Cross-Border Operation Seizes $50M in USDT From Crypto Fraud Ring
In a significant crackdown on cross-border crypto fraud, Tether, a prominent stablecoin issuer, has frozen nearly $50 million in USDT. This action was part of a collaborative effort with blockchain intelligence firm Chainalysis, leading crypto exchanges Binance and OKX, and regional law enforcement agencies. The operation targeted a well-orchestrated “pig butchering” scam based in Southeast Asia.
The term “pig butchering” refers to the fraudulent tactic where scammers build trust with their victims, akin to fattening a pig, before making off with substantial financial gains. These scams have evolved into global criminal enterprises, combining elements of investment fraud and human trafficking. Victims are lured via social media, dating apps, or even wrong-number text messages. Once a relationship is established, scammers pressure individuals into fake investment schemes, often involving cryptocurrencies.
Industry Collaboration: A Powerful Tool Against Crypto Crime
Chainalysis played a pivotal role in tracing the fraudulent movement of nearly $50 million in stolen USDT across 19 addresses, eventually narrowing it down to five main wallets. Between November 2022 and July 2023, victims unknowingly transferred assets to scam-controlled addresses, which were then consolidated into a central wallet. From there, $46.9 million was moved to intermediary accounts before being dispersed into five final wallets.
Investigators discovered that in an attempt to legitimize the scheme, scammers sent back small amounts, such as $63,900 worth of USDT from one wallet, to some victims. Following thorough analysis, Tether froze the funds in June 2024 at the request of Asia-Pacific authorities.
This operation is reminiscent of a landmark case in November 2023, where Tether and OKX collaborated with the U.S. Department of Justice to freeze $225 million in USDT linked to international human trafficking and romance scams. A subsequent court order in June 2024 authorized the seizure and burning of these assets, marking a historic recovery for the U.S. Secret Service.
Tether’s Role and Broader Implications
Unlike other cryptocurrencies such as Ether and Bitcoin, Tether has the technical means to freeze known illicit funds. Tether CEO Paolo Ardoino emphasized the company’s commitment to supporting global law enforcement in disrupting pig butchering scams and aiding in victim restitution.
Erin Fracolli, Binance’s Head of Intelligence and Investigations, highlighted the importance of public-private cooperation in combating sophisticated financial crime networks. “Our collaboration underscores the essential role of partnerships in dismantling criminal operations and working towards victim compensation,” she noted. Binance actively shares intelligence with agencies and other exchanges to enhance blockchain security.
An OKX investigator pointed out that pig butchering scams now have a global reach, targeting victims worldwide based on vulnerabilities rather than intelligence. This underscores the importance of awareness and preventive measures.
The crackdown is part of Tether’s broader campaign against illicit finance. In September 2024, Tether reported freezing over 1,850 wallets linked to crimes across 45 jurisdictions, recovering $1.86 billion in assets in collaboration with 180 agencies. This demonstrates Tether’s expanding enforcement footprint, with the company also aiding in cases tied to sanctioned Russian exchange Garantex and North Korea’s Lazarus cybercrime group.
Nevertheless, challenges persist. A May 2025 report by AMLBot highlighted delays in Tether’s blacklisting process due to its two-step multisignature system, potentially allowing criminals to move funds before restrictions take effect.
Pig Butchering Scams: A Growing Threat to Crypto Investors
Pig butchering scams have emerged as a significant threat to crypto investors, accounting for $3.6 billion in losses in 2024 alone, according to Web3 security firm Cyvers. These scams typically involve grooming victims over extended periods before draining their funds, with the Ethereum blockchain being a primary target.
Cyvers reported a 40% increase in cyber threats last year, with 165 incidents causing $2.3 billion in damages. Access control breaches were the most common attack vector, responsible for $1.9 billion in losses, while smart contract exploits and address poisoning added another $525 million.
Governments and industry players are intensifying their response. In June, the U.S. Department of Justice moved to seize $225.3 million in Tether’s USDT, marking the largest crypto seizure linked to pig butchering to date. The funds were laundered through OKX exchange wallets, many held under the names of trafficking victims. Coinbase assisted the U.S. Secret Service in tracing the illicit flows and identifying over 130 defrauded customers.
Private-sector collaboration is also expanding. Binance recently joined T3+, a global initiative launched by Tether, TRON, and TRM Labs, which has frozen more than $250 million in illicit assets since late 2024. In its first joint case, T3+ partners blocked nearly $6 million tied to a pig butchering operation.
Chainalysis data shows law enforcement projects in Canada and the U.S. have since prevented over $70 million in additional fraud. With crypto-related investment scams driving $5.8 billion in losses in 2024 alone, officials emphasize the importance of such partnerships in safeguarding the sector.
For further details, please visit the source link: Cryptorank News.
