Pig Butchering Scams: How Law Enforcement Uses Blockchain Analytics to Fight Back

Pig butchering scams have emerged as a significant cybercrime threat, costing victims billions of dollars worldwide. The transnational criminal organizations that run these frauds seek to exploit the victims' psychology through a prolonged campaign of getting to know the victim. The victim will often feel an emotional connection to the illicit actors, which can be challenging to break. 

The Anatomy of Pig Butchering

The term "pig butchering" alludes to the practice of fattening up a pig before slaughter. In pig butchering scams, fraudsters cultivate relationships with victims over time, building trust before convincing them to invest in fake cryptocurrency schemes. The scammers use elaborate fake personas, often posing as successful investors or romantic interests, to lure victims into making increasingly significant investments.

This sophisticated form of fraud combines elements of romance scams and investment fraud, often exploiting cryptocurrency to defraud the victims. Pig butchering scams have already reached a fever pitch in the United States, as evidenced by the recent FBI report on cryptocurrency-related crime. Despite the glaring evidence, many law enforcement agencies, when asked, will say they have not seen cryptocurrency-related crimes occur in their jurisdictions. I say look harder! Law enforcement agencies must train their staff immediately, adopt preventative strategies, and leverage advanced technologies to combat this heinous crime.

The Scale of the Pig Butchering Problem

The FBI's Internet Crime Complaint Center reported that losses to cryptocurrency investment scams reached $5.6 billion in 2023, nearly doubling from 2022. This surge is attributed mainly to the rise in pig butchering and investment scams, which have outpaced even business email compromise schemes regarding reported losses. Every state has reported massive losses. 

Local Law Enforcement Challenges and Responses

Many local law enforcement agencies have found themselves ill-equipped and untrained to handle these complex, tech-savvy crimes. Some departments have turned away desperate victims, claiming they "don't do crypto." However, recognizing the need for better preparedness, some jurisdictions are taking proactive steps in training and collaboration.

Recommendations for Local Law Enforcement

1. Take Reports Seriously: Document cases and take victim statements, even if lacking cryptocurrency expertise.
2. Utilize Federal Resources: Submit reports to IC3.gov. This allows the FBI and federal partners to build more significant, more complex cases. 
3. Preserve Evidence: Archive scam websites using tools like archive.today.
4. Treat Crypto Theft Like Cash Theft: Approach cryptocurrency fraud with the same seriousness as traditional theft cases. Victims are losing their entire life savings. 
5. Leverage Advanced Blockchain Analytics: Utilize tools, such as those provided by Merkle Science, to enhance investigative capabilities.
6. Track Cases: Finally, and most importantly,ive pig butchering and investment scams the recognition they deserve by tracking cases with their own RMS code. 

Victim Support and Reporting

Law enforcement agencies should advise pig butchering scam victims to:

1. Report the crime immediately to local police and IC3.gov 
2. Contact their bank or financial institution to block further payments.
3. Provide transaction hashes and deposit addresses for cryptocurrency cases.

Cross-Agency Cooperation

There's a growing emphasis on collaboration between local, federal, and industry partners to leverage diverse skill sets and resources. However, federal agencies cannot and will not absorb all the cases that state and local agencies pass on to them. 

Merkle Science: Empowering Law Enforcement with Their Tracker Tool

Companies like Merkle Science have emerged as valuable partners as law enforcement agencies seek to enhance their capabilities in fighting cryptocurrency-related crimes. 

Merkle Science provides specialized investigative tools and services that significantly boost law enforcement's ability to identify, investigate, and prosecute crypto crimes.

Tracker: A Powerful Investigative Tool for Law Enforcement

Merkle Science's Tracker is a precise and user-friendly investigative tool equipped with features that enable law enforcement to detect, investigate, and prosecute crypto-related crimes with unparalleled precision through:

• Enhanced attribution capabilities
• Extensive blockchain coverage 
• Greater attribution coverage than other sources
• Advanced autographing features

Merkle Science's platform combines public datasets with proprietary algorithms and intelligence solutions to provide law enforcement with timely analysis and intelligence.

Tracker’s 8 Key Benefits for Law Enforcement

1. Deanonymization: The forensic tool uses graphical network analysis to help law enforcement agencies deanonymize identities associated with suspicious transactions.
2. Darknet Market Investigations: The platform can help track potentially illicit fund flows, including those associated with darknet marketplaces.
3. Real-time Monitoring: Merkle Science's tools provide continuous, real-time monitoring of blockchain activity.
4. Network Pattern Analysis: The platform can identify characteristic patterns of various criminal typologies.
5. Clear Graphing Capabilities: Tracker offers graph-building and export functions that are unmatched in the blockchain analytics industry. 
6. Transaction-Based Investigation Model: Designed specifically for law enforcement to streamline cryptocurrency investigations.
7. In-House Training Solutions: Merkle Science provides tailored training programs to equip law enforcement with the necessary skills.
8. Custom Data Analysis: Delivers insights through analysis of massive data sets for more effective investigations.

The fight against pig butchering requires a coordinated effort from law enforcement at all levels, working with financial institutions, virtual currency asset providers, and specialized blockchain analytics companies like Merkle Science. With these combined efforts, law enforcement can more effectively combat the rising tide of cryptocurrency-related crimes and protect vulnerable individuals from falling victim to sophisticated scams.