DOJ Seizes $225.3 Million in Cryptocurrency to Combat Fraud

The U.S. Department of Justice (DOJ) has taken a significant step in combating cryptocurrency fraud by filing a legal request to seize approximately $225 million in cryptocurrency assets. These assets are alleged to have been involved in various fraudulent and illegal operations, targeting over 400 victims. The fraudsters used trust-based investment proposals, a scam known as “pig butchering,” to collect cryptocurrency from individuals. The acquired crypto assets were then transferred across different wallets and networks to conceal their origins.

The DOJ's complaint states that the seized assets were either acquired illegally or used to commit crimes. If the court accepts this complaint, the U.S. government will officially take ownership of these cryptocurrencies. This case sets a significant precedent in the tracking and seizure of crypto assets, highlighting the government's firm stand against frauds committed via crypto assets. Matthew R. Galeotti, head of the DOJ’s Criminal Division, emphasized that such frauds lead to serious economic losses for American victims.

This legal confiscation attempt is part of the DOJ's ongoing efforts to protect American people from crypto-based fraud. These cases cost victims billions of dollars every year and undermine confidence in the cryptocurrency ecosystem. The DOJ's investigators and prosecutors will continue to track these operations and illicit earnings, remaining persistent in recovering victims’ assets.

A civil forfeiture case is initiated when there is a strong suspicion that the assets were acquired through illegal means or used to commit crimes. During this process, the transfer history of the relevant funds is scrutinized, and the movements are tracked across associated networks. Authorities continue their efforts to compensate victims and prevent similar cases in the future. Recovered assets will be returned to the victims, and any remaining portion will be added to the DOJ’s cryptocurrency stockpile.

Warnings issued to investors advise caution against sharing personal information and claims of high returns. The DOJ emphasizes that this case exemplifies the growth in both the number of victims and the total lost assets through cryptocurrencies. While authorities urge investors to stay informed, the court’s decision is being closely monitored due to its potential implications on crypto markets. The outcome could set the stage for financial regulations and new policy developments.

The U.S. Attorney’s Office for the District of Columbia, in collaboration with the Justice Department’s Criminal Division, the U.S. Secret Service, and the FBI, has been actively pursuing these scammers. The seizure of $225.3 million marks the largest cryptocurrency seizure in U.S. Secret Service history. This action underscores the government's commitment to protecting the public from fraudsters specializing in cryptocurrency-based scams, which cost American victims billions of dollars annually and undermine faith in the cryptocurrency ecosystem.

The investigation, led by the U.S. Secret Service San Francisco Field Office and the FBI San Francisco Field Office, involved tracing illicit transactions, identifying victims, and seizing the funds. The goal is to eventually return the stolen assets to their rightful owners. The Department of Justice has expressed gratitude to Tether for its proactive assistance in this 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.

The public is encouraged to report any suspected cryptocurrency investment fraud or other cyber-enabled crimes to the FBI Internet Crime Complaint Center. Victims of the scams alleged in the government’s complaint are advised to include the code “BT06182025” in the narrative of their complaint or note any prior related complaints. This proactive approach by law enforcement agencies aims to disrupt malicious networks and recover funds for those targeted by these fraudulent schemes.