Crypto criminals pivot from Ponzi schemes to 'pig butchering' scams: Chainalysis

In the past year, crypto criminals have shifted from Ponzi schemes to more targeted scams like "pig butchering," according to a new Chainalysis report.

"There is a macro trend consistent with the continued pivot of scammers from elaborate Ponzi schemes that cast a wide net to more targeted campaigns like pig butchering or address poisoning, driven in part by increasing enforcement efforts and stablecoin issuers blacklisting scam addresses," Friday's Chainalysis mid-year update part two said. 

Pig butchering scams earn their name from the way scammers "fatten up" their victims to extract maximum value. This typically involves cultivating a romantic relationship over time through text messages or dating apps, ultimately persuading the victim to invest in a fraudulent scheme. In a disturbing turn, many of the scammers orchestrating these conversations are themselves victims—kidnapped, trafficked to Southeast Asia and forced to work in labor camps within large compounds to carry out these scams, according to Chainalysis.

Prevalence of pig butchering scams

One of the largest cryptocurrency wallets linked to scamming is tied to KK Park, one of the world's most notorious pig butchering operations, according to Friday's Chainalysis report. Located in Myanmar, KK Park has become a significant hub for internet fraud and human trafficking.

"The KK Park wallet was first observed on-chain in 2022, and scamming operations using this address continue to generate significant revenue, netting over $100 million so far this year. Those funds could have come both from scam victims and from ransom payments submitted by families attempting to save their trafficked family members," the report added.

A 2024 investigation by the German state-owned broadcaster Deutsche Welle revealed that workers at KK Park endure 17-hour workdays and are routinely monitored, tortured and threatened with murder if they attempt to escape the compound.

Additionally, Chainalysis said it is important to note that scam operations coming out of KK Park and similar compounds are prolific when it comes to adapting their off-chain scam presence, frequently purchasing seasoned Facebook, Tinder and Match.com profiles from China-based services for use in their campaigns.