Cybercriminals with a deep understanding of cryptocurrencies are increasingly opting for “pig butchering” scams over the more drawn-out Ponzi schemes, adapting to intensified law enforcement scrutiny. Chainalysis, a leader in blockchain security and compliance, highlighted this trend in the second part of its crypto crime mid-year update released on August 29, 2024.
Evolution of Scam Tactics
Chainalysis reports a notable shift in scam strategies, with criminals favoring shorter, more devastating operations. The duration of these scams has dramatically reduced, with the average lifespan of a crypto scam decreasing from 271 days in 2020 to just 42 days in 2024. This change is largely due to effective law enforcement actions, which have compelled scammers to frequently change their operational infrastructure, making it challenging to track and dismantle these schemes on-chain.
Eric Jardine, Chainalysis’s cybercrimes research lead, remarked, “These interventions have forced scammers into more rapidly turning over their infrastructure, making them harder to track on-chain. Still, harder to track and shutdown does not mean impossible and the record of law enforcement interventions and asset recovery is encouraging.”
Pig butchering scams, where scammers cultivate online relationships only to defraud victims later, have seen a significant uptick. Such scams involve the scammer ‘fattening up’ the victim before convincing them to invest in fraudulent crypto projects, leading to substantial financial losses. This technique is increasingly preferred due to its targeted approach and the rapid monetization of trust.
The report also noted that 43% of scam inflows this year have gone to wallets activated in 2024, indicating a surge in new scams employing this method. The increasing enforcement and proactive measures by stablecoin issuers to blacklist scam addresses have further influenced scammers to pivot towards these more focused fraud tactics.
Scam Operations and Social Media Exploitation
Chainalysis uncovered that scammers are not only modifying their scamming strategies but are also innovating in their methods to engage with potential victims. Many scammers are now purchasing seasoned social media profiles from platforms like Facebook, Tinder, and Match.com through China-based services, which they then use to execute pig butchering campaigns.
These illicit services selling social media accounts have seen a steady increase in crypto flows, amassing more than $10 million over the past two years. Approximately two million social media profiles may have been acquired for use in these scams.
Jardine elaborated on the demographics most susceptible to these interpersonal scams, noting that the elderly, individuals undergoing significant life transitions, and those seeking companionship or romance online are particularly vulnerable.
The report also sheds light on Huione Guarantee, an illicit marketplace that has processed over $49 billion in cryptocurrency transactions since 2021. This platform facilitates a range of illegal activities, including pig butchering, investment fraud, and money laundering, by connecting buyers and sellers on platforms such as Telegram.
The transition from elaborate Ponzi schemes to more concise and targeted pig butchering scams represents a significant shift in the landscape of cybercrime. This evolution underscores the adaptability of scammers in response to changing regulatory and enforcement environments, posing ongoing challenges for both potential victims and law enforcement agencies.
