Unveiling the 'Pig Butchering' Crypto Scam
Unveiling the 'Pig Butchering' Crypto Scam

The cryptocurrency market faced a significant setback as the Department of Justice (DOJ) unveiled the latest crypto investment scam—dubbed the ‘pig butchering’ scheme—amounting to a staggering $80 million. However, what unraveled as Americans fell victim to losing their hard-earned savings revealed a grim reality: the scam’s operatives, predominantly located in Asia, were themselves victims of human trafficking.

The ‘pig butchering’ scam not only signifies a financial catastrophe but also signals the ominous growth of modern slavery. Beyond the DOJ’s action, the United Kingdom took decisive steps to sanction individuals and businesses in Southeast Asia linked to these scams. According to Ari Redbord, Global Head of Policy at TRM Labs, the UK’s Treasury targeted traffickers and businesses, particularly in Cambodia, connected to ‘pig butchering’ scams.

The UK’s sanctions, announced this month, pinpointed 46 human rights violators, including 9 individuals and 5 entities involved in trafficking people across Cambodia, Laos, and Myanmar. These victims were coerced into working for online ‘scam farms,’ perpetuating large-scale fraud, often subjecting them to torture and other degrading treatment.

In an interview, Redbord delineated two distinct aspects of ‘pig butchering’: the English-speaking individuals in the U.S. or Europe who fall prey to scams and the human trafficking that compels individuals to execute these scams. The UK’s Treasury’s action targets these traffickers exploiting people to engage in fraudulent activities.

The U.S. had previously announced indictments and seizures related to ‘pig butchering’ schemes, including the seizure of $112 million in April and $9 million of TetherUSDT in November. According to April 2023 reports, cryptocurrency frauds surged by a staggering 183%, amounting to $2.57 billion in reported losses during 2022. Redbord acknowledges that while cryptocurrency facilitates swift global fund movements, law enforcement’s successes stem from enhanced track and trace capabilities.

Assistant Attorney General Kenneth A. Polite, Jr., highlighted the combination of confidence scams and technological adeptness employed by transnational criminal organizations that have severely impacted victims’ lives. The DOJ’s swift action aims to return seized virtual currency to victims, seeking to mitigate the devastating financial losses incurred.

In September 2023, the Financial Crimes Enforcement Network (FinCEN) also alerted financial institutions to ‘pig butchering’ scams. Describing these scams akin to fattening a hog before slaughter, FinCEN emphasized how victims invest in seemingly legitimate virtual currency opportunities, only to be conned out of their assets.

Research from TRM Labs on ‘pig butchering’ from 2021 to 2022 uncovers links to transnational organized crime groups, many operating from Southeast Asia. Reports suggest these scams are orchestrated by criminal enterprises based in Southeast Asia, leveraging victims of labor trafficking to reach unsuspecting individuals worldwide.

The intricate web of transnational crime, human trafficking, and sophisticated psychological manipulation continues unabated, underscoring the importance of heightened vigilance among potential victims. The DOJ’s call for victims to report such crimes is accompanied by a public awareness campaign to combat these scams, hoping to encourage more reports despite the current underreporting.

Meanwhile, the UK’s move to sanction individuals and entities involved in ‘scam farms,’ which exploit human trafficking victims, highlights a shift in targeting the root causes of these scams. The transparency of cryptocurrencies on blockchains aids law enforcement in identifying and addressing the issue’s core overseas.

The ‘pig butchering’ saga, originally a decade-long romance scam, has evolved to exploit crypto transparency for malevolent gains. Yet, ongoing efforts aim to curb these crimes, protecting potential victims and dismantling the networks orchestrating these insidious schemes.

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