KEY POINTS
- One of the victims was a Massachusetts resident who was tricked into wiring over $400K to a crypto wallet
- The investigation later uncovered 36 other Americans nationwide who were victimized by the scheme
- A recent study found that over $75 billion may have been pilfered by pig butchering scammers from victims worldwide
The Massachusetts U.S. Attorney's Office on Wednesday moved to recover some $2.3 million worth cryptocurrencies, which were believed to be part of a 'pig butchering' fraud scheme as part of a romance scam.
Specifically, the government filed a civil forfeiture action to recover various cryptocurrencies such as USD Coin (USDC), Tether (USDT), Tron (TRX), Solana (SOL), Binance Coin (BNB), Cardano (ADA), and Ether (ETH) linked to two Binance accounts. The various cryptocurrencies are collectively valued at an estimated $2.3 million, the District of Massachusetts' Attorney's Office said in a press release.
Civil forfeiture is a legal process wherein the government can seize an individual's personal property if the property is suspected of criminal involvement or if the property represents proceeds from a crime.
The move comes following an investigation that kicked off in spring 2023 over a "pig butchering" scheme that targeted a Massachusetts resident who was tricked into wiring over $400,000 to a crypto wallet "hosted by a legitimate cryptocurrency exchange," the office said.
A pig butchering scheme in the crypto industry has been described as one wherein scammers use manipulative tactics to obtain funds from victims. Among the strategies used are establishing trust then enticing the victim into investing in a fraudulent crypto scheme. "The 'butchering' or 'slaughtering' of the victim occurs once the victim's assets, or funds, are stolen by the criminal, or criminals, ultimately causing the victim financial and emotional harm."
Some of the funds pilfered from the Massachusetts resident were traced back to two Binance accounts, which were seized earlier this year, the office said. The probe later revealed that "the accounts from which the cryptocurrency was seized had been associated with funds from 36 other victims of fraud" in different states.
In a late February study by John Griffin, finance professor at the University of Texas in Austin, and graduate student Kevin Mei, it was revealed that more than $75 billion may have been stolen worldwide by pig-butchering perpetrators. "Our findings highlight how the 'reputable' crypto industry provides common gateways and exit points for massive amounts of criminal capital flows," they said in the study.
They found that the pig butchering scammers "interact freely with major crypto exchanges," including OKX, Huobi, and embattled Binance, the world's largest cryptocurrency exchange by trading volume.
Meanwhile, there are also other crypto scams that have recently been proliferating in the digital asset ecosystem, including rug pulls, wherein project developers raise funds from investors who believe in their proposed projects' potential, only for the team to disappear after the funds are collected.
