Blockchain security firm Chainalysis released a mid-year update on crypto crime, revealing a significant increase in “pig butchering” scams within the cryptocurrency market in 2024. These scams involve scammers promising victims high returns and then disappearing with their funds, a tactic known as “fattening up” and “slaughtering” the victims. The report indicates that 43% of this year’s scam inflows have been funneled into wallets created in 2024, many of which are linked to pig butchering schemes. One of the largest scam wallets uncovered this year is associated with Myanmar’s KK Park, having already amassed over $100 million.
Law enforcement has made progress in dismantling long-term Ponzi schemes, prompting crypto thieves to switch to shorter scams lasting only a few weeks. The average lifespan of crypto scams has dropped from 271 days in 2020 to 42 days in 2024, showcasing scammers’ adaptation and sophistication. Scammers are now using a combination of online and offline methods, such as creating new cryptocurrency wallets to conceal their identities and buying existing social media profiles to build trust with victims. The market for these illicit accounts has grown, with over $10 million in crypto flows attributed to this trade in the past two years.
Victims of these scams include the elderly, individuals in transitional life phases, and those seeking friendship or romance online, making the scams particularly insidious and effective. The Chainalysis report also highlighted the illicit marketplace Huione Guarantee, processing over $49 billion in cryptocurrency transactions since 2021. This platform facilitates various illegal activities, including pig butchering scams, investment fraud, money laundering, and connecting buyers and sellers on messaging apps like Telegram. Despite these challenges, law enforcement agencies have made some progress against pig butchering operations, such as the recent seizure of nearly $5 million worth of Tether (USDT) linked to a pig butchering scam by U.S. prosecutors in North Carolina.
In a related case, Shan Hanes, former CEO of Heartland Tri-State Bank in Kansas, was sentenced to over 24 years in prison for embezzling $47.1 million to fund a pig butchering scheme he had fallen victim to. The FBI agent Robert DeWitt emphasized the need for law enforcement to stay ahead of evolving criminal tactics, with the recent seizure being a testament to the FBI’s commitment to protecting victims from such schemes in the digital age. Similarly, the U.S. Federal Trade Commission (FTC) issued a warning in June 2024, highlighting the surge in pig butchering scams, particularly those involving romance and cryptocurrency investments. Overall, the rise in pig butchering scams and the evolving tactics of scammers pose a significant challenge that requires ongoing vigilance and proactive law enforcement actions to protect victims and combat cybercrime in the cryptocurrency space.
