DOJ Seeks $225.3 Million Crypto Seizure to Combat Fraud

The United States Department of Justice (DOJ) is pursuing the confiscation of approximately $225 million in cryptocurrency assets due to their alleged involvement in fraudulent schemes. The legal move, filed in the Federal Court of the District of Columbia, seeks approval to seize these assets, which would then be incorporated into the U.S. Government’s cryptocurrency reserves.

Fraudsters managed to deceive over 400 individuals by posing as legitimate investors using complex schemes known as “pig butchering.” Victims were persuaded to invest their crypto assets, which were swiftly moved through various digital channels to disguise their origins. The DOJ contends that the seized assets were acquired or used for criminal activities.

If the court approves the forfeiture, the government intends to use the recovered digital currencies to compensate the victims. Any remaining funds will bolster the DOJ’s crypto cache. Recent regulations, influenced by measures introduced in the current administration, now prohibit selling these seized assets due to past concerns that such sales have provoked market instability.

Today’s confiscation effort is a strategic move by the DOJ, aiming to secure the American public from cryptocurrency-related scams. These fraudulent activities drain billions annually and disrupt the trust in digital currencies. The DOJ's relentless efforts will persist until victims regain their financial security.

Scams similar to this represented a significant chunk of illicit digital proceeds in 2024. Such frauds highlight the rapidly evolving strategies of cybercriminals. Investors are cautioned to avoid disclosing personal details or falling for promises of substantial returns.

Civil forfeiture actions typically begin when there’s a probable link to illicit acquisition or utilization of assets in criminal actions. This involves a detailed examination of transaction histories and monitoring how these funds traverse through various networks, ensuring that victims receive the rightful reparations.

The DOJ’s cryptocurrency reserve expands with each successful legal action, solidifying their stance against crypto-related crimes. Blockchain intelligence platforms play a pivotal role in identifying and tracing illicit activities. Regulatory adjustments help stabilize market effects stemming from asset seizures.

Heightened vigilance is necessary as the court’s decision could bear significant implications on future financial regulatory frameworks. Stakeholders are keenly watching, given the potential for this case to reshape policies impacting the volatile crypto markets. This heightened scrutiny underscores the importance of advancing security measures to protect both investors and the broader digital financial ecosystem.

The U.S. Attorney’s Office has filed a civil forfeiture complaint in the U.S. District Court for the District of Columbia, targeting over $225.3 million in cryptocurrency. This action is part of an ongoing effort to combat cryptocurrency investment fraud, commonly known as cryptocurrency confidence scams. The U.S. Secret Service and the FBI, utilizing blockchain analysis and other investigative techniques, have determined that the seized cryptocurrency is linked to the theft and laundering of funds from victims of these fraudulent schemes.

The complaint alleges that the cryptocurrency addresses holding the funds were part of a sophisticated blockchain-based money laundering network. This network executed hundreds of thousands of transactions to conceal the nature, source, control, and ownership of the proceeds derived from the fraud. The scam operators dispersed the proceeds across numerous cryptocurrency addresses and accounts to obscure the source of the illicit funds. The investigation confirmed dozens of victims across the country who lost funds believing they were making legitimate cryptocurrency investments, with over 400 suspected victims worldwide.

The U.S. Attorney’s Office, under the leadership of U.S. Attorney Jeanine Ferris Pirro, has been at the forefront of combating these scams. Pirro emphasized the office's commitment to seizing and forfeiting stolen funds, aiming to return them to the victims. Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, highlighted the department's relentless pursuit of these scammers and their ill-gotten gains, aiming to protect the American public from fraudsters specializing in cryptocurrency-based scams.

Special Agent in Charge Shawn Bradstreet of the U.S. Secret Service’s San Francisco Field Office noted that this seizure marks the largest cryptocurrency seizure in the agency's history. The U.S. Secret Service, FBI, and private partners worked diligently to trace these illicit transactions, identify victims, and seize the funds for eventual return to their rightful owners. FBI Special Agent in Charge Sanjay Virmani of the San Francisco Field Office commended the investigative efforts, stating that cryptocurrency investment schemes can have devastating consequences for victims, far beyond just financial losses.

The investigation is being handled by the U.S. Secret Service San Francisco Field Office and the FBI San Francisco Field Office. The Department of Justice expressed gratitude to Tether for its proactive assistance in the investigation. The case is being handled by Assistant U.S. Attorneys Kevin Rosenberg and Rick Blaylock, Jr., of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorneys Stefanie Schwartz and Ethan Cantor of the Justice Department’s Computer Crime & Intellectual Property Section.

Members of the public who believe they are victims of cryptocurrency investment fraud and other cyber-enabled crimes are encouraged to contact the FBI Internet Crime Complaint Center. Those who believe they may be victims of the scams alleged in the government’s complaint are advised to add the code “BT06182025” in the narrative of their complaint, and if they have previously filed a related complaint, to make note of the prior complaint in the narrative.