DOJ Files Suit to Forfeit $7.1M in Crypto Linked to Oil Storage Fraud

The U.S. Department of Justice has launched a civil forfeiture action to recover $7.1 million in cryptocurrency tied to a fraudulent oil and gas storage investment scheme. The assets, traced through a complex web of crypto wallets and exchanges, were obtained by co-conspirators between June 2022 and July 2024 as part of a multi-year scam. Acting U.S. Attorney Teal Luthy of the Western District of Washington emphasized the government’s swift tracing of digital assets, which has allowed the recovery of a portion of the $97 million total illicit proceeds previously seized by Homeland Security Investigations in December 2023 [1]. The case highlights the DOJ’s ongoing efforts to combat cryptocurrency-enabled financial crimes, particularly schemes exploiting the pseudonymity of digital assets for money laundering.

The fraudulent operation targeted investors with promises of high returns from fictitious oil tank storage rentals in Rotterdam, Netherlands, and Houston. Victims were directed to send funds to escrow accounts controlled by the fraudsters, who then ceased communication after receiving payments. At least seven entities were identified as recipients of these funds, with proceeds funneled through 81 bank accounts and 19 cryptocurrency wallets. The stolen assets were converted into Bitcoin, USDT, USDC, and Ethereum, with the majority transferred to the Binance exchange. Investigators also traced connections to individuals in Russia and Nigeria, where some funds were allegedly sent to exchanges linked to transnational criminal organizations, including groups associated with terrorism and sanctions violations [1].

Geoffrey K. Auyeung, 47, a resident of Newcastle, Washington, was indicted in August 2024 for receiving the bulk of the illicit proceeds. At the time of his arrest, $2.3 million was recovered from his bank accounts, in addition to the $7.1 million in crypto sought for forfeiture. The DOJ filing notes that the scheme’s complexity involved rapid transfers across jurisdictions, leveraging both traditional and digital financial systems to obscure the trail. If the court approves the forfeiture, the funds will be distributed to identified victims. To date, investigators have recovered $17.9 million in total losses, with the amount expected to rise as more victims come forward [1].

The case underscores the challenges law enforcement faces in tracking illicit crypto transactions, despite advancements in blockchain analytics. The DOJ’s ability to trace and seize assets in this case reflects a growing capacity to hold perpetrators accountable, even in cross-border schemes. However, the sophistication of the fraud—spanning nearly two years and multiple jurisdictions—also highlights vulnerabilities in the regulatory landscape. The use of offshore exchanges and transnational criminal networks demonstrates how digital assets can facilitate large-scale financial crimes, even as authorities increasingly focus on recovery efforts.

Source: [1] [US Feds File Suit to Forfeit $7.1M in Crypto With Ties to Oil and Gas Storage Fraud] [https://cryptopotato.com/us-feds-file-suit-to-forfeit-7-1m-in-crypto-with-ties-to-oil-and-gas-storage-fraud/]