Tether reveals scale of crypto romance scams by freezing $225m in stolen USDT

Ever since romantic investment scams started escalating in the crypto markets a couple of years ago it’s been hard to get a handle on their scale.

Now an eye-opening datapoint has surfaced.

On Monday, Tether, the issuer of the most widely used stablecoin in the world, said it had frozen $225 million worth of stolen USDT tokens linked to an organised crime syndicate that was behind a racket known as pig butchering.

Moreover, Tether said the criminal group, which was not identified, is involved in human trafficking.

External wallets

In a press release, Tether said it worked with OKX, a global cryptocurrency exchange, and US law enforcement officials to freeze “external self-custodied wallets” linked to the syndicate.

The case sheds light on the sums at stake in the shadowy world of pig butchering. By preying on online users who may be looking to make friends or develop romantic relationships, the swindlers trick their marks into investing their life savings on crypto exchanges.

The depositors virtually never get their money back.

The men and women who lure investors into these scams are often victims themselves.

Hundreds of thousands of people have been “forcibly engaged in online criminality” at the hands of organised crime groups based in compounds in Southeast Asia, according to a report published in August by the Office of the United Nations High Commissioner for Human Rights.

A DL News investigation in September found that pig butchering scams originated in China and then spread across Southeast Asia.

One woman’s story

One woman who shared her story said she lost $80,000 to a pig butchering scam on a crypto exchange. She is trying to turn the tables on the swindlers by forming a group called GASO, which compiles accounts from victims and works with law enforcement officials.

In the Tether case, the stablecoin issuer “proactively alerted” US law enforcement authorities to the location of illicit funds on-chain. Using tools provided by Chainalysis, the blockchain analytics firm, Tether said it mounted a months-long, joint investigation with OKX and US officials.

Tether said the frozen wallets are on the secondary market and are not associated with its customers. The US Department of Justice and the US Secret Service were both involved in the probe, Tether said.

“Our recent collaboration with the Department of Justice underscores our dedication to fostering a secure environment,” said Paolo Ardoino, the CEO of Tether, in a statement.

$52 million in losses

Sizing up the size of the pig butchering racket has been a piecemeal exercise.

In September, the Hong Kong Police Force told DL News it had received 769 complaints between January and July, chalking up losses of $52 million for victims.

And in 2021, In 2021, the FBI received more than 4,325 complaints with losses of more than $429 million, according to its annual internet crime report.

With this latest case, the breadth of pig butchering scams may have become a little bit clearer.

Have a tip about crypto scams? Contact the authors at ed@dlnews.com and tcarreras@dlnews.com.