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Cryptocurrency Fraud
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Fraud Management & Cybercrime

Six Crypto Wallets Linked to Laundering Confidence Scam Proceeds

Rashmi Ramesh (rashmiramesh_) •
April 4, 2023    

The U.S. Department of Justice seized virtual assets worth $112 million in a crackdown on “pig butchering,” a romance-based cryptocurrency investment scam.

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Authorities seized more than half the amount from an account in Los Angeles. Cybercriminals used six accounts to launder funds from cryptocurrency confidence scams, federal prosecutors said.

The scammers enticed victims, with whom they built long-term, online relationships, to invest in fraudulent cryptocurrency trading platforms. They funneled the invested funds to their own accounts. In Los Angeles alone, authorities identified at least 10 victims, with the last transfer of cryptocurrency occurring on March 21.

Pig butchering scammers typically target victims through social networking, dating websites, and “misdialed” phone calls and text messages. After establishing a connection with the victims, the scammers lure them into “lucrative” crypto investment schemes, even setting up fabricated websites and mobile apps that display bogus investment portfolio with large returns to add an air of legitimacy to the scams. They can trick victims into downloading malicious smart contracts on their phones to access their through cryptocurrency wallet software. The fraud gets its name from its Chinese name, Sha Zhu Pan, which translates to pig butchering – the pig in the scam being the victims.

Some scammers ask victims to withdraw cash and deposit into Bitcoin ATMs to make it easier to steal (see:‘Pig Butchering’ Online Scam Sweeping English Speakers).

“The use of digital currency to commit fraud presents new challenges to victims and to law enforcement trying to recover lost funds – which likely total billions of dollars in the so-called ‘pig butchering’ schemes,” said Martin Estrada, United States Attorney for the Central District of California.

Cryptocurrency fraud, including pig butchering, made up most of 2022’s $3.3 billion investment fraud scams recorded by the FBI’s Internet Crimes Complaint Center. These frauds grew 183% from 2021 to $2.57 billion in reported losses in the United States last year.