Our Commitment to Security: Freezing $47M from a Pig Butchering Scam

At OKX, we believe that a secure and transparent crypto ecosystem is essential for the future of Web3. Our recent collaboration with industry leaders and a law enforcement agency led to the freezing of $47 million in USDT tied to a sophisticated pig butchering scam, a type of investment fraud which involves criminals building trust with victims over time before stealing their funds.

Speaking to the Senate Banking Committee, Chainalysis CEO Jonathan Levin highlights how, in a recent pig butchering case, OKX and Tether worked with officials to freeze and seize millions in illicit funds

Pig butchering scams represent one of the most deceptive forms of crypto fraud. Criminals pose as legitimate investors, gradually gaining victims' trust before convincing them to transfer funds, only to disappear with the money.

In this case, our Special Investigations and Intelligence team worked alongside Chainalysis, Tether and an Asia-based law enforcement agency to trace stolen funds across multiple wallets. Using Chainalysis' Crypto Investigations Solution, we identified victim deposit addresses, scam-controlled wallets, and a consolidation point where $46.9 million in USDT was pooled.

The criminals employed common tactics such as returning small amounts to victims to create the illusion of profits. However, advanced blockchain forensics exposed their activities. By June 2024, law enforcement and Tether took action to freeze the stolen funds, initiating the process for victim recovery.

This case highlights the importance of collaboration between crypto companies, industry partners, and the public sector to combat fraud effectively. Unlike some other digital assets, USDT has the technical ability to be frozen when linked to criminal activity, providing a crucial mechanism for protecting users and recovering stolen funds.

Our involvement in this investigation reflects our broader commitment to security and compliance. We have implemented one of the most robust safety frameworks in the crypto industry, including:

• Global regulatory licenses across the US, Europe, Middle East, and Asia-Pacific regions

• Experienced compliance and legal teams led by Chief Compliance Officer Jonathan Brockmeier and Chief Legal Officer Linda Lacewell

• Educational campaigns to help our community identify threats

• Advanced threat detection powered by AI tools like SkyNet to identify and flag malicious actors

• Industry-leading certifications including SOC I Type 2, ISO 27001, and CSA STAR Level 1

• Top security ratings from independent auditors such as Certik, Hacken, and SlowMist

• Proof of Reserves demonstrating 1:1 backing of user funds for nearly three consecutive years

The crypto industry must uphold the highest standards of security and transparency. At OKX, we are committed to leading by example through:

• Active cooperation with law enforcement to track and freeze illicit funds

• Continuous enhancement of transparency through regular audits and real-time reserves

• Establishing trust by maintaining the highest benchmarks for security