"Bitcoin Stolen in SIM Swap Attacks Funneled Through Casino to Obscure Trail"

The U.S. Justice Department has filed a civil forfeiture complaint seeking the recovery of over $5 million in bitcoin allegedly stolen through a series of SIM swap attacks on victims across the country. The funds, traced to five victims, were reportedly transferred between October 2022 and March 2023, after perpetrators used SIM swapping techniques to gain unauthorized access to their cryptocurrency accounts. The complaint, announced by U.S. Attorney Jeanine Ferris Pirro, highlights the sophisticated tactics employed by the attackers, who leveraged weaknesses in multi-factor authentication systems to intercept verification codes and transfer stolen assets to accounts they controlled.

A SIM swap attack involves manipulating telecommunications providers to transfer a victim’s phone number to a SIM card under the attacker’s control. This allows the perpetrator to intercept two-factor authentication codes and gain unauthorized access to digital accounts, including cryptocurrency wallets. With this access, they can then transfer the funds without the victim's knowledge. The stolen bitcoin was subsequently moved through a series of cryptocurrency wallets before being consolidated into a single wallet, which was then used to fund an account at Stake.com, an online casino. This series of transactions, including 32 circular deposits and withdrawals of BTC within a two-day period in March 2023, was designed to obscure the origin of the funds and mimic legitimate financial activity.

The Justice Department’s move underscores the growing focus on cryptocurrency-related crimes and the enforcement of anti-money laundering (AML) measures. As part of the case, Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division and FBI Special Agent in Charge Brett D. Skiles of the Miami Field Office have collaborated with prosecutors to pursue asset forfeiture of the ill-gotten gains. The case is being led by Trial Attorneys Jessica Peck and Gaelin Bernstein from the Computer Crime and Intellectual Property Section (CCIPS), along with Assistant U.S. Attorneys for the District of Columbia Kevin Rosenberg, Alexandra Hughes, and Asset Forfeiture Coordinator Rick Blaylock, Jr. Since 2020, CCIPS has pursued over 180 cybercrime convictions and secured court orders for the return of more than $350 million in victim funds, demonstrating the agency’s commitment to recovering assets lost to digital fraud.

This case is not an isolated instance of cryptocurrency being used in financial crime. The complex nature of digital assets, including the difficulty in tracing ownership and the lack of centralized oversight in many markets, makes them an attractive tool for money laundering. Circular transactions, such as those conducted in this case, are often used to “clean” the proceeds of criminal activity, creating the illusion of legitimate business activity by inflating transaction volumes and making the origins of funds appear benign. Financial institutions and regulators have increasingly recognized these tactics as red flags, with some estimating that up to 87 percent of global illicit financial flows may be attributed to trade-based money laundering. While the Justice Department’s efforts target digital fraud specifically, the broader financial ecosystem continues to grapple with the evolving tactics of criminals who exploit cross-border trade, supply chains, and the anonymity of digital currencies to obscure the origins of their proceeds.

The enforcement actions taken by the Justice Department in this case highlight a growing trend of collaboration between law enforcement and digital forensics teams. Blockchain analytics and digital investigations are now standard tools in tracing illicit transactions, especially in cases involving cryptocurrencies. The ability to map wallet addresses, smart contracts, and exchange records has proven essential in building compelling evidence for civil and criminal cases. As the Justice Department continues to refine its approach to digital crime, it is likely to expand its use of advanced analytics and international cooperation to counter increasingly sophisticated financial crimes.