How 'pig-butchering' scams have emerged as a billion-dollar crypto industry

LONDON – At a Thai police headquarters in October 2022, Chinese businessman Wang Yicheng congratulated one of Bangkok’s most senior cybercrime investigators on his recent promotion, presenting the official with a large bouquet of flowers wrapped in red paper and a bow.

Wang, the vice-president of a local Chinese trade group, wished the new cybercrime investigator “smooth work and new achievements”, according to the group’s website, which displays photographs of the event.

Over the past two years, Wang has forged relationships with members of Thailand’s law enforcement and political elite, the trade group’s online posts show.

During that time, a cryptocurrency account registered in Wang’s name was receiving millions of dollars linked to a type of cryptocurrency investment scam known as pig butchering, a Reuters investigation has found.

In total, crypto worth more than US$90 million (S$120 million) flowed into the account between January 2021 and November 2022.

The victim of one of the scams was a 71-year-old California man. According to blockchain analysis company Coinfirm, he sent money to crypto wallets that channelled more than US$100,000 into the account in Wang’s name.

The man’s family told Reuters he lost about US$2.7 million, his life savings, after falling prey to someone claiming to be an attractive young woman called Emma.

The previously unreported transactions provide rare insight into the finances of pig-butchering scams, which involve engaging unsuspecting people online.

Scammers cultivate trust and then persuade victims to invest in fraudulent crypto schemes, sometimes via fake websites built to look like legitimate trading platforms. Sometimes the targets initially receive real returns to trick them into believing the scheme is legitimate.

Such scams have drawn intensifying scrutiny from global law enforcement over the past year, but little is publicly known about the people behind them.

Wang, who is 41 according to the account registration documents, did not respond to detailed questions for this article. Neither did the Thai government, the Thai police or the Bangkok-based trade group Wang represented, the Thai-Asia Economic Exchange Trade Association.

Some aspects of the pig-butchering operation remain murky.

Lisa Wolk, a blockchain intelligence analyst at TRM, said the crypto account in Wang’s name “is a node in a money laundering network and not necessarily the ultimate recipient of funds”.

According to Erin West, a California prosecutor specialising in cybercrime, in January, she participated in a briefing about cyberfraud attended by agents from the US Federal Bureau of Investigation (FBI) and the US Secret Service.

A 72-page presentation prepared for the attendees, which Reuters reviewed, provides details on cyberscams operated from South-east Asia and cites Wang as among alleged beneficiaries.

The FBI and Secret Service declined to comment on the briefing, or on whether Wang was part of any investigation.

The briefing was given by the Global Anti-Scam Organisation, a US non-profit that advocates for fraud victims and investigates cases.

The crypto account registered to Wang was held at Binance, the world’s largest crypto exchange, according to three blockchain analysis firms.

In an August post on its website, the company said the number of reports of pig-butchering scams it had received in 2023 was double that of 2022, an increase it attributed to an influx of inexperienced crypto investors and scammers looking to exploit them.

Crypto fraud has emerged as a multi-billion-dollar criminal speciality that has entrapped victims around the world.

According to the FBI, in the United States alone, victims reported losses of US$2.6 billion from pig butchering and other crypto fraud in 2022, more than double the previous year.

The true scale of the losses is unknown because victims are often too embarrassed to report crimes to the authorities.

In April, the US Department of Justice said it had seized about US$112 million worth of crypto linked to pig-butchering scams, without identifying suspects. A warrant that resulted in the seizure of more than half that amount specified a Binance account registered in Thailand.

‘Absolute devastation’

West, the US prosecutor, said many victims in the hundreds of pig-butchering cases she has handled since early 2022 have lost more than US$1 million. Many are never able to recover their money. West said at least one victim died by suicide and another attempted suicide.

“I’ve never seen this level of absolute devastation,” she added.

Financial crime specialists say pig-butchering scams originated in China.

The US Treasury said in September that many such scams are now run by criminal organisations out of South-east Asia that use victims of labour trafficking to contact individuals around the world. Cases are difficult to prosecute.

Jeremy Douglas, regional representative of the United Nations Office on Drugs and Crime, told Reuters that perpetrators are typically “ruthless transnational organised crime syndicates” that thrive on corruption.

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One of the blockchain analysis firms told Reuters that several scams connected to deposits made into the account in Wang’s name were run from an industrial park on the Myanmar-Thai border.

According to two former workers and groups that support workers or scam victims, workers are trafficked to the area, known as KK Park, by gangs that force them to con people online.

China has announced a crackdown on cyberscams in recent months in partnership with Thailand and Myanmar.

Thailand has also said it is combating cyberfraud. Thai police in September announced the arrest of several Chinese nationals in connection with a crypto investment fraud operation.

Binance publicly said it had assisted Thai police with a probe into “a significant pig-butchering scam”, and that about US$277 million of assets were confiscated.

Thai police did not respond to questions about the operation or whether there was any connection to Wang.

Binance chief Changpeng Zhao stepped down and pleaded guilty to breaking US anti-money laundering laws on Nov 21, as part of a US$4.3 billion settlement resolving a years-long probe.

The US authorities said that over five years, Binance processed transactions by users who “laundered proceeds” of criminal activity, including scams.

Wang has continued to court officials. In August, he helped host an event in Bangkok, according to photos and a description published on the Thai-Asia association’s WeChat account.

Standing on a red carpet under a chandelier and flanked by floral decorations, Wang “warmly welcomed” the guests. They included a government minister, senior police officers and Chinese embassy officials, according to the trade group’s post.

Among those in attendance: Police Lieutenant-General Kornchai Klaiklueng, the assistant to the national police chief who previously headed up the cybercrime unit.

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