Binance, Tether, others seize almost $50 million connected to pig butchering scam

Blockchain tracing firm Chainalysis has announced its role in a joint investigation that led to the freezing of almost $50 million tied to a pig butchering scam. The company disclosed this on X, noting that it worked with Binance, Tether, and OKX on the investigation.

Blog posts from Chainalysis and the other firms involved in the case showed that they worked on it in 2024, with investigative effort culminating in Tether freezing around $46.9 million in funds. The partnership also involved a law enforcement agency in the Asia Pacific region.

According to Chainalysis, the investigative team was able to trace the illicit funds using its Crypto Investigations Solution. The tool enabled them to identify the addresses connected to the pig butchering operation in Southeast Asia. Nineteen addresses were initially connected to the case, with Chainalysis Reactor graph showing eight victim addresses that transferred funds to the scam between November 2022 and July 2023.

It said:

“The Chainalysis Reactor graph below shows 19 addresses that the team identified in connection with the case. It is likely that hundreds of wallets sent funds to this scam.”

Some of the victims sent funds to scammers multiple times, with scammers moving the funds to a consolidation wallet, which later sent $46.9 million to intermediary addresses. The three intermediary wallets moved the funds to five destination wallets, where Tether eventually froze the funds.

Interestingly, the analysis shows that one of the scammer wallets also transferred funds to victims, moving a total of $63,900. Experts note that scammers use this common tactic to gain the trust of their victims by making small deposits that give them the impression they are getting returns.

Crypto firms deepen collaboration with law enforcement to combat crime

Meanwhile, the announcement highlights the growing collaboration between crypto firms and law enforcement to combat illicit cryptocurrency activity.  Chainalysis acknowledged this in its post on X.

The firm said:

“Powerful example of how industry collaboration can combat sophisticated financial crime networks.”

It also noted that this public-private partnership aims to protect users and improve trust in the blockchain ecosystem. The exchange’s Global Head of Intelligence and Investigations, Eric Fracolli, stated that it will partner with all relevant stakeholders to achieve this.

Fracolli said:

“Our collaboration with these organizations highlights the essential role of public-private partnerships in subverting criminal operations and working toward compensating victims.”

Binance added that its number one priority is to improve the security of the crypto ecosystem, noting that this is necessary to ensure that the sector does not get a bad name. The exchange observed that illicit activity accounts for only a small fraction of all crypto transactions, but poses real harm to users, and any opportunity to disrupt such activity is a victory.

Tether CEO Paolo Ardoino also said that the stablecoin issuer remains committed to working with law enforcement agencies globally to ensure that funds connected to scams and other illicit activities are frozen so victims can get restitution.

As for OKX, it described its involvement as evidence of its commitment to security and compliance while noting that USDT’s ability to be frozen is a crucial mechanism in recovering stolen funds.

The commitment from the crypto industry leaders highlights how pig butchering scams that involve the use of cryptocurrencies are under more scrutiny. While these scams are not new and continue to lead to billions of dollars in losses annually, while affecting several other victims, law enforcement is now finding it easier to trace those involving cryptocurrencies.

Only a few months ago, the US Court approved the seizure of around $225 million USDT by the US Secret Service (USSS). The funds are also connected to pig butchering scams and were initially frozen in 2023 through a collaboration that involved Tether, OKX, Coinbase, and the US law enforcement.

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