- "Pig-butchering" scams have stolen at least $75.3 billion in crypto in recent years, a study said.
- Scams involve sending a wrong-number text to a victim and then building trust.
- Victims send money for fake investments and are ghosted soon after.
Be wary of "pig-butchering" scams.
A recent study says a particular kind of fraud — named after the method used by farmers of fattening pigs up before they're slaughtered — has allowed criminals to get away with billions in crypto, often leaving victims penniless.
According to the study, from January 2020 to February 2024, crypto criminals moved at least $75.3 billion into suspicious accounts, including $15.2 billion in deposits from major crypto exchanges used by everyday investors.
A research paper released Thursday by John Griffin, a finance professor at the University of Texas at Austin, and graduate student Kevin Mei, detailed a study that tracked crypto addresses of over 4,000 victims of pig-butchering schemes. Griffin's previous studies on crypto include a paper released last year that argued the price of bitcoin is manipulated.
The study said that stolen crypto is usually converted into other assets, often the stablecoin Tether, after which the funds flow through a decentralized exchange to obscure the movement, and finally onto a major crypto exchange where the crypto can be cashed out for fiat money.
Pig-butchering scams are unsophisticated and don't involve much in the way of technological savvy on the part of the scammers. The scheme begins with criminals sending a wrong-number text. They use that as a door to build trust with victims by sending small payments to them and then lure them into making fake crypto investments, ghosting them once the victim has sent a large amount of money.
"In a subset of cases, the friendly relationships slowly morph into full-blown scams known as "pig butchering" or sha zhu pan, which, in the extreme, bleed lonely, sick, and distressed victims, often with little exposure to investments and crypto, into the loss of their life savings," the researchers wrote.
"We find 83% of potential inducement payments are sent from addresses used in more than ten transactions, suggesting limited monitoring by crypto exchanges," Griffin and Mei added.
Their paper is titled "How do crypto flows finance slavery? The Economics of pig butchering," and the researchers claim that many scammers were originally victims of human trafficking in Southeast Asia.
"Pig butchering relies on an even darker crime. Many of the ground-level perpetrators are themselves victims of human trafficking and modern-day slavery," Griffin and Mei wrote.
Lured with promises of work, trafficked victims are locked away in compounds and forced to perpetrate scams, they said, adding that estimates of how many people are held in such conditions vary, but figures from the United Nations and other groups indicate it could be as high as 500,000 across Southeast Asia.
