U.S. DOJ recovers $7.1M in crypto from $97M oil & gas fraud via shell companies and international laundering.

The U.S. Department of Justice has initiated a civil forfeiture action to recover $7.1 million in cryptocurrency linked to a two-year oil and gas investment fraud scheme. The funds, seized by Homeland Security Investigations in December 2024, are tied to a network of shell companies and transnational money-laundering operations. The DOJ alleges the scheme defrauded victims through fake investments in oil tank storage facilities, with proceeds funneled into crypto accounts across Russia and Nigeria. Geoffrey K. Auyeung, a 47-year-old U.S. resident, was indicted in August 2024 for his role in the scam, with authorities seizing $2.3 million from his bank accounts at the time of his arrest.

The fraudulent scheme, active between June 2022 and July 2024, targeted investors under the guise of purchasing oil tank storage facilities in Rotterdam and Houston. Once victims transferred funds to escrow accounts, co-conspirators allegedly ceased communication and rapidly moved money through 81 bank accounts and offshore channels. The illicit proceeds were converted into Bitcoin, Tether, USD Coin, and Ethereum, with transactions traced to exchanges in Russia and Nigeria. At least one Nigerian cryptocurrency platform is accused of facilitating the laundering of proceeds for transnational criminal groups, including those violating international sanctions.

Authorities have identified over 50 victims who collectively lost $17.9 million, with the total stolen from the scheme estimated at $97 million. The DOJ’s forfeiture request, if approved, would add $7.1 million to the $2.3 million already seized, bringing the total reclaimed funds to $9.4 million. These will be distributed to verified victims as restitution. Prosecutors emphasized the complexity of the case, noting co-conspirators deliberately layered transactions across multiple jurisdictions to obscure the trail. Federal agencies used advanced tracking tools to freeze assets before they could be further dissipated, highlighting the role of international cooperation in tracing cryptocurrency exchanges in high-risk regions.

The case underscores the growing use of cryptocurrencies in financial fraud, where cross-border transactions and anonymity complicate recovery efforts. While the DOJ has successfully traced and frozen assets, the technical and legal challenges of seizing digital assets persist. The alleged involvement of exchanges in Russia and Nigeria raises questions about regulatory oversight in jurisdictions with weaker compliance measures. Prosecutors stress that targeting both fiat and crypto holdings disrupts the economic incentives driving such scams, but the lack of standardized protocols for tracking digital assets across borders remains a hurdle.

This enforcement action aligns with a broader trend of regulatory crackdowns on crypto-related crimes. Recent cases include the prosecution of OmegaPro promoters for a $650 million fraud and a former rugby player’s 2.5-year sentence for a $900,000 Ponzi scheme. The DOJ’s focus on digital assets reflects a strategic shift to adapt to the evolving financial crime landscape. By prioritizing the recovery of crypto holdings, authorities aim to hold fraudsters accountable while mitigating the risks posed by decentralized finance. The pending court approval of the $7.1 million forfeiture will set a precedent for future enforcement actions, particularly in jurisdictions where crypto-based fraud is on the rise.