According to Chainalysis, crypto scammers are shifting away from large-scale Ponzi schemes to more targeted tactics like pig butchering scams. Pig butchering scams have gained notoriety in the past year, with authorities extensively warning about them.
“Pig butchering” scams, also known as “sha zhu pan” scams, are a complex type of online fraud. In these scams, fraudsters create fake identities to lure people into bogus investment schemes, often involving cryptocurrencies.
The name comes from the way these scammers work: they “fatten up” their victims by building trust over time, then “slaughter” them by stealing their money.
The scam usually starts when fraudsters reach out to potential victims through random messages on dating apps, social media, or text. They start friendly conversations and slowly gain the victim’s trust.
Once the victim feels comfortable, the scammers introduce the idea of making money through cryptocurrency investments, often with promises of extremely high returns that seem too good to be true.
Victims are then directed to fake apps or websites that look real, sometimes even copying legitimate financial institutions. As victims deposit money, they might see their “investment account” grow because the scammers manipulate the system to create an illusion of success. This fake success encourages victims to invest even more money, sometimes even borrowing funds.
The scam reaches its peak when the fraudsters, after taking as much money as possible, shut down the accounts and disappear, leaving the victims no way to get their money back. These scams can cause serious financial and emotional harm to those who fall for them.
KK Park, Myawaddy, Myanmar
An example highlighted by Chainalysis brings attention to KK Park in Myawaddy, Myanmar, notorious for being one of Southeast Asia’s most nefarious pig butchering scam hubs.
This center belongs to an extensive network of human trafficking activities that prey on vulnerable individuals, compelling them to participate in online scams that largely deceive victims through romantic and investment ruses.
Reports indicate that KK Park confines over 2,000 trafficked individuals, forcing them into relentless scam operations under severe conditions, working grueling hours with looming threats of violence and neglect.
The facility operates with a unique structure where a single entity owns the property and leases it to various firms executing the scams. These firms frequently use guards to prevent any escape attempts, effectively turning the compound into a high-security prison.
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Scammers use fresh wallets
The report also revealed that one noticeable trend this year is the high percentage of scam money going to new crypto wallets that only became active in 2024.
This suggests a rise in new scams, as nearly 43% of the scam-related funds this year have gone to these new wallets. In comparison, only about 30% of scam money in 2022 went to wallets that were new that year.
“Despite the trend towards the use of fresh on-chain addresses by scammers, some 57% of 2024 YTD scam inflows are still going to wallets that became active before 2024,” Chainalysis said.
“One of the largest single wallets associated with scamming active this year consolidates funds from many scams operating out of Myanmar’s most notorious pig butchering compound, KK Park” that have done over $100 million this year alone.
Social media accounts and scams
Scammers at KK Park excel at altering their online presence, often purchasing fake social media profiles from services in China to aid their schemes. The flow of money from the KK Park scam wallet to fraud shops selling these fake accounts illustrates their strategic use of these tools.
In recent years, the amount of cryptocurrency sent to services that sell fake social media accounts has steadily increased. Between 2022 and 2024, approximately $10.5 million was spent on these accounts, suggesting scammers acquired between 525,000 and 2.1 million fake profiles to deceive victims.
Additionally, Chainalysis reports that scams are becoming shorter in duration. The average scam lasted 271 days in 2020 but has decreased to just 42 days by 2024. Scammers are moving from long-running schemes to shorter, more targeted attacks, partly due to improved law enforcement efforts.
