Chainalysis warns pig-butchering crypto scams are escalating, posing national security risks and prompting global law enforcement action.
The pig-butchering scam has grown beyond simple financial fraud. Experts are now warning that it has become a serious national security risk.
Chainalysis’ head of national security intelligence, Andrew Fierman, and former prosecutor Erin West, founder of Operation Shamrock, pointed out the scale of these scams in a recent podcast.
Pig-butchering involves long-term effort. Scammers build trust with victims (often through romantic or friendly online interactions). Once trust is established, victims are directed to fake crypto platforms where their funds are drained.
The Growing Scale of Pig-Butchering Scams
Fraud rings, especially in Southeast Asia, work in dormitory-style compounds. Trafficked workers are forced to contact victims and start relationships with them. These interactions then push the victims toward fake crypto investments.
In 2023, the US Department of Justice (DOJ) seized about $112 million in crypto assets linked to pig-butchering scams. Chainalysis reported that pig-butchering scams rose nearly 40% last year alone, while total crypto scam revenue exceeded $9.9 billion.
Sometimes, these victims even face a second layer of fraud after being scammed the first time. Fake recovery firms contact them and promise to return lost funds. West warned that “Once this happens to you, you will be put on a list and are even more likely to get hit up again.”
Fierman and West noted that these scams have become highly organised. They now integrate human trafficking, money laundering, and crypto networks.
These make them far more complex than traditional scams.
Blockchain Transparency Offers Opportunities
Despite the scale of these scams, blockchain provides a chance to disrupt these operations. Fierman said that blockchain transparency allows regulators, exchanges and virtual asset service providers (VASPs) to track and even possibly block funds before they are cashed out.
“One of the benefits of the blockchain is that there is an opportunity for disruption if it’s enabled right,” he said.
Governments are stepping up to address these scams. On November 12, the DOJ created a “Scam Centre Strike Force” targeting Chinese-linked transnational criminal groups behind crypto fraud in Southeast Asia.
Regional law enforcement has also acted. On August 27, agencies in the Asia Pacific region worked with Chainalysis, OKX, Tether and Binance to freeze $47 million in pig-butchering funds.
Red Flags to Identify Pig-Butchering Scams
Recognising warning signs can protect scam victims. Emotional manipulation is a common tactic, and scammers may show strong feelings quickly without ever meeting in person.
Suspicion should rise if the individual refuses to share personal or professional information. Requests for money (even for alleged emergencies) are another major red flag.
Scammers also promise easy and risk-free profits. They may use fake screenshots to show massive gains and lure victims into fake crypto investments.
Related Reading: SEAL Team Unveils Verifiable Phishing Reports to Expose Scammer
Education and Awareness Are Essential
Because of this, experts are warning that awareness is the first line of defense.
Understanding how these scams work and recognising their signs can prevent financial and emotional damage. Education campaigns, public advisories and industry collaboration are an important part of reducing the reach of these pig-butchering scams.
Authorities and private organisations are using blockchain analytics and cooperation with exchanges to track and freeze suspicious transactions. These measures are being put in place to make it harder for scammers to convert stolen crypto into cash.