An alarming disclosure indicates that within two years, a single company based in Myanmar has allegedly conned people out of $100 million. The surprise finding was disclosed by Chainalysis, a crypto analytics firm, and International Justice Mission, an anti-slavery group in America, according to FT.
According to Chainalysis, Tether – one of the largest global cryptocurrency platforms – was involved in “pig butchering” scams. Additionally, payments were made by Tether tokens to a firm headquartered at a compound referred to as KK Park in eastern Myanmar. These funds were sent by families of trafficked laborers who had no choice but to pay ransoms for their release.
“Everyone has known for a long time that these kinds of scams are blockchain-based, but this is the first time we’ve been able to tie it to a specific location and a known compound,” said Eric Heintz, a global analyst at International Justice Mission
Cryptocurrency Fuels Black Market Expansion
As per the analysis, one Chinese company managed to sip more than $100 million in cryptocurrency into just two digital wallets. According to Jackie Koven, head of cyber threat intelligence at Chainalysis, it is a testament to how digital assets are being used by malicious actors to fuel an expanding black market.
Tether’s tokens are used by criminals as an international money transfer means for buying US dollars. Koven added This case is so illustrative of what’s happening; it’s just a vignette of what’s taking place on a larger scale. Chainalysis and IJM did not mention the name of China Company to save the Chinese victims from human trafficking.
Furthermore, IJM noted that KK Park near the Thailand-Myanmar border had possibly thousands of enslaved laborers, many of whom were recruited for online scamming. It is still not clear who owns KK Park, and those running it cannot be reached for comment’s sake.
Tether’s Illicit Use Sparks Regulatory Concerns
The findings of KK Park are expected to increase pressure on Tether, which manages almost $100 billion in assets, to stop allowing its in-house currency to be used for illicit purposes. Last month, the UN’s Office on Drugs and Crime warned that Tether had become one of the top payment systems used by money launderers and fraudsters in Southeast Asia.
To prevent the illicit use of its token, Tether stated that it was collaborating with global regulatory authorities and had frozen $276 million used in pig butchering-related scams. The platform further said that it felt proud about continuing to cooperate with law enforcement agents.
Most of the $100 million worth of crypto linked to KK Park belonged to a company that was traded on Tron, one of the largest networks in its sector with very low transaction fees. According to Koven, many of these scams use Tether and Tron. This helps ensure price stability for Tether in addition to low transaction costs for Tron.
Among the many payment methods available, cryptocurrencies appear to be the biggest challenge to law enforcement officials because their transaction mechanisms are complicated and very rapid. This means that it is not every time that “pig butchering” scammers adopt cryptocurrency for payments.
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