A recent study by University of Texas at Austin finance professor John Gryphon and doctorate student Kevin Mei revealed the startling finding that cryptocurrency schemes that involve pig-butchering have defrauded victims of over $75 billion worldwide. The report draws attention to the alarming extent of these fraudulent acts, which have proliferated since the pandemic started.
The Pig Butchering Scam Unveiled
"From Wrong-Number Texts to Crypto Disappearances"
The phrase "pig-butchering scam" refers to the practice of fattening hogs before slaughter, and it frequently starts with seemingly innocent text messages with the wrong number. As the con artists disappear, gullible people are tricked into investing large sums of money in fictitious cryptocurrency. It is astonishing to learn that victims frequently lose hundreds of thousands, or even millions, of dollars. One such victim is a Kansas banker who is accused of embezzling $47.1 million.
"Criminal Enterprises Operating Unscathed"
Gryphon and Mei tracked the flow of money from over 4,000 victims to cryptocurrency exchanges over a four-year period, from January 2020 to February 2024, exposing the enormous size of these criminal networks. These organised gangs, which are mostly centred in Southeast Asia, continue to function largely unabated despite efforts to suppress them, presenting a serious threat to law enforcement.
Human Trafficking and Scam Compounds
"Tragic Origins: Victims Forced into Scam Operations"
Behind the scenes, the individuals sending these deceptive messages are often victims themselves, trapped in human trafficking networks across Southeast Asia. They are enticed with promises of high-paying jobs, only to find themselves in compounds in countries like Cambodia and Myanmar, forced to scam, and subjected to abuse. The United Nations estimates that over 200,000 people are held in such scam compounds.
Crypto Exchanges and Tether Dominance
"Tracking the Money Flow: Exchanges and Stablecoins"
Gryphon and Mei's study revealed that $15 billion flowed through five exchanges, including Coinbase, frequently used by victims in Western countries. Tether, a popular stablecoin, emerged as the currency of choice for scammers, constituting 84% of the transaction volume. Despite claims of traceability and cooperation by Tether's CEO, Paolo Ardoino, the study suggests that scammers exploit the system to cash out before authorities can act.
Challenges in Quantifying Funds
"Blockchain Analysis: Challenges and Scepticism"
While the study provides crucial insights, blockchain analysis firm Chainalysis Inc. and crypto investigation firm Chainbrium express scepticism. Quantifying funds earned through pig-butchering scams proves challenging due to limited reporting. The study's totals may be inflated, raising questions about the accuracy of the $75 billion estimate.
Binance's Role and Regulatory Challenges
"Binance in the Spotlight: Regulatory Hurdles Persist"
Despite facing legal issues and the founder, Changpeng Zhao, pleading guilty to charges, Binance remains a favourite destination for scammers. Gryphon highlights its role in facilitating the movement of large sums, emphasising the ongoing challenge for law enforcement. Regulatory efforts continue, with Binance cooperating in some cases to freeze accounts tied to fraud and return funds to victims.
The Human Impact: Why the Pig-Butchering Crypto Scam Is on Everyone's Lips
With an astounding loss of more than $75 billion, the crypto scam has turned into a global tale of lives upended and dreams dashed. Empathy and outrage have been generated by the tale of gullible people, among them a banker from Kansas. A terrifying dimension is added by the human trafficking element, which exposes a harsh reality in which victims are forced to take part in these schemes. The global discourse surrounding the pig-butchering crypto scam has focused on financial security, empathy, solidarity, and coordinated measures to prevent people from becoming victims of these heartbreaking schemes. The need for a shared commitment to protect the welfare of those deceived by these schemes is an additional reason why addressing this issue urgently goes beyond regulatory actions. "How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering" reveals the intricate web of pig-butchering crypto scams and emphasises the need for increased awareness, international cooperation, and regulatory measures to curb this global menace.
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