Crypto scammers ditch Ponzi schemes for emotionally manipulative scams, says Chainalysis

Crypto scammers are shifting from large-scale Ponzi schemes to more focused strategies like emotionally manipulative pig butchering, work-from-home scams, drainers, and address poisoning, blockchain analytical firm Chainalysis stated in a new report

According to the firm, both on-chain and off-chain activity indicate that scammers are refining their tactics to conduct shorter and more profitable campaigns against crypto users.

Pig butchering

Chainalysis observed a rise in pig butchering scams this year as fraudsters move away from complex Ponzi schemes to these more targeted attacks.

Pig butchering scams are named for how criminals “fatten up” their victims to maximize the value they extract. Typically, scammers build a romantic relationship with the victim through text messages or dating apps, gradually convincing them to invest in a fake opportunity.

This type of scam has gained more notoriety this year, with the authorities extensively warning about them. However, Chainalysis noted that individuals behind these scams are often victims themselves as they are trafficked to Southeast Asia and forced to work in labor camps within large compounds to carry out these schemes.

The blockchain analytical firm pointed out that a wallet linked to Myanmar’s infamous pig butchering compound, KK Park, has accumulated over $100 million this year. Chainalysis suggests these funds could stem from both scam victims and ransom payments made by families attempting to rescue their trafficked relatives.

Money laundering

Meanwhile, Chainalysis highlighted the significant role Huione Guarantee, an online marketplace managed by a Cambodian conglomerate, plays in helping scammers launder their illicit funds.

According to the firm, the marketplace has processed $49 billion in crypto transactions, a substantial amount of which originated from pig butchering scams. It stated:

“Huione Guarantee appears heavily used for illicit crypto-based activities, including pig butchering, investment fraud, and money laundering.”

The marketplace has claimed neutrality for its users’ actions, saying it only acts as a facilitator. However, the platform allows its users to buy or sell almost anything, including digital assets, without regulating their transactions or scrutinizing the sources of the funds.

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