Crypto “pig butchers” lose access to another almost $50M

While losses from pig butchering scams are estimated to be in the tens of billions of USD, a small yet growing share of these illicit funds is now being frozen by law enforcement.

The latest example comes from the collaboration among blockchain analysis firm Chainalysis, stablecoin issuer Tether, crypto exchanges OKX and Binance, and law enforcement in the APAC region, as almost $50 million in the tether (USDT) stablecoin has been frozen.

This is how it all went. At first, Chainalysis identified five crypto wallets associated with "pig butchers" in Southeast Asia that held the stolen funds.

Blockchain analysis showed that after victims sent their funds to scammers, the stolen money was sent to a consolidation wallet before being distributed to five other wallets.

However, when the criminals sent small deposits back to victims in order to deceive them into believing their investment was legitimate and extract more money, this allowed crypto exchanges together with local enforcement to gather intelligence.

"After sharing the results of the investigation with APAC-based law enforcement, Tether froze funds in June 2024 at the agency’s direction," Chainalysis revealed this week.

This case followed a bigger operation, when Tether, OKX, and the US Department of Justice managed to freeze $225 million in USDT in November 2023.

"When looking at these scams, people often don’t understand how victims fall prey to them and often blame the victims. It’s not based on someone’s intelligence, but rather on their vulnerabilities, and scammers are adept at figuring those out," an unnamed senior blockchain investigator for the special investigations team at OKX was quoted as saying.

Pig butchering is a popular category of crime in which criminals befriend potential victims to lure them into fake investment platforms and steal increasing amounts of money.

As previously reported by Cybernews, last year, several US agencies and regulators started distributing a one-page infographic that illustrates the scam’s phases, from how victims are targeted and groomed to how the scam concludes. It also shows warning signs and what to do if you've been scammed.