Additional Coverage:
- Feds seize $225 million in crypto from crooks who ran giant ‘pig butchering’ operation (fortune.com)
Justice Department Cracks Down on “Pig Butchering” Crypto Scam, Seizes $225 Million
The Department of Justice (DOJ) announced a major victory Wednesday in the fight against cryptocurrency fraud, seizing a record $225 million in USDT stablecoins connected to a so-called “pig butchering” operation. This complex scam involves criminals cultivating trust with victims over time before manipulating them into large financial transactions.
The DOJ alleges the funds were laundered through the cryptocurrency exchange OKX. This marks the largest seizure of its kind in U.S. history related to cryptocurrency confidence schemes.
While the DOJ’s complaint doesn’t name specific perpetrators, it links the funds to a suspected “scam compound” in the Philippines. These compounds often house numerous workers who systematically deceive victims into transferring cryptocurrency or cash. Reports indicate that many of these workers are victims of human trafficking, forced into these operations by transnational criminal rings.
The investigation identified over 430 victims linked to 144 OKX accounts used in the laundering scheme. Among the victims is Shan Hanes, the former CEO of Heartland Tri-State Bank in Kansas. Hanes himself fell prey to a similar scam, ultimately leading to his conviction and a 24-year prison sentence for embezzling $47 million from the bank.
“These schemes inflict significant harm on American victims, costing them billions of dollars annually,” stated Matthew Galeotti, head of the DOJ’s criminal division.
The FBI reports a dramatic surge in cryptocurrency-related losses over the past five years. Between 2023 and 2024, Americans lost $9.3 billion, a staggering 66% increase.
The number of complaints also more than doubled to almost 150,000. Extortion and investment fraud rank as the most common crypto-related crimes.
Extortion involves manipulating victims with compromising photos or videos, while investment fraud lures victims with promises of exorbitant returns.
Hanes’s case serves as a stark example of investment fraud. His lawyer poignantly described him as “the pig that was butchered,” highlighting the devastating consequences of these sophisticated scams. Hanes expressed remorse for the damage caused to the bank and its stockholders.