Cryptocurrency Investments: Pig-Butchering Scams Net More Than $75 Billion, Study Finds

Pig slaughter scammers have likely stolen more than $75 billion from victims worldwide, far more than previously estimated, according to a new study.

John Griffin, a finance professor at the University of Texas at Austin, and graduate student Kevin Mei collected crypto addresses from more than 4,000 victims of the fraud, whose popularity has skyrocketed since the pandemic. Using blockchain tracing tools, they traced the flow of funds from victims to scammers, who are largely based in Southeast Asia.

Over four years, from January 2020 to February 2024, criminal networks moved more than $75 billion into crypto exchanges, said Griffin, who has written about fraud in financial markets. Part of the total could represent proceeds from other criminal activities, she said.

"These are large organized criminal networks and they operate largely unscathed," Griffin said in an interview.

The study “How do crypto flows finance slavery?” The Economics of Pig Slaughter,” was published Thursday. Griffin and Mei discovered that $15 billion came from five exchanges, including Coinbase, that are commonly used by victims in Western countries. The study said that once scammers raised funds, they most often converted them into Tether, a popular stablecoin. Of the addresses touched by criminals, 84% of the transaction volume was carried out in Tether.

"In the old days, it would be extremely difficult to move that much cash through the financial system," Griffin said. “You would have to go to the banks and follow 'know your customer' procedures. Or you would have to put cash in bags.”

Paolo Ardoino, CEO of Tether, called the report false and misleading. "With Tether, every action is online, every action is traceable, every asset can be seized and every criminal can be caught," Ardoino said in a statement. "We are working with authorities to do exactly that."

Tether has cooperated with authorities in some cases to freeze accounts linked to fraud. But often, by the time the crime is reported, the scammers have already been paid.

"Our paper shows that they are the currency of choice for criminal networks," Griffin said.

Pig slaughter, a scam named after farmers' practice of fattening pigs before slaughter, often begins with what appears to be a text message with a wrong number. People who respond are attracted to cryptocurrency investments. But the investments are fake and once victims send sufficient funds, the scammers disappear. As crazy as it may seem, victims routinely lose hundreds of thousands or even millions of dollars. A Kansas banker was charged this month with embezzling $47.1 million from his bank as part of a hog slaughter scam.

The people sending the messages are often victims of human trafficking throughout Southeast Asia. They are lured to compounds in countries like Cambodia and Myanmar with offers of high-paying jobs, then trapped, forced to scam, and sometimes beaten and tortured. The United Nations has estimated that more than 200,000 people are detained in fraudulent facilities.

Many of the fraud victims' blockchain addresses were collected by Chainbrium, a Norwegian crypto research firm. Chainbrium also conducted its own analysis of the data and found that a large proportion of the funds flowed through a supposedly decentralized crypto exchange called Tokenlon. According to Chainbrium, scammers use the exchange to hide the origin of funds. Tokenlon did not respond to a request for comment.

"People in the United States, their money goes directly to Southeast Asia, to this underground economy," said Jan Santiago, a Chainbrium consultant.

Eventually, the criminals would send the scam proceeds to centralized crypto exchanges to collect traditional money. Griffin said Binance was the most popular exchange, even after the company and its founder, Changpeng Zhao, pleaded guilty in November to criminal anti-money laundering charges and sanctions and agreed to pay $4.3 billion to resolve an investigation of long duration carried out by prosecutors and regulators.

"Binance is the place where they can get huge amounts of money out of the system," Griffin said.

Like Tether, Binance has worked with authorities in some cases to freeze accounts linked to fraud and return money to victims. A company spokesman said it recently worked with authorities to seize $112 million in a pig slaughter case.

“Binance continues to work closely with authorities and regulators to raise awareness about scams, including cases of pig slaughter,” said spokesperson Simon Matthews.

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