The U.S. government today imposed economic sanctions on Funnull Technology Inc., a Philippines-based company that provides computer infrastructure for hundreds of thousands of websites involved in virtual currency investment scams known as “pig butchering.” In January 2025, KrebsOnSecurity detailed how Funnull was being used as a content delivery network that catered to cybercriminals seeking to route their traffic through U.S.-based cloud providers.“Americans lose billions of dollars annually to these cyber scams, with revenues generated from these crimes rising to record levels in 2024,” reads a statement from the U.S. Department of the Treasury, which sanctioned Funnull and its 40-year-old Chinese administrator Liu Lizhi. “Funnull has directly facilitated several of these schemes, resulting in over $200 million in U.S. victim-reported losses.”

Pig butchering is a rampant form of fraud wherein people are lured by flirtatious strangers online into investing in fraudulent cryptocurrency trading platforms. Victims are coached to invest more and more money into what appears to be an extremely profitable trading platform, only to find their money is gone when they wish to cash out.

Amazon said its Amazon Web Services (AWS) hosting platform actively counters abuse attempts.

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So why do ordinary people keep buying crypto? Part of the answer is intense marketing; as I mentioned in a recent post, my Venmo app (which is actually useful) is constantly trying to sell me crypto. But the most compelling explanation why people buy crypto is that there is a clear affinity between the psychology of buying crypto and the psychology of gambling. Retail crypto looks, in particular, a lot like the “numbers racket,” which siphoned millions of dollars from generations of working-class Americans until it was largely supplanted by state lotteries.
The numbers racket was illegal, but flourished anyway because the criminal organizations paid off police and politicians.
But they were pikers by today’s standards. According to Public Citizen, crypto companies accounted for almost half of all corporate spending during the 2024 election. Donald Trump and his family have made billions off the $Trump and $Melania “meme coins,” but I wouldn’t be surprised to learn that other politicians have also been the beneficiaries of crypto largesse.

What is a stablecoin? It’s a digital token like Bitcoin — that is, an asset that “belongs” to whoever has the secret numerical key that unlocks it. But unlike Bitcoin, whose value in dollars fluctuates wildly day to day, a stablecoin is supposed to retain a fixed value in dollars. The stablecoin issuer maintains that stability by standing ready to buy its tokens back, holding reserves of conventional assets like Treasury bills for that purpose.

One way to think about this is that stablecoin issuers are like banks back in the days before the Civil War, when gold and silver coins were the only official forms of money. Many banks issued paper currency, which they promised to redeem for gold and silver coins on demand. Similarly, stablecoin firms issue tokens that they promise to redeem for dollars.

Today, however, the federal government is deeply involved in banking, for very good reasons. After the devastating bank runs of the 1930s, in particular, officials realized that they needed to guarantee the value of deposits via the FDIC, while at the same time requiring banks to limit the kinds of risks they take. The goal was to limit the risk of financial crisis. While we did have a nasty crisis in 2008, that mostly involved “shadow banks” that evaded precautionary regulation. And stablecoins are, among other things, a new kind of shadow bank.

The fundamental point is that the growth and legitimation of stablecoins poses new risks to overall financial stability — all in the name of making it easier for criminals to do their business.