FinCrime Central - Latest AML/CFT News & Vendor Directory

Record-Breaking $12.4B Lost to AI-Powered Pig Butchering and Romance Scams in 2024

pig butchering romance scam crypto fraud

A new report has revealed that 2024 was a record-breaking year for digital asset fraud, with cybercriminals stealing over $12.4 billion from unsuspecting victims. The surge in illicit activities was largely driven by pig butchering scams and romance scams, both of which saw alarming increases in revenue.

The Crypto Scam Revenue 2024 report by blockchain analytics firm Chainalysis estimated that $9.9 billion was lost to various scams. However, as more illicit addresses are identified, analysts expect the final figure to rise to $12.4 billion. This marks a troubling trend, as scam-related proceeds have grown by an average of 24 percent annually since Chainalysis first began reporting on these crimes.

HYIS scams, which promise unrealistic, risk-free returns, remained the top fraud category. However, despite a 37 percent decrease in revenue, these scams still attracted significant sums. The decline in HYIS scams was offset by the rapid expansion of pig butchering and romance scams, which experienced significant growth in total stolen funds.

One of the most notorious HYIS scams in 2024 was Smart Business Corp., a Ponzi scheme that integrated digital assets into its fraudulent operations. The scam raked in $1.5 billion in cryptocurrency, part of which was cashed out through mainstream, yet unnamed, exchanges.

Meanwhile, pig butchering scams, so named because fraudsters “fatten up” their victims by gaining their trust before executing the scam, became the fastest-growing fraud category. Chainalysis reported a 210 percent surge in deposits to scammer-controlled addresses, although the average deposit amount dropped by 55 percent. This suggests scammers are prioritizing speed over long-term deception, opting to extract funds quickly rather than engaging in prolonged manipulation.

The Rise of AI-Powered Romance Scams

Romance scams have also surged, with scammers leveraging artificial intelligence to create convincing fake personas. These scams typically involve fraudsters establishing online relationships with victims, gaining their trust, and then manipulating them into sending money or investing in fraudulent schemes.

Scammers now use AI-driven chatbots to sustain long-term conversations with victims, making interactions appear genuine. AI-generated fake profiles, deepfake videos, and voice messages have made it increasingly difficult for victims to detect fraud early.

Victims of romance scams often believe they are in real relationships, making them particularly vulnerable to deception. Reports indicate that scammers are now targeting individuals on dating apps, social media platforms, and even professional networking sites.

Global Expansion of Pig Butchering and Romance Scams

Originally emerging from Southeast Asia, pig butchering scams have now become a global phenomenon. In December 2024, Nigerian authorities arrested 800 individuals involved in a massive pig butchering operation in Lagos. Law enforcement in California, Namibia, Peru, and the Isle of Man also made significant arrests related to similar schemes, illustrating the worldwide reach of these fraudulent operations.

Similarly, romance scams have expanded globally, with victims reporting losses across North America, Europe, and Asia. Scammers often impersonate military personnel, successful entrepreneurs, or humanitarian workers to gain the trust of their victims before requesting money under false pretenses.

“These scams are particularly devious because anyone who has put their resume out there and is looking for a job could easily be hooked,” said Eric Heintz, a global analyst at the International Justice Mission, the first organization to document pig butchering scams in Asia.

Centralized Exchanges: The Preferred Cashout Route for Scammers

The Chainalysis report also shed light on the preferred method scammers use to liquidate stolen funds. Despite the growth of decentralized finance (DeFi) platforms, centralized exchanges (CEXs) remain the primary choice for criminals seeking to convert their digital assets into fiat currency.

Historically, criminals have flocked to CEXs with weak KYC and AML controls to cash out illicit funds. However, the 2024 report indicates that scammers are now using even fully regulated exchanges with robust compliance measures. Since 2021, CEXs have processed more scammed funds than any other platform, despite DeFi’s increasing popularity.

Regulatory enforcement against these exchanges remains inconsistent. While some cases, such as the Binance AML scandal of 2023, resulted in legal action—including a four-month prison sentence for founder Changpeng Zhao—many other exchanges continue to operate with minimal consequences. Platforms like KuCoin and BitMEX have faced only monetary penalties, allowing them to remain in business despite allegations of facilitating illicit transactions.

Another significant issue is the rise of over-the-counter (OTC) crypto brokers that enable illicit cashouts. Many of these brokers operate outside regulated jurisdictions, making it nearly impossible for authorities to track their activities. These unregulated OTC markets have become a major loophole for scammers looking to offload stolen funds without triggering compliance red flags at regulated exchanges.

Law Enforcement Fights Back Against Crypto Fraud

Authorities worldwide have ramped up efforts to combat the surge in crypto fraud, with the Federal Bureau of Investigation (FBI) leading notable prevention campaigns. In a groundbreaking initiative, the FBI reached out to over 4,000 potential scam victims, successfully preventing $285 million in losses in 2024.

“Victims are solicited to put money into an investment opportunity,” said James Barnacle, deputy director of the FBI’s criminal investigation division. He explained that fraudsters typically show victims fake returns via manipulated websites, but when victims attempt to withdraw their funds, they are denied access.

While law enforcement interventions like these have provided some relief, experts argue that stronger global regulatory frameworks and more proactive exchange compliance measures are needed to curb the growing crypto fraud epidemic.

Conclusion: A Persistent and Evolving Threat

With pig butchering and romance scams growing at an unprecedented rate, 2024 has highlighted the evolving strategies of crypto fraudsters. AI-driven deception, the exploitation of job seekers, and the continued use of CEXs for cashing out stolen funds all signal that financial criminals are adapting rapidly.

While law enforcement and regulators have made strides in preventing crypto-related fraud, the ever-changing tactics of scammers make this an ongoing battle. Investors and job seekers alike must remain vigilant, educate themselves about potential scams, and verify the legitimacy of investment opportunities before parting with their funds.