Coinbase Aids $225 Million Crypto Seizure in Major Fraud Bust

Coinbase, a prominent cryptocurrency exchange, has disclosed its crucial involvement in a significant operation led by the U.S. Secret Service, resulting in the seizure of $225 million in cryptocurrency. This operation, which took place earlier this month, is the largest cryptocurrency seizure in the agency's history. The funds were linked to a sophisticated online fraud and human trafficking scheme, specifically targeting "pig butchering" scams, a form of romance-based financial fraud.

The investigation, which began in 2023, involved multiple federal agencies, including the U.S. Secret Service, FBI, and the U.S. Attorney’s Office. The seizure was formally ordered last week, with the funds, approximately $225 million worth of USDT, initially frozen by Tether, the issuer of the USDT stablecoin, in December 2023. Tether's action was pivotal in the investigation, as the funds were stored in self-custody wallets allegedly linked to the criminal group.

Coinbase's compliance and security teams were instrumental in tracking the illegal funds on the blockchain. According to a company statement, Coinbase employees spent several days tracing crypto transactions, identifying how the stolen assets moved through wallets, and connecting them to accounts originating from its platform. The company also assisted in tracking potential victims eligible for compensation. Shawn Bradstreet, Special Agent in Charge at the U.S. Secret Service, described the seizure as the "largest cryptocurrency seizure in the U.S. Secret Service history."

Tether, which has faced scrutiny for its role in the crypto ecosystem, commended the operation and emphasized its broader efforts to combat criminal activity in the crypto space. The company claimed it has now frozen over $2.7 billion in USDT tied to illicit transactions globally. As the investigation progresses, victims who believe they were affected are being encouraged to file a report with the FBI’s Internet Crime Complaint Center.

This seizure highlights the increasing importance of cryptocurrency exchanges in law enforcement efforts to combat financial crimes. Coinbase's proactive role in assisting federal authorities demonstrates the company's commitment to maintaining the integrity of the crypto ecosystem. The successful seizure also underscores the effectiveness of collaboration between private sector entities and law enforcement agencies in tackling complex financial crimes.