Pig Butchering Scams Targeting US Investors
United States authorities have made significant strides this week in tackling a major pig butchering scam, recovering millions of dollars in cryptocurrency, and sending a former bank CEO to prison. The US District Attorney’s Office for the Eastern District of North Carolina announced the seizure of nearly $5 million worth of Tether (USDT).
Authorities linked the funds to a pig butchering ring, a type of scam in which criminals build online relationships with victims to trick them into investing in fake cryptocurrency schemes. US Attorney Michael Easley highlighted the growing threat of such scams, noting that many Americans have lost their life savings through them.
In one case, the scammers convinced a victim to invest his entire individual retirement savings into what he believed was a legitimate crypto trading platform. Instead, the scammer funneled the funds into the accounts they controlled. Authorities, including federal agents and FBI analysts, tracked the stolen money across multiple crypto wallets, and with help from Tether, they successfully seized the funds.
Former Bank CEO Jailed for Embezzling $47 Million
Earlier in the week, Shan Hanes, the ex-CEO of Heartland Tri-State Bank in Elkhart, Kansas, received a prison sentence of over 24 years. Hanes had embezzled $47.1 million from his bank in an attempt to recover losses he suffered in a pig butchering scam.
Between May and July 2023, Hanes made 11 wire transfers from the bank’s accounts to crypto wallets, hoping to recover his money. However, the scammers continued to pressure him for more funds, leading him to steal from a local church, an investment club, and even his daughter’s college savings account.
Hanes’ actions led to the collapse of Heartland Tri-State Bank, with the Federal Deposit Insurance Corporation (FDIC) covering the $47.1 million loss. However, the damage extended beyond the bank, with investors losing an additional $9 million due to Hanes’ fraudulent activities.
Using Fake Crypto Platforms to Defraud Victims
Pig butchering scams continue to be a serious issue, with scammers targeting more people through social media and dating sites. The scams typically start with criminals posing as romantic interests or trusted acquaintances, who then manipulate their targets into investing in fake cryptocurrency platforms.
The schemes often involve elaborate tactics to build trust before the final financial blow is delivered. In addition, a security expert on X warned about a new scam involving an Asian woman with adequate knowledge of crypto trading. She tricks victims into investing in a fake crypto platform and charges them a 15% fee when they try to withdraw their so-called profits.
Crypto Pyramid Scheme Leader Extradited from Thailand to China
Meanwhile, Zhang Moumou, the brain behind the famous crypto pyramid scheme, has been sent back to China from Thailand to face appropriate charges. This extradition is a significant development in the fight against economic crimes involving digital currencies.
Zhang, who led the MBI Group, orchestrated an online pyramid scheme that scammed millions of people and accumulated billions in illegal profits. Zhang’s extradition is the first instance of such a transfer between Thailand and China under the 1999 China-Thailand Extradition Treaty. Zhang had been on the run since November 2020, when the Chongqing Municipal Public Security Bureau formally filed a case against him.
The MBI Group’s $14 Billion Scam
The MBI Group, which Zhang led, has been operating since 2012. It lured victims with promises of high returns on investments in virtual digital currency. The scheme required participants to pay fees ranging from 700 to 245,000 yuan ($98 to $34,316) to join.
Earnings were tied to recruiting new members and the amount of money they invested. The operation entrapped more than 10 million people and involved over 100 billion yuan ($14 billion).
China’s pursuit of Zhang intensified after the issuance of an Interpol red notice in March 2021. This international alert marked Zhang as one of China’s most wanted economic crime suspects. Thai authorities eventually captured Zhang on July 21, 2022.
Zhang Moumou’s Extradition
However, Zhang’s extradition to China was not immediate. The legal process required careful adherence to the terms of the bilateral treaty between China and Thailand. The Thai Court of Appeal made a final decision on May 21, 2024, to deport Zhang Moumou.
The government approved this decision on August 14, allowing Zhang to be sent back to China on August 20. Despite China’s strict regulations on cryptocurrency, including a comprehensive ban on Bitcoin transactions implemented in 2021, the population remains vulnerable to crypto-related scams.