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The $11 Billion Market Enabling the Crypto Scam Economy
The public nature of the criminal transactions is even more shocking when you consider that Huione Guarantee is operated by Huione Group, a Cambodian financial conglomerate that includes a company linked to the family of Cambodia’s prime minister, Hun Manet. One of the companies’ directors, in fact, is Hun To, a cousin of the prime minister, who was linked to an Al Jazeera investigation to an alleged fraudulent complex owned by Heng He, a Cambodian conglomerate owned by two Chinese nationals.
Cryptocurrency scam researchers say that Huione Guarantee, despite its size, is just one of many money laundering methods used by pig slaughterers. Because much of the pig slaughter ecosystem has ties to Chinese organized crime, pig slaughter revenues are often laundered in a decentralized manner by convincing individual Chinese citizens to accept and transfer cryptocurrency through their personal Alipay accounts for a small fee, notes Gary Warner, director of intelligence at cybersecurity firm DarkTower. Marketplaces like Huione Guarantee, however, offer an avenue for scammers who don’t already have a laundering network to rely on or who need to diversify their options for liquidating funds.
An ad on Huione Guaranteed for electrified chains with GPS tracking for the detention of slave laborers.
Courtesy of Elliptic
Perhaps unsurprisingly, Huione Guarantee began operating in 2021, given that cryptocurrency scams have surged during the Covid-19 pandemic. Sophos’s Gallagher notes that in Cambodia, pig slaughter operations are largely run by hotels and resorts that have struggled with a tourism slump in 2020 and 2021. “They’ve been heavily funded or even owned by Chinese companies in connection with special economic zones and other Belt and Road developments,” he says. Gallagher’s research indicates that workers slaughtering pigs in Cambodia, often against their will, are typically not citizens but from the surrounding region. “These facilities follow the same script in terms of seizing people’s passports and then using electric shocks, electric cattle prods and other physical punishments for not following the rules.”
While it may be disturbing that a service that enables billions of dollars in cryptocurrency scam transactions annually is run openly, and with ties to one of Cambodia’s most powerful families, Elliptic’s Robinson suggests that the brazenness presents an opportunity to dismantle a pillar of that criminal industry: He proposes international sanctions against Huione’s leadership.
“This has the hallmarks of a darknet market, but it’s run by a large Cambodian conglomerate, which has documented ties to the ruling family there,” Robinson says. “There’s certainly room to impose sanctions on an activity like this, to prevent this type of market from operating.”