Binance and Partners Freeze $50 Million in Illicit Funds from Scams

Binance Blog published a new article, highlighting a significant collaboration between Binance, Chainalysis, stablecoin issuers, and law enforcement agencies in the Asia-Pacific (APAC) region to combat financial scams. This joint effort led to the freezing of nearly $50 million in illicit funds linked to 'pig butchering' scams, a form of investment and romance fraud that has been increasingly involving cryptocurrencies. In June 2024, APAC-based law enforcement successfully froze these funds following a comprehensive investigation supported by Binance, Chainalysis, and other industry partners. The term 'pig butchering' describes a scam where victims are gradually 'fattened' through trust-building before being defrauded. These scams often start with casual online interactions that evolve into relationships, eventually leading victims to invest in fraudulent schemes. Despite their recent association with cryptocurrencies, such scams have long existed in traditional finance. The use of blockchain technology, however, provides new methods to counter these threats. In a notable case in late 2023, the U.S. Department of Justice, along with industry participants, managed to freeze $225 million in stablecoins, marking the largest seizure in U.S. Secret Service history. In the 2024 case, Chainalysis utilized blockchain analytics to trace the flow of funds linked to a scam network active across Southeast Asia. Their tools tracked transactions from numerous victims between November 2022 and July 2023, eventually connecting them to consolidation wallets controlled by scammers. The criminals pooled victim funds into a primary wallet, then distributed them to intermediary addresses before moving them to five final wallets, which collectively held nearly $47 million in USDT. Scammers also sent small amounts back to victims to create the illusion of legitimate investment returns, prolonging the fraud. The intelligence gathered was shared with APAC law enforcement, who directed stablecoin issuers to freeze the funds in June 2024, preventing the conversion of illicit proceeds into fiat currency. Binance's involvement in these efforts underscores the importance of public-private partnerships in disrupting criminal operations and compensating victims. Erin Fracolli, Binance Global Head of Intelligence and Investigations, emphasized the role of such collaborations in enhancing the security of the blockchain ecosystem. The ability of stablecoin issuers, like Tether, to freeze funds at law enforcement's direction is a crucial safeguard. Chainalysis highlighted that blockchain intelligence supports every stage of an investigation, from identifying addresses to mapping wallet relationships and providing actionable leads for law enforcement. While illicit activity remains a small fraction of overall crypto transactions, it poses significant harm to victims. Each successful disruption demonstrates progress in protecting users, returning funds, and building a safer ecosystem. As pig butchering scams continue to evolve, the growing use of blockchain intelligence and cross-industry partnerships is narrowing the opportunities for perpetrators.