- Fraudsters will take advantage of bull market mojo, Chainalysis says.
- Crypto romance scams are on the rise outside of Asia.
- Many victims don't report the crime for a number of reasons.
If anyone doubted that crypto crimes are on the rise check out the dark web: Fraudsters are now selling “pig butchering kits,” according to a report from Sophos, a cybersecurity firm.
Pig butchering refers to a type of online romance scam that uses cryptocurrency exchanges to fleece unwitting victims of their savings.
Inca Digital estimated that $32 billion in proceeds from pig butchering scams has been laundered using USDT, the stablecoin issued by Tether.
Authorities say the scam is largely controlled by Asian crime gangs, which have set up compounds in Myanmar, Cambodia, and other locales where they coerce legions of men and women to wrangle victims online.
And they are spreading: On January 21, Australian Federal Police warned against pig butchering scams in the lead up to Valentine’s Day. The FBI issued a similar warning during the Christmas holiday period.
“New pig butchering rings that are unaffiliated with Chinese organised crime groups are appearing in areas like Thailand, West Africa and even the US,” Sophos said in its recent report.
Cybercriminals have long packaged and peddled hacks and other illegal tools on the dark web. The advent of pig butchering kits shows how this specific form of crypto scam is industrialising.
With Bitcoin up 84% in the last 12 months, the crypto market is bound to attract more criminals.
“Scammers do best in bull market conditions,” Eric Jardine, head of cyber crime research at Chainalysis, told DL News.
As it happens, scamming revenue measured on-chain declined more than 29% in 2023 over the previous year, according to a Chainalysis report published earlier this month.
The smaller harvest is probably due to law enforcement action and better compliance controls than a downturn in the crypto markets, said Ari Redbord, the global head of policy and government affairs at TRM Labs. (Redbord is a contributing writer at DL News.)
Romance scams have become a particularly pertinent problem over the past few years. The perpetrators gradually build trust with a victim before directing them to invest in a third-party crypto website and squeeze as much money from them as possible.
“We’re likely to see a surge in scammers adopting this approach because it’s effective,” Jardine said.
Many people still don’t report being the victim of pig butchering because they fear the social stigma or that reporting the crime is futile, Jardine said.
A report last year from TRM Labs estimates that only 15% of the victims report their losses, with many finding law enforcement resources insufficient to pursue their cases.
“My personal two cents is calling it ‘pig butchering’ probably doesn’t help with the social stigma, simply because it is implying that the victim is the pig in this case and adopting the scammer’s language as opposed to using our own,” he said.
Callan Quinn is DL News’ Hong Kong correspondent. Have a tip? Contact the author at email@example.com.