A recent study found that “pig-butchering” cryptocurrency scammers stole a staggering $75 billion from investors' digital wallets, but the large-scale theft was primarily carried out by hard-to-police overseas criminal networks. It became clear that it was planned.
The scam, which has proliferated during the pandemic, involves a scammer “butcher” starting a conversation with what initially appears to be a text message with the wrong number, said John Griffin, a finance professor at the University of Texas at Auston. Student Kevin May collected crypto addresses from more than 4,000 victims.
There is then a period of “bloating up” the victim by continuing text exchanges to build rapport, using stock images of men or women and communicating with real, harmless people. They often deceive people, rebels say. Malware software company Malwarebytes.
Once the victim trusts the scammer enough, he or she is asked to transfer money to a seemingly legitimate crypto wallet, locking them into an investment scheme that financially “massacres” them.
According to Bloomberg, which previously reported on the study, once victims transfer enough funds, the scammers disappear.
Griffin and May used blockchain tracking tools to track the flow of funds from victims to fraudsters, many of whom are based in Southeast Asia, from January 2020 to February 2024. To date, criminal networks have been found to have transferred at least $75.3 billion to cryptocurrency exchanges.
However, according to a study entitled “How Cryptoflows Fund Slavery?”, this investment is bogus. The economics of pig slaughter. ”
According to the study, the scammers “freely interacted with major cryptocurrency exchanges and sent over 104,000 small-value potential solicitation payments to build trust with their victims.”
Approximately 84% of funds are traded on Tether. Tether is a popular stablecoin, a reference asset whose value is fixed.
Griffin and May said about $15 billion of the stolen cash came from five exchanges, including Bitcoin, which can now be tracked in U.S.-listed exchange-traded funds; It also includes Coinbase, the largest cryptocurrency exchange platform in the United States. .
“These are large organized crime networks that operate largely unscathed,” Griffin told Bloomberg, noting that some of the funding may be the proceeds of other criminal activities.
According to Bloomberg, Tether CEO Paolo Ardoino called the report false and misleading.
“With Tether, everything you do is online, everything you do can be tracked, any asset can be seized, any criminal can be arrested,” Ardoino said in a statement to the media. “We are working with law enforcement to do just that.”
Tether has frozen accounts associated with the scams following recommendations from authorities, but in many cases, scammers have withdrawn the money by the time the crime is reported, Bloomberg reported.
“Our paper shows that they are the currency of choice for criminal networks,” Griffin said.
However, these scammers are often victims themselves, and the United Nations Office on Drugs and Crime estimates that more than 150,000 people are trafficked in Southeast Asia each year.
According to Bloomberg, victims of human trafficking, for example in countries such as Cambodia and Myanmar, are lured into facilities under the guise of well-paying jobs, but are then trapped, forced to commit fraud, and sometimes beaten. It is said that they are sometimes subjected to torture.
Without blockchain, which utilizes a decentralized network, “you have to go through a bank and follow a 'know your customer' procedure. Otherwise, you have to bag cash to scam people out of big money.” “It will have to be,” Griffin told Bloomberg.
“In the past, it would have been extremely difficult to move that much cash through the financial system,” Griffin added.
The professor reportedly used Norwegian cryptocurrency research firm Chainbrium to collect the victims' blockchain addresses.
“The American people, their money is flowing directly into Southeast Asia, into this underground economy,” Jean Santiago, a consultant at Chainbrium, told Bloomberg.
