U.S. DOJ Seizes $7.1M in Crypto Tied to $97M Oil and Gas Investment Scam

The U.S. Department of Justice has initiated a civil forfeiture action to recover $7.1 million in cryptocurrency linked to a fraudulent oil and gas investment scheme that defrauded victims of approximately $97 million between June 2022 and July 2024. The seized crypto, held by Homeland Security since December 2024, is part of a broader effort to dismantle a transnational money laundering network. The scheme allegedly operated through shell companies and cryptocurrency accounts to obscure the flow of illicit funds, with proceeds funneled into Bitcoin, Tether, USD Coin, and Ethereum before being sent to exchanges in Russia and Nigeria.

Geoffrey K. Auyeung, a 47-year-old resident of Newcastle, Washington, was indicted in August 2024 for his role in the operation. Federal agents confiscated $2.3 million from his bank accounts at the time of his arrest, while the $7.1 million in crypto sought by the DOJ remains in custody. Prosecutors allege Auyeung used victims’ funds to purchase cryptocurrency and transferred the majority of the assets to Binance, a major exchange. The scheme lured investors with promises of profits from oil tank storage rentals in Rotterdam and Houston, but victims were cut off once payments were made. Authorities have identified at least 40 individuals who lost a combined $17.9 million, with further claims expected as investigations continue.

Acting U.S. Attorney for Seattle Teal Luthy Miller emphasized the complexity of the operation, noting that co-conspirators used 81 financial accounts and 19 cryptocurrency wallets to launder funds. “The co-schemers moved their ill-gotten gains through cryptocurrency accounts to launder stolen money,” Miller stated. “Our team worked rapidly to recover assets and ensure victims can reclaim what was taken from them.” The DOJ’s ability to trace and seize the crypto highlights advancements in tracking cross-border digital transactions, despite the anonymity often associated with cryptocurrency. If approved, the forfeiture would add $9.4 million to the funds reclaimed for victims, pending court authorization.

The case underscores the growing use of cryptocurrency in financial crimes, particularly in schemes exploiting niche markets like energy sector investments. Fraudsters leveraged the perceived legitimacy of oil and gas projects to attract victims, then routed stolen assets through jurisdictions known for lax oversight. Russian and Nigerian exchanges, some of which have been linked to money laundering for transnational criminal groups, facilitated the movement of proceeds. The DOJ’s focus on these jurisdictions aligns with broader efforts to close regulatory gaps and hold intermediaries accountable for enabling illicit activities. Prosecutors also highlighted the speed of their response, which limited the time fraudsters had to conceal assets before seizure.

Victims of the scam, many of whom invested in high-yield oil and gas ventures, now face the challenge of recovering their losses. The DOJ’s actions provide a precedent for using civil forfeiture to target cryptocurrency in cross-border fraud, though the $97 million total loss reflects ongoing vulnerabilities in investor protections. Authorities have urged the public to exercise caution with unsolicited investment offers, particularly those promising rapid returns. As cryptocurrencies become more entrenched in global finance, cases like this highlight the need for robust anti-money laundering (AML) frameworks to balance innovation with security. The outcome of the forfeiture request will depend on judicial review, but the DOJ’s proactive approach signals a continued focus on disrupting criminal enterprises through digital asset tracing.