US Secret Service Seizes $400 Million in Cryptocurrency Scams Over Decade

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) specializes in digital financial crimes, using software, subpoenas, and spreadsheets to trace fraudulent activities.

Investigators like Jamie Lam, an investigative analyst with the US Secret Service, have successfully traced fraudulent activities to their origins. By analyzing domain names, cryptocurrency payments, and IP addresses, the GIOC has managed to seize nearly $400 million in digital assets over the past decade. This figure highlights the agency's growing role as one of the world's largest crypto custodians, following its past successes in cracking down on digital currencies like Liberty Reserve and E-Gold.

Kali Smith, a lawyer directing the Secret Service’s cryptocurrency strategy, leads a team that has conducted workshops in over 60 countries. These workshops train local law enforcement and prosecutors in identifying and unmasking digital crimes. The agency targets jurisdictions with weak oversight or residency-for-sale programs, providing training at no cost to enhance global investigative capabilities.

In Bermuda, a British overseas territory known for its comprehensive crypto framework, the Secret Service team conducted a workshop to educate local authorities on the risks and investigative techniques related to digital asset fraud. Bermuda's governor, Andrew Murdoch, emphasized the need for strong investigative powers to combat the exploitation of financial technologies.

The GIOC's efforts have led to significant recoveries, including a case involving an Idaho teenager who was extorted after sending a nude photo to a stranger. The extortionist, who was later arrested in England, had processed about $4.1 million across nearly 6,000 transactions. This case underscores the real-world impact of digital currency fraud and the importance of international cooperation in tracking down perpetrators.

Fraud tied to digital currencies now drives a majority of US internet-crime losses, with Americans reporting $9.3 billion in crypto-related scams in 2024. Older victims, in particular, have borne the largest share of these losses, often falling prey to bogus investment sites. The Secret Service's collaboration with industry partners, such as Coinbase and Tether, has been crucial in recovering stolen funds.

In some cases, digital currency fraud has spilled into real-world violence. In New York, two investors were indicted for allegedly kidnapping and torturing a friend to gain access to his digital wallet. In Connecticut, six men were charged with abducting the parents of a teenage hacker who had stolen $245 million in Bitcoin, attempting to extort a ransom. These incidents highlight the severe consequences of digital currency fraud and the need for robust investigative measures.

To recover stolen funds, the Secret Service relies on industry partners who provide trace analysis and wallet freezes. One of the largest recoveries involved $225 million in USDT, linked to romance-investment scams. The agency's long-standing mission of following the money has evolved to include digital currencies, reflecting its commitment to combating financial crimes in the modern era.