Authorities in Myanmar have raided a compound and freed more than 1,000 slave laborers being forced to work in a series of so-called ‘pig-butchering’ scams, one of which has raked in an estimated $100 million in the past two years.

The KK Park compound in east Myanmar was raided in a joint operation led by China, Thailand, and Myanmar earlier this week and 1,200 workers were reportedly freed. A flight chartered from China left Myanmar on Thursday afternoon with 150 of these victims on board, according to Deutsche Welle (DW),

Earlier this week, Protos reported how one of the pig-butchering operations based at the compound has made around $100 million in USDT in the past two years. Many of the scams’ workers were trafficked from China, Southeast Asia, and Africa and were forced to scam crypto from victims in Europe, the US, and China. 

Read more: UN report links crypto scams to Southeast Asia slave trade

DW interviewed the trafficked victims who claimed that weekly murders took place and that they were constantly surveilled and tortured. Victims reportedly ran these crypto scams for 17 hours a day with no rest and were told they would be sold or killed if they tried to leave. 

Around 1,000 of the freed slaves are Chinese nationals, while the other 200 were mostly trafficked from African countries. 

An anonymous source who negotiated the release of the victims told DW that Chinese nationals found to have traveled to the compound willingly “would be arrested, according to China’s current regulations.”  

In addition, the other 200 reportedly face being stuck in Thailand’s human trafficking identification system, or handing themselves over to the police for breaching Thailand’s immigration laws.

Tether, pig-butchering, and Myanmar slaves

This week, a study released by Texas finance professor John Griffith estimated that pig-butchering scams have made somewhere in the region of $75 billion. In the report, Griffith concluded that Binance, Huobi, and OKX work as exit points for these criminal funds and that USDT is the crypto of choice for criminals.

The United Nations (UN) also claims organized crime uses a ‘parallel banking system’ that relies on Tether and USDT. The UN estimated that over 100,000 victims are being trafficked to work in Myanmar scam centers linked to these pig-butchering scams. 

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A single Chinese company has managed to rake in more than $100 million in USDT from so-called ‘pig-butchering’ romance scams in under two years, according to research from blockchain analytics firm Chainalysis.

As reported by the Financial Times, Chainalysis and anti-slavery group International Justice Mission (IJM) tracked massive amounts of victims’ crypto that had been deposited into just two wallets. It also traced numerous ransom payments made to a compound in Myanmar by the families of trafficked workers.

An IJM spokesperson said, “Everyone has known for a long time that these kinds of scams are blockchain-based, but this is the first time we’ve been able to tie it to a specific location and a known compound.”

Jackie Koven, head of cyber threat intelligence at Chainalysis, added, “This case is so illustrative of what’s happening, it’s just a vignette of what’s taking place on a [larger] scale.

“Once criminals realized it was traceable we thought they would stop using it, but they didn’t.”

The Myanmar-based company hasn’t been identified in order to protect its workers, however, IJM says former workers gave it details on the wallets used to receive the USDT. It also said that the compound, known as KK Park, was “likely to be home to thousands of trafficked workers,” and described it as “a self-contained city.”

Read more: Hong Kong investment manager loses $1.5M inheritance in crypto scam

UN has warned about USDT before

Last month, a United Nations (UN) report revealed that Tether and USDT are at the heart of a “parallel banking system” created by organized crime and making use of new technologies.

The report, published by the UN’s Office on Drugs and Crime, detailed how USDT has become a popular payment method for criminal gangs, particularly those in the gambling industry, operating in Southeast Asia.

Read more: UN report links crypto scams to Southeast Asia slave trade

According to the report, “Online gambling platforms, and especially those that are operating illegally, have emerged as among the most popular vehicles for cryptocurrency-based money launderers, particularly for those using Tether or USDT on the TRON25 blockchain, while also fueling the intensification of Southeast Asia’s rapidly growing illicit digital economy, and particularly the regional cyberfraud industry.”

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Myanmar’s ousted government has asked the US Federal Reserve to release $1 billion of its frozen funds in a bid to create a new central bank and issue its own crypto, Bloomberg reports.

Since February 2021, a portion of Myanmar’s reserves have been frozen by the Federal Reserve Bank of New York in response to the country’s military coup that exiled its democratic government and its leader, Aung San Suu Kyi.

“We just need the US blessing that allows us to use the frozen money virtually,” said the National Unity Government’s minister of planning, finance, and investment, Tin Tun Naing, in an interview with Bloomberg (our emphasis).

The funds would be used to support the deposed government in its attempts to regain control of Myanmar, which has fallen into economic and political turmoil.

While a long shot, Venezuela’s opposition leader Juan Guaido was granted access to US-held government funds in a bid to suppress President Nicolas Maduro’s foothold.

It remains unclear how the ousted government in Myanmar would use the funds to support itself, however it has previously raised significant funds.

As noted by Bloomberg, the National Unity Government sold “Spring Revolution Special Treasury Bonds” and raised $53 million through a mock auction of mansions owned by the country’s current junta leader, Min Aung Hlaing.

• In May 2020, Myanmar’s central bank said it doesn’t recognize crypto.
• Controversial stablecoin Tether was labelled an “official currency” by the exiled government in December 2021 as an alternative way to raise funds.
• A month later, the junta sought to ban crypto and VPNs in an attempt to quell revolution.

Read more: Myanmar’s parallel government wants revolution backed by Tether crypto

Myanmar military government 180s on crypto

The junta announced plans to issue its own Myanmar crypto in February this year, just a month after planning to ban it altogether. “A digital currency will help improve financial activities,” Major General Saw Min Tun said.

Myanmar’s currency, the kyat, is down 37% against the US dollar since the coup in February 2021, yet it remains unlikely a digital currency would alleviate pressure. “We are undecided whether we should do it as a joint venture with local companies or by the government alone,” the Major General further stated.

The junta has taken increasingly violent measures to prevent a return of the National Unity Government, recently executing four political activists. Since the coup, over 2,100 civilians have been killed and more than 15,000 have been arrested, the United Nations reports.

Aung San Suu Kyi has been in detention since the military seized power and has since been found guilty for a series of offences she and her supporters deny. She was sentenced to 17 years in total — just last week, the 77-year-old deposed leader was found guilty of election fraud and handed an extra three years in prison with hard labor.

Her treatment has raised serious concerns by the United Nations special envoy on Myanmar, Noeleen Heyzer. “I am very concerned about her health and condemn her sentence for hard labor,” Heyzed said in Singapore on Monday.

The envoy visited Myanmar this month and has said a return visit was possible if a meeting with Aung San Suu Kyi could be promised.

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Anyone in Myanmar caught using crypto or virtual private networks (VPN) could face up to three years in jail and hefty fines if the country’s military government passes a new cybersecurity law, reports The Register.

The bill was floated to government ministers on January 13. It intends to criminalize methods used by supporters of the country’s pro-democracy political class to organize, communicate, and support themselves.

Under the new rules:

• Using a VPN without a military license risks one to three years in jail and a 5 million Kyat ($2,800) fine.
• Transacting via crypto faces six months to one year in jail and a similar fine.
• Internet service providers must share citizen internet records if requested by authorities.

Following last year’s military coup, pro-democracy citizens have leveraged VPNs to evade surveillance and military-imposed internet censorship, which still blocks access to social media sites.

Myanmar’s government-in-exile, the National Unity Government (NUG), last month acknowledged stablecoin Tether as a means to transact outside of the junta-controled fiat currency, the Kyat.

The NUG is currently fundraising to finance its ambitions to regain control amid 11 months of deadly protests.

Myanmar’s second attempt at a crypto crackdown

Overall, the proposed rules represent revised efforts to outlaw parts of the internet. Myanmar’s central bank has prevented the country’s banks from servicing crypto since May 2020.

But this year’s version of the junta’s cybersecurity law places more stringent controls on internet activity.

One Myanmarese Reddit poster explained locals use VPNs to access banned social media (Facebook and Twitter) to “spread news about what’s happening in Myanmar,” particularly atrocities perpetuated by the reigning military government.

“We are also watching ads with [USA-based] VPNs to generate more money on revolution websites, where we can watch ads and donate the revenue directly to rebels who are fighting the dictatorship,” they said, adding that mobile data prices have surged “more than five times” since the coup as a result.

Read more: [Myanmar’s parallel government wants revolution backed by Tether crypto]

Last February’s attempt to pass a similar bill was met with objections from the Myanmar Federation of Chambers of Commerce and Industry.

Unconfirmed rumors of military council members already cracking down on those breaking the unratified laws are now spreading across the Southeast Asian nation, according to BBC Myanmar.

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Myanmar’s shadow government has acknowledged stablecoin Tether (USDT) as an official currency as it continues efforts to regain control from the military junta, reports Bloomberg.

Tin Tun Naing, the National Unity Government’s (NUG) finance minister, announced the adoption of the controversial dollar-pegged cryptocurrency in a Facebook post on Sunday.

The post claimed the pro-democracy group’s endorsement of Tether would “make it easy and speed up the current trade, services, and payment systems,” (translation via Bloomberg).

In May 2020, Myanmar’s central bank said it does not recognize crypto as official currency. It effectively banned financial institutions in the country from dealing with digital assets.

But the NUG is unable to access official government funds. Its Tether nod is likely an attempt to encourage Myanmar citizens to operate outside of the reach of the controlling military junta, which seized power earlier this year.

Myanmar’s parallel government needs cash

The NUG operates as a government-in-exile, outside of official office. The group is made up of leaders from the Southeast Asian state’s last civilian government.

Myanmar had previously been under complete military control for decades. In 2015, Aung San Suu Kyi led the National League for Democracy party (NLD) to a historic victory.

NLD became the first administration not selected by the military and its political allies. The party lost power after a military coup in February this year.

Suu Kyi and a number of party members were detained by military forces on the day that the NLD’s second term in office was set to begin.

The NLD won a landslide victory in the previous November’s general election, securing 80% of the vote.

The coup followed accusations of voter fraud by the military-supported Union Solidarity and Development Party (USDP).

The military set its commander-in-chief as leader and declared a year-long state of emergency. A president was installed in August.

Throughout this, often violent conflict between citizens and the ruling military junta has resulted in more than 1,000 civilian deaths.

Military control remains despite the rising death toll and NUG’s recognition from the western world as the legitimate leading party.

Tether as an alternative to Myanmar’s kyat

Since the coup, the NUG has been on a billion-dollar fundraising campaign to finance its challenge for political power.

It reportedly raised $9.5 million in 24 hours from the sale of so-called ‘Spring Revolution Treasury Bonds’ last month. Running totals are unreported.

In its current political state, Myanmar continues to descend into financial chaos. NUG’s endorsement of Tether, while a novelty for crypto, could actually make matters worse for the in-power military government if adopted at scale.

In May, parallel finance minister Tun Naing warned foreign countries and banks against offering financial support to the military regime. He promised he would not honor any debt should the NUG regain power.

NUG has also encouraged citizens to withhold tax and boycott junta-linked businesses.

[Read more: Tether Papers: This is exactly who acquired 70% of all USDT ever issued]

And with Myanmar’s local currency, the kyat, plummeting, Tether could be an attractive option for citizens wanting to reject the status quo.

However, as crypto researcher Bennett Tomlin pointed out, Tether actively freezes sanctioned addresses at the whim of the Feds and other global enforcement agents.

So, Myanmar’s shadow government adopting Tether as official currency leaves open the opportunity for their finances to be controlled by foreign interests, particularly the US.

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