DOJ Seizes $225.3 Million in Cryptocurrency Linked to Pig Butchering Scams

The United States Department of Justice has initiated legal proceedings to seize approximately $225.3 million in cryptocurrency, marking a significant move against large-scale "pig butchering" scams. These scams involve deceiving individuals into transferring money after gaining their trust, often through fake social media profiles and fabricated stories. The term "pig butchering" refers to the process of fattening a pig before slaughtering it, likening it to the scammers' method of gaining victims' trust before defrauding them.

The seized funds, primarily in Tether's USDT stablecoin, were part of an extensive money laundering network. The DOJ's investigation revealed that the cryptocurrency was laundered through the OKX exchange after being stolen from unsuspecting investors. The complaint filed by the DOJ alleges that the cryptocurrency addresses holding the funds were part of a complex 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 cryptocurrency investment fraud.

Tether, the issuer of USDT, collaborated with the U.S. Secret Service and the Federal Bureau of Investigation to facilitate the seizure. An investigation by these agencies deemed the millions of dollars in USDT to have been from proceeds of crypto scams. Tether CEO Paolo Ardoino stated that the company is committed to setting the standard for compliance in digital assets and ensuring that stablecoins are not misused by malicious actors. Tether has a history of working with law enforcement to identify and freeze tokens linked to criminal activities, having previously frozen $2.7 billion in tokens related to such activities.

The investigation began in 2023 when Tether and the crypto exchange OKX discovered that over 144 accounts on the exchange could be traced back to confidence scams. These accounts, originating from IP addresses in the Philippines, deposited $3 billion in crypto over a year, engaging in what the feds described as "high-volume money laundering." The USDT stablecoin, pegged to the value of the U.S. dollar, is one of the most traded digital assets in the industry. It is commonly used by traders to enter and exit crypto transactions, serving as the backbone of the digital asset economy.

The DOJ's enforcement action underscores the growing concern over the misuse of cryptocurrencies in fraudulent activities and the need for stringent regulatory measures to combat such crimes. The perpetrators of the crypto investment fraud used a complex web of transactions in an attempt to obfuscate the flow of illicit funds. However, authorities leveraged blockchain analytics tools to trace the transactions and link them to the fraudulent operation. According to the DOJ, the scammers defrauded more than 400 victims globally.

U.S. Attorney Pirro emphasized the importance of the DOJ's role in combating crypto-confidence scams, stating that the U.S. Attorney’s office for the District of Columbia is taking a leading role in the fight against these scams. The DOJ's action is part of a broader effort to seize and forfeit stolen funds and rip them from the hands of foreign criminals, all with the eye toward making victims whole. The DOJ's enforcement action is a significant step in the fight against crypto fraud and highlights the importance of collaboration between law enforcement agencies and private companies in combating these crimes.