Synopsis: New study shows pig-butchering scam stole $75 billion worldwide from 2020-2024. Scammers build trust via texts, lure victims into fake crypto investments, then vanish with life savings.
A sophisticated fraud scheme has cost victims more than $75 billion globally. The massive theft occurred between January 2020 and February 2024. Researchers at the University of Texas at Austin uncovered the staggering scale of these losses through blockchain analysis.
Finance professor John Griffin and graduate student Kevin Mei led the groundbreaking investigation. They tracked cryptocurrency flows from over 4,000 fraud victims. Their findings reveal losses far exceeding previous government and industry estimates. The scam primarily operates through criminal networks based in Southeast Asia.
These criminal organizations move billions through the financial system with remarkable ease. Griffin emphasizes the severity of the problem in stark terms. “These are large criminal organized networks, and they’re operating largely unscathed,” he explains. The scale of theft represents one of history’s largest financial frauds.
How the Scam Traps Victims
The scheme begins innocently with a wrong-number text message. Victims who respond receive friendly replies that gradually build trust. Scammers then introduce fake cryptocurrency investment opportunities that promise high returns.
The fraud earns its name from traditional farming practices. Just as farmers fatten pigs before slaughter, criminals cultivate relationships before stealing funds. Consequently, victims often lose their entire life savings to these fake investments.
Individual losses regularly reach hundreds of thousands or millions of dollars. One Kansas banker recently faced charges for embezzling $47.1 million from his institution. He fell victim to the scam and stole from his own bank. Once scammers collect enough money, they vanish without a trace.
Cryptocurrency’s Role in Enabling Fraud
The study found $15 billion originated from five major exchanges including Coinbase. Western victims typically use these legitimate platforms to send their initial investments. Criminal networks then convert stolen funds into Tether, a popular stablecoin.
Tether accounted for 84% of all transaction volume across addresses touched by criminals. Moreover, criminal groups moved $27.8 billion annually into suspicious exchange accounts between 2021 and 2023. This includes $5.6 billion annually flowing from Western exchanges into criminal hands.
Griffin highlights a key advantage cryptocurrency provides to criminals. “In the old days, it would be extremely difficult to move that much cash,” he notes. Traditional banking systems require extensive customer verification procedures. Additionally, moving physical cash in bags would be impractical at this scale.
Scammers use decentralized exchanges like Tokenlon to obscure fund sources. Eventually, they transfer proceeds to centralized exchanges to convert cryptocurrency into traditional money. Binance emerged as the most popular exit point for cashing out stolen funds.
Also Read: Bitcoin Price Predicted to Surge 149% to $225,000 by 2026: As Per Report
The Human Cost Behind the Scam
The people sending fraudulent messages are often victims themselves. Criminal organizations lure workers from across Southeast Asia with promises of high-paying jobs. However, these workers find themselves trapped in compounds throughout Cambodia and Myanmar.
Trafficked individuals are forced to operate scam operations under threat of violence. Furthermore, they endure beatings and torture if they refuse to comply. The United Nations estimates more than 200,000 people remain imprisoned in these scam compounds.
Jan Santiago, a consultant to Chainbrium, describes the direct connection between victims. “People in the U.S., their money is going straight to Southeast Asia,” he explains. The funds enter an underground economy that perpetuates both financial fraud and human slavery.
Industry Defends Its Role
Paolo Ardoino, Tether’s CEO, strongly disputed the study’s characterization of his company. “With Tether, every action is online, every action is traceable,” Ardoino stated. He emphasized that assets can be seized and criminals caught through law enforcement cooperation.
Tether has frozen accounts tied to fraud in several cases. However, scammers typically cash out before victims report crimes to authorities. Griffin maintains that research clearly shows Tether’s dominance in criminal networks.
Chainalysis Inc. questioned whether the $75 billion figure might be inflated. The blockchain analysis firm noted that addresses receiving some fraud proceeds may also handle legitimate funds. “Quantifying funds earned through pig-butchering scams is challenging given limited reporting,” spokesperson Maddie Kennedy explained.
Binance highlighted its cooperation with law enforcement agencies. The exchange recently helped authorities seize $112 million in one pig-butchering case. Spokesman Simon Matthews stated the company works closely with regulators to raise scam awareness. Nevertheless, Binance processed billions in suspicious transactions even after pleading guilty to criminal charges.
Written By Fazal Ul Vahab C H
