How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering

54 Pages Posted: 28 Mar 2024

See all articles by John M. Griffin

John M. Griffin

University of Texas at Austin - Department of Finance

Kevin Mei

University of Texas at Austin - McCombs School of Business

Date Written: February 29, 2024

Abstract

Through blockchain addresses used by ‘‘pig butchering’’ victims, we trace crypto flows and uncover methods commonly used by scammers to obfuscate their activities, including multiple transactions, swapping between cryptocurrencies through DeFi smart contracts, and bridging across blockchains. The perpetrators interact freely with major crypto exchanges, sending over 104,000 small potential inducement payments to build trust with victims. Funds exit the crypto network in large quantities, mostly in Tether, through less transparent but large exchanges—Binance, Huobi, and OKX. These criminal enterprises pay approximately 87 basis points in transaction fees and appear to have recently moved at least $75.3 billion into suspicious exchange deposit accounts, including $15.2 billion from exchanges commonly used by U.S. investors. Our findings highlight how the ‘‘reputable’’ crypto industry provides the common gateways and exit points for massive amounts of criminal capital flows. We hope these findings will help shed light on and ultimately stop these heinous crimes.

Keywords: Cryptocurrency, Pig Butchering Scams, Money Laundering, Slavery

JEL Classification: G23, G28

Suggested Citation

Griffin, John M. and Mei, Kevin, How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering (February 29, 2024). Available at SSRN: https://ssrn.com/abstract=4742235 or http://dx.doi.org/10.2139/ssrn.4742235

John M. Griffin (Contact Author)

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-6621 (Phone)

HOME PAGE: http://www.jgriffin.info

Kevin Mei

University of Texas at Austin - McCombs School of Business ( email )

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