Chainalysis Says Pig-butchering Is Becoming A National Security Threat

Pig-butchering scams are expanding into a transnational crime model, blending trafficking and crypto laundering on a massive scale.

The multibillion-dollar scam known as “pig-butchering,” once treated as a consumer-fraud issue, has crossed a new threshold, prompting concerns over national security.

In a podcast, Chainalysis head of national security intelligence, Andrew Fierman and former prosecutor Erin West, the founder of cross-sector anti-scam nonprofit Operation Shamrock, discussed how pig butchering is becoming a threat to national security.

“So if anybody is touching money in any way, you’re part of this. So you need to be prepared to understand the threat and the gravity of what’s happening on a national security level,” West said, highlighting the importance of education and awareness in combating crypto scams.

A pig-butchering scam is a long-term fraud strategy in which criminals attempt to establish trust with a victim, often through romance or friendship, before steering them into a fake cryptocurrency investment platform and draining their funds.

In the podcast, the duo discussed how fraud rings across Southeast Asia operate dormitory-style scam compounds where trafficked workers contact unsuspecting victims, foster trust through romance and then push them into fake crypto investments with the goal of draining funds.

In 2023, the US Department of Justice (DOJ) seized about $112 million in crypto linked to pig-butchering scams. In a February report, Chainalysis said that pig-butchering scams alone increased by almost 40% year-over-year in 2024, while crypto scam revenues overall exceeded $9.9 billion.

In addition, one under-reported area of pig-butchering is that victims are often hit twice. The duo stated in the podcast that after the initial scam, victims would receive follow-up contact from fake recovery firms claiming to help recover the money.

“Once this happens to you, you will be put on a list […] and you are even more likely to get hit up again,” West said.

Fierman and West said these scams have matured into a transnational crime model, blending human trafficking, money laundering and crypto rails, making them far more complex than your everyday fraud.

Source: CoinTelegraph