Crypto Market News: Australia Shuts Down 95 Firms Linked to Pig Butchering Scams

As part of a prominent bust on cryptocurrency fraud, the Australian Securities and Investments Commission (ASIC) has successfully applied to the Federal Court to wind up 95 entities believed to have operated large-scale investment frauds referred to as “pig butchering.” The wind-up is the latest development in Australia’s increasing efforts to combat scams involving cryptocurrency that have resulted in victims losing millions of dollars worldwide.

Court-Approved Shutdown on Just Grounds

On April 8, ASIC confirmed that the Federal Court had approved its application to liquidate the firms. Justice Angus Stewart ruled that there were overwhelming reasons to close them down, citing serious misconduct and a complete lack of confidence in their management. The court found that most of these entities were registered using fake or misleading information and functioned solely to support fraudulent operations.

Scams Based on Fake Relationships and Investments

This case primarily constituted scams that involved the “pig butchering” method – a type of fraud where scammers build fake online relationships with victims, gain their emotional trust, and then encourage them to invest money into fictitious cryptocurrency platforms – and then take off with the victims’ money. ASIC believes these scams are well organized and use sophisticated methods to deceive investors by developing near-replicas of legitimate trading platforms into websites and applications.

Liquidators Reveal Startling Findings

Catherine Conneely and Thomas Birch from Cor Cordis were assigned as joint liquidators. They conducted an initial inquiry and found that only three out of the 95 companies had any recoverable assets, so they recommended that 92 of the companies be deregistered immediately. The liquidators have now received approximately 1,500 claims from victims across 14 countries, including Australia, the United States, India, Ghana, Cameroon, Nepal, and the Philippines. The reported total loss now exceeds $35.8 million.

Scammers Exploit Trust and Technology

ASIC Deputy Chair Sarah Court stressed that these firms were consciously designed to look credible and trustworthy. She cautioned that scammers are always becoming more sophisticated and will use every tool at their disposal, such as fake websites, mobile phone apps, and supposedly legitimate company registrations, in their efforts to swindle people. The Court said: “These companies were set up to provide a veneer of credibility … Scammers will use every tool they can think of to steal people’s money and personal information.”

Ongoing Crackdown on Crypto Fraud

ASIC continues with its aggressive enforcement of crypto scams. The regulator is currently shutting down about 130 scam websites per week, and has taken down over 10,000 sites in total, which include 7,200 fake investment sites and 1,500 phishing sites that target users unaware of the scams.  Last month, ASIC began taking action against crypto ATM operators. It warned that operators who do not comply with Anti-Money Laundering and Counter-Terrorism Financing regulations could face penalties under the law. Australia’s financial crime agency AUSTRAC also reported a spike in suspicious activity linked to crypto ATMs and urged the regulation of crypto ATMs to tighten the safety of the sector.