Pig-Butchering Scams Emerge as a National-Security Concern: Chainalysis

The multi-billion dollar scam known as “pig-butchering”, once treated as a consumer fraud problem, has crossed a new threshold and is raising national security concerns.

In a podcast, Chainalysis’s head of national security intelligence, Andrew Fierman, and former prosecutor Erin West, founder of the cross-industry anti-scam nonprofit Operation Shamrock, discussed how pig slaughter becomes a threat to national security.

“So, if someone touches the money in any way, you are part of it. So you need to be prepared to understand the threat and the seriousness of what is happening at the level of national security,” West said, emphasizing the importance of education and awareness in the fight against crypto scams.

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

The growing scale of pig slaughter scams

In the podcast, the duo discussed how fraud rings in Southeast Asia operate consisting of bedroom-style scams 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) caught up about $112 million in crypto related to pig slaughter scams. In a February report, Chainalysis he said that pig slaughter scams have increased by almost 40% year on year in 2024, while the overall income of crypto scam exceeded $9.9 billion.

Also, an underrated area of ​​pig slaughter is that victims are often hit twice. The duo said in the podcast that after the initial scam, victims sometimes received follow-up contact from fake recovery companies claiming to help them recover money.

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

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

Fierman suggested that blockchain transparency offers opportunities for regulators, exchanges and virtual asset service providers (VASPs) to disrupt scams.

“One of the benefits of blockchain, at least as the mechanism for it, is that there is a potential for disruption if it’s enabled properly,” he said. “And the transparency of the blockchain provides an opportunity to potentially disrupt at the point of cash out.”

How the authorities intervene

With scams having a much wider impact, governments have stepped in. On November 12, the DOJ. announced the formation of a “Scam Center Strike Force” to target China-linked transnational criminal organizations behind crypto investment fraud in Southeast Asia.

Simultaneously, regional law enforcement departments are imposing freezes and sanctions to combat the problem. On August 27, Asia Pacific (APAC) law enforcement partnered with Chainalysis, OKX, Tether and Binance to freeze $47 million in pig slaughter funds.

The strategy is not simple, but it is clear. This is to disrupt on-ramp and off-ramp points for scammers, sanction facilitators and build private-public partnerships.

“My support for transnational organized crime has been constant: Use every tool in our arsenal. Sanctions, indictments, diplomatic pressure,” said West.

Related: Scammers pose as Australian police to steal crypto, authorities warn

Red flags to watch out for

Like many scams, there are ways to spot a pig slaughter scam. The scam often involves the manipulation of feelings, which means that someone who expresses strong feelings for you too quickly through online channels, especially without meeting, may be a scam.

Become more suspicious if the person you are contacting refuses to share personal information or professional credentials.

One of the main signs that it’s a pig slaughter scam is when the person starts asking for money, even if they say it’s for an emergency.

This also takes the form of risk-free investments and easy money, often showing fake screenshots of massive profits to convince their victims to invest.

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