The Department of Justice has seized $225 million in crypto linked to a “pig butchering” scam, the largest seizure of its kind, revealing ties to a Philippine compound.
The Department of Justice (DOJ) has announced its intention to seize $225 million in cryptocurrency from a large-scale “pig butchering” operation. This term describes a type of confidence scheme where fraudsters cultivate trust with victims over time, ultimately manipulating them into handing over substantial sums of money. The funds, held in USDT stablecoins, were reportedly laundered through the crypto exchange OKX, according to the Justice Department. This action marks the U.S.’s largest ever seizure of funds specifically tied to cryptocurrency confidence schemes.
Anatomy of the Scam
While federal prosecutors did not name a single perpetrator in the complaint, they indicated the seized funds were linked to a “scam compound” located in the Philippines. These compounds typically house scores of workers who operate in shifts, tasked with luring victims into parting ways with their crypto or cash. According to the United Nations, many of these workers are employed by transnational criminal rings and are reportedly forced to work against their will under coercive conditions. The scheme involves building a relationship with the victim, often online, before gradually introducing them to fraudulent investment opportunities that promise outsized returns, leading to significant financial losses.
Tracing Illicit Funds
The DOJ’s investigation successfully identified more than 430 victims directly tied to the 144 OKX accounts through which their funds were allegedly laundered. A prominent example highlighted in the case is Shan Hanes, the former CEO of Heartland Tri-State Bank in Kansas. In August 2024, Hanes was sentenced to 24 years in prison after confessing to stealing $47 million from his bank’s funds. He reportedly invested this money in what he believed was a legitimate cryptocurrency investment opportunity, which later turned out to be the “pig butchering” scam. Hanes’ lawyer, at the time of his sentencing, publicly characterized his client’s situation by stating, “He was the pig that was butchered.” The lawyer added, “Mr. Hanes’s vulnerability to the Pig Butcher scheme caused him to make some very bad decisions, for which he is truly sorry for causing damage to the bank and loss to the Stockholders.”
A Broader Look at Crypto Fraud
The seizure underscores a wider trend of accelerating cryptocurrency scams in the U.S. Matthew Galeotti, head of the DOJ’s criminal division, commented on the impact of such schemes, stating in a public statement, “These schemes harm American victims, costing them billions of dollars every year.” According to the most recent annual report on internet crime from the Federal Bureau of Investigation (FBI), losses from cryptocurrency scams have notably accelerated in the U.S. over the past five years. The FBI’s data indicates a significant surge from 2023 to 2024, with the money Americans lost skyrocketing by 66% to a total of $9.3 billion. During the same period, the number of complaints the agency received related to such scams more than doubled, reaching nearly 150,000.
The FBI’s report also categorizes the most common types of crimes linked to cryptocurrencies. The most frequent crime reported was extortion, which typically involves bad actors manipulating photos or videos to create explicit content and then luring victims into sending cryptocurrency payments under threat. The second most common type of crypto-related crime identified was investment fraud. This category involves criminals promising victims outsized, unrealistic returns if they send money to a fraudulent scheme. The case of Shan Hanes, the former bank CEO, falls directly into this latter category of investment fraud.
The success of this $225 million seizure represents a significant victory for law enforcement in their ongoing battle against sophisticated cryptocurrency confidence schemes. It also serves as a potent reminder of the severe financial and personal consequences that victims can face, particularly when large sums of digital assets are involved. The DOJ’s action against this “pig butchering” operation signals continued efforts to pursue and recover illicit funds from such transnational criminal enterprises.
