Pig Butchering Scam: A Growing National Security Threat

Pig Butchering: From Financial Fraud to National Security Threat

The multibillion-dollar scam known as “pig-butchering” is no longer just a consumer-fraud issue; it has crossed a new threshold, raising serious national security concerns. In a recent podcast, Chainalysis' head of national security intelligence, Andrew Fierman, and former prosecutor Erin West, founder of Operation Shamrock, discussed how pig butchering is evolving into a threat to national security.

West emphasized the importance of education and awareness in combating crypto scams, stating, “So if anybody is touching money in any way, you’re part of this. So you need to be prepared to understand the threat and the gravity of what’s happening on a national security level.”

A pig-butchering scam is a long-term fraud strategy where criminals build trust with victims, often through romance or friendship, before luring them into fake cryptocurrency investment platforms and draining their funds.

The Escalating Scale of Pig Butchering Scams

The duo discussed how fraud rings across Southeast Asia operate dormitory-style scam compounds. Trafficked workers contact unsuspecting victims, cultivate trust through romantic relationships, and then pressure them into fake crypto investments, ultimately siphoning off their funds.

In 2023, the US Department of Justice (DOJ) seized approximately $112 million in crypto assets linked to pig-butchering scams. A February report from Chainalysis revealed that pig-butchering scams alone increased by nearly 40% year-over-year in 2024, while overall crypto scam revenues exceeded $9.9 billion.

Compounding the problem, victims often face a second wave of fraud. After the initial scam, they are frequently contacted by fake recovery firms promising to help recover their lost funds.

“Once this happens to you, you will be put on a list […] and you are even more likely to get hit up again,” West warned.

Fierman and West highlighted that these scams have matured into a sophisticated transnational crime model, integrating human trafficking, money laundering, and crypto rails, making them far more complex than traditional fraud.

However, Fierman pointed out that blockchain’s inherent transparency provides an opportunity for regulators, exchanges, and virtual asset service providers (VASPs) to disrupt these scams.

“One of the benefits of the blockchain, at least as the mechanism for this, is that there is potential opportunity for disruption if it’s enabled right,” he said. “And the transparency of the blockchain gives that opportunity to potentially disrupt at the point of cash out.”

Authorities' Response

Recognizing the broader impact, governments are actively stepping in. On November 12, the DOJ announced the formation of a “Scam Center Strike Force” targeting Chinese-linked transnational criminal organizations behind crypto investment fraud in Southeast Asia.

Simultaneously, regional law enforcement departments are enforcing freezes and sanctions to combat the issue. On August 27, law enforcement in the Asia Pacific (APAC) region collaborated with Chainalysis, OKX, Tether, and Binance to freeze $47 million in pig butchering funds.

The strategy is clear: disrupt on-ramp and off-ramp points for scammers, sanction facilitators, and build private-public partnerships.

“My advocacy about transnational organised crime has been consistently: Use every tool in our arsenal. Sanctions, indictments, diplomatic pressure,” West stated.

Red Flags to Watch Out For

Like many scams, pig butchering schemes have telltale signs. These often involve emotional manipulation, such as someone expressing strong feelings too quickly through online channels, particularly without meeting in person.

Suspicion should increase if the individual refuses to share personal information or professional credentials.

A major red flag is when the person begins asking for money, even if they claim it’s for an emergency. This also includes promises of risk-free investments and easy money, often accompanied by fake screenshots of substantial profits to entice victims to invest.