'Pig-butchering' crypto scams thriving in Southeast Asia

AT a Thai police headquarters in October 2022, Chinese businessman Wang Yicheng congratulated one of Bangkok's most senior cybercrime investigators on his recent promotion, presenting the official with a large bouquet of flowers wrapped in red paper and a bow.

Wang, the vice-president of a local Chinese trade group, wished the new cybercrime investigator "smooth work and new achievements", according to the group's website, which displays photographs of the event.

Over the past two years, Wang has forged relationships with members of Thailand's law enforcement and political elite, the trade group's online posts show.

During that time, a cryptocurrency account registered in Wang's name was receiving millions of dollars linked to a type of cryptocurrency investment scam known as pig butchering.

In total, crypto worth more than US$90 million flowed into the account between January 2021 and November 2022, according to registration documents and transaction logs reviewed by Reuters.

The victim of one of the scams was a 71-year-old California man. He sent money to crypto wallets that channelled over US$100,000 into the account in Wang's name, according to blockchain analysis company, Coinfirm.

The man's family told Reuters he lost about US$2.7 million, his life savings, after falling prey to someone claiming to be an attractive young woman called Emma.

The previously unreported transactions provide rare insight into the finances of pig-butchering scams, which involve engaging unsuspecting people online.

Crypto fraud has emerged as a multibillion-dollar criminal specialty that has entrapped victims around the world.

In the United States alone, victims reported losses of US$2.6 billion from pig butchering and other crypto fraud last year, more than double the previous year, according to the FBI.

Wang, who is 41 according to the account registration documents, didn't respond to detailed questions. Neither did the Thai government, police or the Bangkok-based trade group Wang represented, the Thai-Asia Economic Exchange Trade Association.

Lisa Wolk, a blockchain intelligence analyst at TRM, said the crypto account in Wang's name "is a node in a money-laundering network and not necessarily the ultimate recipient of funds".

The crypto account registered to Wang was held at Binance, the world's largest crypto exchange. Asked about the account, Binance spokesperson Jessica Jung declined to comment.

In an August post on its website, the company said the number of reports of pig-butchering scams it had received this year was double that of 2022, due to an influx of inexperienced crypto investors and scammers looking to exploit them.

In April, the US Department of Justice said it seized about US$112 million worth of crypto linked to pig-butchering scams, without identifying suspects.

A warrant that resulted in the seizure of more than half that amount specified a Binance account registered in Thailand.

Pig-butchering scams originated in China, financial crime specialists say.

Many are now run by criminal organisations out of Southeast Asia that use victims of labour trafficking to contact individuals around the world, the US Treasury said in September.

Cases are difficult to prosecute. Perpetrators are typically "ruthless transnational organised crime syndicates" that thrive on corruption, Jeremy Douglas, regional representative of the United Nations Office on Drugs and Crime, told Reuters.

Several scams connected to deposits made into the account in Wang's name were run from an industrial park on the Myanmar-Thai border, one of the blockchain analysis firms told Reuters.

Workers are trafficked to the area, known as KK Park, by gangs that force them to con people online, according to two former workers and groups that support workers or scam victims.

The Thai government, Myanmar's ruling military junta and the Myanmar border guard that controls the area didn't respond to questions about the industrial park or whether gangs operate there. Reuters was unable to contact the park's owners.

China has announced a crackdown on cyber scams in recent months in partnership with Thailand and Myanmar. Thailand has also said it is combating cyber fraud.

Nearly all of the crypto deposited in the Wang-registered account was moved to other wallets, the transaction records reviewed by Reuters show.

Between January 2021 and October 2022, about US$87.5 million was transferred to almost 50 other crypto wallets, including at least five registered at regionally based crypto exchanges, Coinfirm said.

On Nov 3, 2022, activity in the crypto account registered to Wang abruptly stopped, financial records show.

The writers are from Reuters

The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times

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