- US prosecutors seized nearly $5M worth of Tether ($USDT).
- Funds were linked to a crypto scam involving ‘pig butchering,’ where victims were lured into fake investment schemes.
- Shan Hanes, ex-CEO of Heartland Tri-State Bank, will go to prison for 24+ years for embezzling $47.1M.
- The scammers transferred the funds to crypto wallets, leading to the bank’s collapse.
The US Department of Justice (DoJ) nabbed a ‘pig butcher’ scam artist and seized $5M of Tether ($USDT).
Crypto scammers have come a long way in the past few years, devising increasingly sophisticated ways of separating crypto investors from their assets. Law enforcement has stepped up its own efforts, devoting increasing resources to cracking down on scammers.
What does the most recent success story mean for crypto, and how will the industry react? Let’s find out.
A $5M Butcher Bust
The U.S. Department of Justice announced the disruption of a significant investment fraud scheme, resulting in the seizure of nearly $5M in cryptocurrency.
Scammers were luring the victims into fraudulent investment opportunities, primarily through social engineering tactics.
As highlighted by the FBI’s Robert Dewitt, the agency stepped up its efforts to protect consumers and maintain the integrity of financial markets.
The Case of Surprisingly Sophisticated ‘Pig Butcher’ Scams
The ‘pig butcher’ phrase originated in China, and while it sounds both humorous and a bit ugly, it hides an equally ugly scam. Moreover, pig butcher scams vary, but the basic format is the same:
- Scammers contact potential clients via social media or messaging networks.
- Over time, the scammers build a relationship with the victim, ‘fattening’ them.
- The scammers direct the victim to a fake crypto exchange, typically built to imitate more popular, reputable exchanges.
- The victim invests in the fake exchange and may even be able to withdraw funds at first.
- The victim loses their ability to withdraw funds as they sink deeper into the scammer’s clutches.
In the end, the victim is ‘sliced and diced’ with nothing left: clean, efficient, and ruthless financial butchery. A dramatic example of this just occurred in Kansas, USA.
Former Bank CEO Stole $47M As Part of Pig Butcher Scam
Despite his financial acumen, former Heartland Tri-State Bank CEO Shan Hanes fell victim to a pig butcher scheme. And desperate to cover the growing losses, he began pilfering funds from a local church, family, and eventually his own bank.
The money was transferred (and lost) to crypto wallets controlled by the scammers. Heartland Tri-State Bank went bankrupt as a result, and Shan Hanes now faces 293 months in prison.
Together, the two convictions highlight the ongoing dance between crypto scammers and law enforcement. Which side will come out on top next time?
At the very least, growing awareness of social engineering tactics should help more investors – large and small – avoid the more devastating pig butcher schemes.
Resources
- Investment Fraud Disrupted by Seizure of $5 Million in Cryptocurrency (US Department of Justice)
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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