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The opening bell.
The US launching a scam center strike forced to take on one of the fastest growing forms of international fraud, so-called pig butchering schemes.
Now these operations aren't small time across Southeast Asia, industrial scale fraud compounds are stealing billions of dollars a year.
Now traffic workers.
Forced to run online investment scams around the clock, targeting Americans through fake trading apps, social media, as well as romance cons.
Now the US government is escalating its response sanctioning groups in Burma and Thailand and formally launching a multi-agency strike force to go after the criminal networks behind these scam compounds.
Well joining me this morning to weigh. is Ari Redford, global head of policy at TRM Labs.
Ari, good morning.
Thank you so much for joining me.
So of course there's been a lot of media focus on pig butchering scams, but how much of the seized money can realistically be returned to victims and how quickly?
And tell us about the work that you're actually doing here.
Terrific.
No, thank you so much and thank you for having me.
You know, at TRM we've seen about 53 billion in scams and fraud within the crypto ecosystem since about 2023.
That number is likely much higher, about only about 15% of victims report being a victim of scams and frauds.
So we could see that number being 85% bigger, which is absolutely, um, you know, a really, really big number.
But what we've seen is really a whole of government.
Approach and a global approach to this issue.
I think for years we've treated scams and fraud as a law enforcement issue where you have the FBI at the federal level involved or IRS criminal investigation, and I think what we've seen over the last, you know, really few months with this administration is treating it like a national security issue.
So you mentioned the scam strike force, this scam compound strike force, which is now using DOJ.
Authorities to indict individuals to go after funds for seizure and forfeiture.
We're seeing US Treasury as part of that using sanctions.
And a great example is just a few weeks ago, the Department of Justice filed a $14 billion forfeiture, the largest certainly in US history, probably world history of anything, against $14 billion associated with the Prince Group, which is an organization in Cambodia that was running scam compounds there.
So what we're really seeing is a whole of government approach treating this like a national security issue, and I think that's why we've really seen a focus of it from the Department of Justice, but also really the industry working together with the public sector to stop bad actors from abusing cryptocurrency in these types of investment fraud scams.
Yeah, and Ari, as you mentioned, the numbers are staggering, aren't they?
The FBI says Americans lost more than $9 billion to online investment fraud last year.
So you were talking about the government agencies working together.
What do you think are some of the biggest obstacles to getting the agencies to coordinate like they did in, say, the Prince Group case that you just mentioned?
Yeah, look, I think that always the key to successful action is bringing everyone and their authorities together, right?
The Department of Justice has very specific criminal authorities.
So in that Prince Group example we saw an indictment.
We saw a civil forfeiture action against the funds, but we also saw sanctions from OFAC, the Office of Foreign Asset Control, which is part of the US Treasury Department.
We saw a designation against a money launder.
An entity called We One by FinCEN, the financial intelligence unit for the United States, again, part of the US Treasury Department.
But then the US didn't go it alone.
We saw the UK bring travel bans and other types of sanctions against individuals associated with with Prince Group.
So what we're really seeing is a global approach to this problem, but the reality is that we have to ensure that countries like Cambodia, Laos, Myanmar, and China.
Really also sort of join this effort because these are the countries where these the activity is happening and if you read the indictment, it talks a lot about how governments and law enforcement in this region is complicit here.
So I think the real challenge is not just bringing the US together but really forcing the issue in the countries where this is happening and I think we've seen some good first steps there with this Prince group action and with this strikeforce, but I think we're going to see more and more.
And Ari, it is the holiday season and we know that scams are 24/7.
So how fast can this strike force freeze crypto funds once the scam is identified?
And also when it comes to some of these scam compounds, how do you actually enforce sanctions on these compounds in countries where, say, local authorities are also compromised?
Yeah, I know, it's a great question.
So starting with the first one, look, I think the promise of cryptocurrency, right, is cross-border value transfer at the speed of the internet.
Funds move faster than ever before, and I think the challenge is, you know, crypto is the means of value transfer in a lot of these scams, right?
A victim will send funds in cryptocurrency to the scammer, and we as law enforcement and blockchain analytics companies like TRM.
Have to also get a lot faster on the show a couple of months ago we talked about the launch of the Beacon network, which is a public-private disruption initiative by TRM and the largest cryptocurrency exchanges in the world to move as fast as the bad actors, so they're not able to off-ramp those funds.
So the challenge is the money is moving faster than ever before, but so is the industry cryptocurrency.
Exchanges like Binance and Coinbase are working closely with law enforcement to stop the proceeds of scams from ultimately off ramping.
And then, you know, the question of sanctions, you know, I've spent about 2 years at the US Treasury Department and there was always this conversation around the efficacy of sanctions.
Do they work?
And I think the reality is they're one tool in a toolbox of authorities that we have to include criminal prosecutions and asset seizure and forfeiture.
Um, to, to include offensive action against some of these groups, right, um, like what we're seeing in Venezuela right now, uh, quite frankly, and against the cartels.
So it's sort of one tool in a larger toolbox.
They are effective in that they make it very difficult for certain actors to travel.
Certain actors to use the US financial system, but wherever there are sanctions, there are sanctions evasion, and I think the job that we really have as an industry, working closely with law enforcement is to stop the ability of bad actors from taking advantage of this transformative technology.
Well, Ari, we will have to leave it there for today, but it's such an important conversation, so thank you so much for taking time out of your busy schedule to join us and have a happy Thanksgiving.
Remy, always great to join you.
Happy Thanksgiving.
