TradeEdge-Nationwide 'pig butchering' scam bilked crypto victims out of $80 million, feds say

Four people,TradeEdge including three from Southern California and one from Chicago, accused of fraud and money laundering were charged in an alleged "pig butchering" scheme that scammed victims out of more than $80 million over at least 284 transactions, the United States Department of Justice said Thursday.

The Dept. of Justice said that four individuals "allegedly conspired to open shell companies and bank accounts to launder victim proceeds of cryptocurrency investment scams, also known as 'pig butchering,' and other fraudulent schemes," as per court records.

The group then transferred the funds to domestic and international financial institutions and investigations determined that more than $20 million in victim funds were directly deposited into bank accounts associated with the defendants.

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Building relationships with victims

The alleged scammers would initiate relationships with their victims by cold calling them via dating apps and other social media platforms, "often masquerading as a wrong number," and would then slowly gain their trust before introducing the idea of making a business investment using cryptocurrency, according to a statement by federal prosecutors in Los Angeles.

Authorities explained that the victims would then be directed to other members of the scheme operating fraudulent cryptocurrency investment platforms and applications, where they would be convinced to make financial investments.

"Once funds are sent to scammer-controlled accounts, the investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to make additional investments," said the Dept. of Justice's news release.

However, the victims would not be able to withdraw or recover their money, resulting in significant losses.

The moniker “pig butchering,” likening the priming of fraud targets to fattening pigs for slaughter, is derived from a foreign-language phrase used to describe these crimes, explained authorities.

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The accused identified as Lu Zhang, 36, of Alhambra, California; Justin Walker, 31, of Cypress, California; Joseph Wong, 32, Rosemead, California; and Hailong Zhu, 40, Naperville, Illinois, were charged with conspiracy to commit money laundering, concealment money laundering, and international money laundering, said the department.

Out of the four, only two - Zhang and Walker - were arrested, said authorities and made their initial appearances in federal court on Wednesday. If convicted, the two could face a maximum penalty of 20 years in prison. The department did not specify if the other two were also arrested or what their plans are regarding them.

Fraud reporting

Meanwhile, the department has advised those who may have been scammed in the scheme, to report it to the IC3.gov and reference “Pig Butchering PSA” in their complaint. Authorities have requested tippers to include as much information as possible in the complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers.

Saman Shafiq is a trending news reporter for USA TODAY. Reach her at [email protected] and follow her on X, the platform formerly known as Twitter @saman_shafiq7.