In 2022, Shan Hanes, the chief executive of the Heartland Tri-State Bank in Kansas, met a friendly investment adviser from Australia on WhatsApp. The adviser persuaded Hanes to invest a few thousand dollars in an online cryptocurrency-trading platform, which generated impressive returns. Hanes ended up investing all his own money, $60,000 from his daughter's college fund, $40,000 from his local church and $47 million from the bank he ran.
The “adviser” was, it transpired, not in Australia but most likely in Asia; the “trading platform” was fake; and Hanes had become the highest-profile US victim of a practice known in Chinese as sha zhu pan, a “pig-butchering scam”. Some money was recovered, but investors lost $9 million, the bank collapsed, and Hanes was sentenced to 24 years in prison.
How do the scams work?
“Long cons” have been around for ever, but these – in which the scammers invest a lot of time in building a relationship with the victim, a process they liken to fattening a pig for slaughter – have distinctive features.
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Scammers actively seek out victims on social media: pig-butchering originated on regional Chinese dating sites around 10 years ago, but it has since spread to platforms such as Telegram, WhatsApp and LinkedIn. They create trusting relationships with their victims, sometimes of a romantic nature; one former scammer told The Economist she’d been trained to target people who were “rich but not good-looking”.
They rely heavily on crypto, which is easy to launder and difficult to recover. These and other online scams are increasingly run out of Chinese-linked “scam hubs” or “fraud factories” in Southeast Asia.
How did such operations develop?
Gambling – illegal on mainland China – is one of the main revenue streams for domestic and foreign-based Chinese mafias. Casinos and online gambling hubs for Chinese-speakers, based in Cambodia and Myanmar, were one of their main enterprises until 2019, when Cambodia tightened its regulations; Covid lockdowns then emptied the casinos. The criminal syndicates refitted their properties as centres where teams of workers – often trafficked and coerced – run online scams at scale.
Chinese citizens were their original targets, followed by Chinese communities around the world. But they soon expanded to other nationalities, which also meant expanding their trafficking activities. In the four years from January 2020, at least $75 billion was taken in crypto scams; estimates suggest the industry generates over $500 billion a year, comparable to the global drugs trade.
Why do they traffic people?
Many of the gangs’ voluntary workers went home during Covid; not enough locals had the necessary language and computer skills, and recruiting people into cybercrime isn't always easy. The scammers’ solution was to lure people – typically young graduates from developing countries – to cities such as Bangkok with fake offers of legitimate employment, then drive them to compounds in Myanmar, Cambodia or Laos, and put them to work under threats of torture, organ harvesting and sexual slavery.
A UN report this February found that there is a workforce of at least 300,000 people from 66 countries, about 75% of them in the Mekong River region of Southeast Asia. Many live in vast compounds, like self-contained towns – some over 500 acres in size, heavily fortified, with armed guards. It's unlikely that all the workers are coerced, but many of them certainly are; some families have had to pay ransoms in cryptocurrency to get them out.
What are the nations doing about it?
Weak local governance, along with easy access to China, is the reason the gangs set up shop in the Mekong region in the first place. Myanmar's military junta doesn’t control the whole territory; much of it is controlled by insurgent groups and warlords; while Cambodian politics has been dominated by one family since the 1980s. Transparency International ranks both governments among the most corrupt in the world. Analysts calculate that Cambodia’s scam hubs generate earnings worth about 60% of the nation's GDP. According to the US Treasury Department, the Huione Group, a financial conglomerate with ties to Cambodia’s ruling Hun family, has provided the gangs with financial and practical services. Like Latin American “narco-states” before them, these countries are well on the way to becoming “scam states”.
Is there international pressure to close them down?
Influenced partly by stories like the kidnapping of the actor Wang Xing, and even a popular film about scam hubs, “No More Bets”, China has launched an aggressive crackdown. There have been heavily publicised rescues of coerced workers in the Mekong countries; under Chinese pressure, local law enforcement has dismantled notorious scam hubs like the KK Park complex in Myawaddy, Myanmar, thought to have been run by Macau-based triads. Thai forces shelled several other hubs during a border conflict with Cambodia last year. China has arrested hundreds of thousands of people over scams, and in January it executed 11 members of the “Ming family” crime group, who had been extradited from Myanmar.
Is the situation improving?
Experts worry that police raids on compounds in Cambodia and Myanmar are largely for show: the bosses are often tipped off in advance. In any case, they have globalised their operations, popping up as far afield as Peru and the Philippines. Police even closed down an operation targeting Chinese citizens on the Isle of Man in 2024. But developments in AI may mean that the scammers are getting less reliant on human trafficking for language skills. One report on AI-assisted scams found that they rose by 450% in 2024-25 compared with 2023-24. The scammers now often use “deepfakes” of increasingly good quality to groom their victims.
