Coinbase Aids US Secret Service in $225 Million Crypto Seizure

Crypto exchange Coinbase has revealed its significant role in a recent US Secret Service investigation that led to the seizure of $225 million in cryptocurrency linked to investment scams. The Department of Justice filed a seizure order on June 18, targeting funds allegedly stolen by pig butchering scammers, marking the largest cryptocurrency seizure in the agency’s history.

Coinbase detailed its involvement in a blog post, stating that it participated in an "investigative sprint" with the Secret Service in 2024. This collaborative effort involved identifying scam victims, analyzing transaction flows, and building a case to seize the cryptocurrency. Between February 26 and February 29 of last year, Coinbase's team traced millions in crypto transactions to illicit wallets and other suspicious account activities, which helped flag victims for the Secret Service.

Through this analysis and the production of subpoena records, the Secret Service was able to identify over 130 Coinbase customers who were defrauded, totaling $2.3 million in losses. Additionally, the Secret Service traced some of the frozen funds back to 140 accounts at the crypto exchange OKX, many of which were held in the names of individuals detained at scam compounds in Southeast Asia.

Stablecoin issuer Tether played a crucial role in the investigation by freezing 39 wallet addresses containing the $225 million in its stablecoin USDT. These tokens were later burned, meaning they were permanently removed from circulation. The equivalent amount of new USDT was then reissued and transferred to a wallet controlled by the Secret Service, providing a transparent example of how cryptocurrency can enhance law enforcement operations.

This seizure is part of a broader trend of global authorities seizing stolen cryptocurrency. In May, the Australian Federal Police seized nearly 25 Bitcoin, worth over $2.6 million, linked to a heist of 950 Bitcoin stolen from a French crypto exchange in 2013. Earlier in February, German law enforcement seized 34 million euros ($38 million) in crypto from eXch, a platform allegedly used to launder funds stolen after a $1.4 billion hack on Bybit.

Coinbase's involvement in this investigation highlights the growing importance of cryptocurrency exchanges in supporting law enforcement efforts to combat financial crimes. By leveraging blockchain analysis and collaborating with regulatory bodies, exchanges like Coinbase are playing a key role in enhancing the transparency and security of the cryptocurrency ecosystem. This case serves as a reminder of the potential for cryptocurrency to be used in illicit activities, as well as the effectiveness of collaborative efforts between private companies and law enforcement in addressing these challenges.