A new study conducted by finance professor John Griffin and graduate student Kevin Mei from the University of Texas at Austin has revealed that pig-butchering scammers have likely stolen over $75 billion from victims worldwide. These scams have become increasingly prevalent during the pandemic, with criminal networks in Southeast Asia being the primary perpetrators. Using blockchain tracing tools, the researchers were able to track the flow of funds from over 4,000 victims to the scammers over a four-year period from January 2020 to February 2024. Griffin noted that some of the funds could potentially be proceeds from other criminal activities as well.
The pig-butchering scam, named after the practice of fattening hogs before slaughter, typically begins with victims receiving what appears to be a wrong-number text message. Victims are then enticed into making crypto investments that turn out to be fake. Once victims send funds to the scammers, they vanish, leaving victims with significant financial losses. Some victims have reported losing hundreds of thousands or even millions of dollars. In a recent case, a Kansas banker was charged with embezzling $47.1 million from his bank as part of a pig-butchering scam. The individuals sending these messages are often victims of human trafficking from Southeast Asia who are coerced into participating in the scams.
The criminals behind these scams are part of large, organized networks that have been able to operate with relative impunity. Victims are often lured to compounds in countries like Cambodia and Myanmar with promises of lucrative job opportunities, only to find themselves trapped and forced to participate in fraudulent activities. The United Nations estimates that over 200,000 individuals are being held in these scam compounds. Griffin and Mei’s study, titled “How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering,” sheds light on the economic aspects of these scams and the impact they have on victims and society at large.
The researchers’ use of blockchain tracing tools allowed them to gain insights into the scale and scope of pig-butchering scams, revealing the staggering amount of funds that have been stolen from victims. By following the flow of funds from victims to scammers, Griffin and Mei were able to track over $75 billion being transferred to crypto exchanges over the four-year period studied. The findings highlight the need for increased awareness and vigilance to combat these types of scams and protect individuals from falling victim to fraudulent schemes.
The study underscores the importance of addressing the underlying issues that enable pig-butchering scams to thrive, such as human trafficking and exploitation. By understanding the economic motivations behind these criminal activities, law enforcement agencies and policymakers can work towards dismantling these networks and providing support for victims. Griffin and Mei’s research contributes to a better understanding of the complex dynamics of pig-butchering scams and the urgent need for coordinated efforts to combat financial fraud and exploitation.
