Kraken Aids USSS in $225 Million Crypto Fraud Seizure

Kraken, a prominent cryptocurrency exchange, has played a pivotal role in assisting the United States Secret Service (USSS) in a groundbreaking investigation into a crypto fraud scheme. The collaboration resulted in the largest-ever crypto seizure by the USSS, amounting to approximately $225 million. The fraudsters employed social engineering techniques, commonly known as “pig butchering,” to build trust with victims over time, luring them into fake cryptocurrency investments. Victims were gradually encouraged to deposit increasing amounts, only to eventually discover their funds had been stolen.

The $225 million in question was initially frozen by Tether in 2023, after being linked to pig butchering in a United States Department of Justice investigation. The stolen funds were tied to the perpetrators’ accounts at a non-Kraken centralized exchange. Identifying the victims and returning their funds presented a significant challenge, requiring extensive knowledge of blockchain analytics.

In March 2024, Kraken joined several cryptocurrency exchanges in an intensive, weeklong law enforcement sprint. The exchange's compliance and investigative teams provided rapid, real-time responses to crucial information requests. Kraken's timely provision of transaction and account information was instrumental in identifying nearly 500 victims. This directly supported the USSS in obtaining the seizure warrant for the unprecedented $225 million confiscation of stolen funds.

Kraken remains dedicated to cooperating with law enforcement to safeguard the cryptocurrency ecosystem. The exchange's rapid-response approach and meticulous record-keeping reflect its ongoing commitment to security, transparency, and protecting its customers. Kraken also has strict policies and procedures to protect client privacy while supplying data when legally obligated to do so.

Kraken continues to actively participate in efforts aimed at identifying and stopping fraud, supporting victim recovery, and maintaining trust within the crypto community. David Zacks, Kraken Deputy Chief Compliance Officer, stated, “Protecting clients is our highest priority, and we’re proud to have supported efforts leading to this historic recovery of stolen funds. Our rigorous compliance practices, cutting-edge security protocols, and onchain investigative capabilities reflect our deep commitment to safeguarding client assets and preserving confidence in crypto. We will continue to fight fraud and help ensure the crypto ecosystem remains safe and secure for all users.”

For those who believe they are victims of cryptocurrency fraud, Kraken encourages reporting the case to local authorities and to the FBI Internet Crime Complaint Center. Prompt reporting can help prevent future scams and assist in the recovery of stolen funds.