A comprehensive study led by University of Texas finance professor John Griffin and graduate student Kevin Mei has shed light on the staggering scale of pig-butchering crypto scams, uncovering that these fraudulent schemes have potentially drained more than $75 billion from victims worldwide.
Conducted over a span of four years, from January 2020 to February 2024, the research meticulously tracked the flow of funds from over 4,000 victims to primarily Southeast Asia-based scammers. These scams typically commence with unsolicited text messages, luring individuals into sham crypto investments, resulting in significant financial losses.
According to the study’s findings, scammers adeptly maneuver through major crypto exchanges, initiating over 100,000 small payments to build rapport with victims. Subsequently, funds exit the crypto network in substantial quantities, predominantly in Tether (USDT), through less transparent but sizable exchanges such as Binance, Huobi, OKX, Crypto.com, and Coinbase.
While the study provides crucial insights into the magnitude of these scams, concerns have been raised regarding the challenges in accurately quantifying the total amount due to underreporting. Tether CEO Paolo Ardoino has contested the findings, underscoring the platform’s collaboration with law enforcement agencies to combat fraudulent activities.
“With Tether, every action is online, every action is traceable, every asset can be seized and every criminal can be caught. We work with law enforcement to do exactly that,” Ardoino emphasized in a commentary with Bloomberg.
Despite concerted efforts by authorities and blockchain analysis firms to thwart these illicit activities, criminals persist in exploiting decentralized finance protocols to launder their ill-gotten gains. Griffin and Mei noted that the “legitimate” crypto space often serves as the gateway and exit point for these fraudulent activities, labeling it as “the lifeblood enabling both pig butchering and modern-day slavery.” The study highlights the ease with which criminal networks move significant sums of money inexpensively and with minimal fear of detection.
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