In This Post:
- China-based CSAM vendors see alarming growth since late 2023.
- Scammers evolve tactics, with “Pig Butchering” scams netting millions.
- Huione Guarantee linked to $49 billion in illicit crypto transactions.
- Rising Chinese marketplaces facilitate cybercrimes, laundering, and scams.
China-based vendors selling Child Sexual Abuse Material (CSAM) via cryptocurrency have seen a disturbing rise in activity since late 2023. A report from the Internet Watch Foundation (IWF) highlights that although it’s hard to pinpoint the exact cause of this growth, the increase in reporting suggests an emerging trend rather than a sudden discovery of existing networks.
Source: https://www.chainalysis.com/blog/2024-crypto-crime-mid-year-update-part-2/
The on-chain infrastructure supporting these vendors is relatively new, with the earliest wallets traced back to mid-2023, indicating that this could be a developing phenomenon rather than just the result of improved reporting.
Most purchases from these networks are small, often ranging from a single day’s access for $5 to nearly permanent access for $41. This low entry cost combined with the anonymity of crypto transactions enables the spread of these illicit materials with little risk of detection. Despite their illegal nature, CSAM vendors cash out using instant exchangers, making it even harder to trace and dismantle these networks.
“Pig Butchering” Scams: A $100M Industry and Rising
Source: https://www.chainalysis.com/blog/2024-crypto-crime-mid-year-update-part-2/
In the world of crypto scams, 2024 has seen scammers refine their tactics, moving away from broad-based Ponzi schemes to more targeted campaigns. The “Pig Butchering” scam is a prime example, where victims are slowly manipulated into investing in fake opportunities.
This scam, often orchestrated from compounds in Southeast Asia, has become a major revenue generator, with a single compound in Myanmar netting over $100 million this year alone.
Source: CoinDesk
Scammers have increasingly adopted new on-chain and off-chain methods to avoid detection. Many of these operations now have a shorter lifespan, with new wallets appearing and disappearing quickly, making it difficult for authorities to track them down. Despite the use of new wallets, a significant portion of scam-related funds still flows into older, well-established wallets, highlighting the ongoing sophistication of these criminal networks.
To support their scams, these networks often purchase social media accounts through services that specialize in providing fake identities. These fraud shops have seen a steady increase in business, with scammers spending between $5 and $20 per account. This suggests that between 525,000 and 2.1 million fake profiles may have been purchased since 2022, all used to lure unsuspecting victims into scams.
Huione Guarantee: The $49 Billion Marketplace for Cybercrime
The emergence of Huione Guarantee, a platform tied to the Cambodian conglomerate Huione Group, has been a significant development in the crypto crime landscape. Initially established as a remittance service, Huione Guarantee has evolved into a hub for illicit activity, processing over $49 billion in cryptocurrency transactions since 2021.
This P2P marketplace connects buyers and sellers through Telegram, often with little effort to disguise the illegal nature of the transactions.
Source: https://www.chainalysis.com/blog/2024-crypto-crime-mid-year-update-part-2/
Huione Guarantee has become a crucial player in facilitating a range of cybercrimes, including pig butchering scams, money laundering, and even the distribution of CSAM.
The platform’s on-chain activity reveals connections to a wide array of illicit entities, including those involved in scams, stolen funds, and even entities sanctioned by the U.S. Office of Foreign Assets Control (OFAC).
Despite its claims of neutrality, the sheer volume and nature of transactions processed by Huione Guarantee make it a significant enabler of global cybercrime. The platform has also been linked to larger crime syndicates, such as the notorious KK Park compound in Myanmar, further underscoring its role as a central node in the network of crypto-related criminal activity.
The rise of Huione Guarantee and similar platforms highlights the growing complexity and scale of cybercrime in the cryptocurrency space, presenting new challenges for law enforcement and regulators alike.
