Crypto Company Says Oops, Its Coin Was Being Used in a Human Trafficking Scam

It's freezing $225 million worth of crypto.

Deep Dive

A crypto company is working with the feds after an investigation revealed that millions of dollars worth of its coins were being used for human trafficking.

In a press release, the people behind the stablecoin Tether, whose value is pegged to the US dollar, explained that the company was forced to freeze $225 million worth of its own tokens after the Department of Justice investigation linked it to an international human trafficking syndicate out of Southeast Asia.

The DOJ has also, per its own statement, seized $9 million of Tether from the company as it investigates what is known as a "pig butchering" scam.

The term "pig butchering," as many outlets have explained, is a play on "fattening the pig" before slaughter, and involves scammers — in this case, trafficked people forced into the scheme — luring people in with promises of huge returns on investment, having them deposit cash into what seem like legitimate crypto wallets, and then cutting them off from the accounts that the scammers had controlled the whole time.

Honeypotting people out of their hard-earned money is nothing new — but the means of labor in pig butchering scams add an additional layer of corruption to the entire endeavor.

Love Lockdown

As ProPublica explained in its exposé on the scam last year, the architects of these scams are creating fake identities to lure unsuspecting victims in, often using romance as a ruse.

But oddly enough, the scammers may also be victims themselves. As ProPublica and Vice both reported last year, many of the scammers had been misled with bait-and-switch job offers themselves and forced to work in scam sweatshops in countries like Cambodia, Laos, or Myanmar.

Tether is far from the first cryptocurrency used in this type of scam. A year ago to the day, the DOJ announced that it had seized fake domains that spoofed real ones from Singapore's financial markets as part of another pig butchering scam. This year, the department seized $112 million worth of crypto in a case based out of Los Angeles.

Notably, however, Tether appears to be the first crypto company to announce that it was working with federal investigators and voluntarily freezing its own funds. It's rare, especially in the wake of FTX, to want to laud a crypto company, but so long as we don't learn Tether was complicit in these schemes, we do have to hand it to them.

More on crypto scammers: Crypto Mining Rig Discovered Under Floor of Courthouse, Stealing Power