US Secret Service Seizes $400 Million in Crypto Assets to Combat Scams

The US Secret Service is intensifying its global efforts to combat cryptocurrency scams, leveraging advanced digital tools and international collaboration to track down and seize illicit funds. The agency's Global Investigative Operations Center (GIOC) has been instrumental in this fight, using software, subpoenas, and spreadsheets to trace fraudulent activities and recover stolen assets.

Investigators like Jamie Lam, an investigative analyst with the US Secret Service, have shared insights into the tactics used by scammers. These scams often begin with a seemingly friendly message, leading victims to professional-looking cryptocurrency investment sites. Initial deposits show modest profits, encouraging victims to invest more, sometimes even borrowing money. However, the platform eventually stops responding, and the account balance disappears.

Lam and her team have successfully traced these frauds to their origins, using open-source tools to uncover the domain names, registration details, and payment methods behind the fake sites. A cryptocurrency payment can lead to another wallet, and a brief VPN failure can expose an IP address, providing crucial clues for the investigation.

Over the past decade, the GIOC has seized nearly $400 million in digital assets, a significant portion of which is stored in a single cold-storage wallet. This makes the Secret Service one of the world's largest crypto custodians. The agency's efforts are led by Kali Smith, a lawyer who directs the Secret Service’s cryptocurrency strategy.

Smith's team has conducted workshops in over 60 countries, training local law enforcers and prosecutors to unmask digital crimes. The agency targets jurisdictions with weak oversight or residency-for-sale programs, providing training for free to enhance global investigative capabilities.

One such workshop was held in Bermuda, a British overseas territory known for its comprehensive crypto framework. The training highlighted the need for strong investigative powers to combat the exploitation of financial technologies. Bermuda's governor, Andrew Murdoch, emphasized the importance of balancing economic growth with robust legal measures to address abuse.

During the workshop, Smith shared real-life cases, including one involving an Idaho teenager who was extorted after sending a nude photo to a stranger. The GIOC analysts reconstructed the extortion using screenshots, receipts, and blockchain data, leading to the arrest of the suspected extortionist in England.

Fraud tied to digital currencies now drives a majority of US internet-crime losses. Older victims are particularly vulnerable, losing significant amounts to bogus investment sites. Some schemes have even spilled into real-world violence, with cases of kidnapping and torture to gain access to digital wallets.

To recover stolen funds, the Secret Service collaborates with industry partners like Coinbase and Tether, which provide trace analysis and wallet freezes. One of the largest recoveries involved $225 million in USDT, linked to romance-investment scams.

Patrick Freaney, head of the agency’s New York field office, which oversees Bermuda, highlighted the agency's long-standing mission of following the money, emphasizing that this training is a crucial part of that mission. The Secret Service's global push against crypto scams underscores the importance of international cooperation and advanced investigative techniques in combating digital financial crimes.