Feds Seize $112 Million From Accounts Used In Crypto Currency Scams

April 4, 2023 TH Author headline,government,bank,usa,cybercrime,fraud,cryptography

Over $112 million in virtual currency linked to cryptocurrency investment scams was seized by the Department of Justice.

The DoJ said the seizure warrants were authorized for six cryptocurrency accounts by judges in Arizona, California and Idaho, according to a Monday announcement of the actions.

The accounts were used to allegedly launder proceeds from various scams where fraudsters cultivated long-term relationships with online victims in efforts to entice them to make investments in fake cryptocurrency trading platforms, according to the DoJ. Instead, the funds sent by victims were funneled to crypto addresses and accounts controlled by the scammers.

“Transnational criminal organizations are combining confidence scams with technological savvy to swindle Americans out of their hard-earned funds,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “These particularly vicious frauds — where scammers carefully cultivate relationships with their victims over time — have devastated families and cost individuals their life savings.”

Investment fraud caused the most losses of any scam reported to the FBI’s Internet Crime Complaint Center in 2022, totaling $3.31 billion. The majority of the fraud involved cryptocurrency, which increased 183% to $2.57 billion in losses from the year before.

The DoJ noted in its news release that so-called “pig butchering” scams where fraudsters target their victims through social networking, dating sites, phone calls or text messages, that appear to have been misdialed. After gaining the victim’s trust — sometimes over a period of months — scammers eventually introduce the idea of trading in cryptocurrency.

Polite said the government seeks to return the ill-gotten funds to victims and raise the public’s awareness of cryptocurrency scams.

“Depriving scam organizations of their ill-gotten gains is an important part of our strategy to combat these ruthless schemes,” said Director Eun Young Choi of the Criminal Division’s National Cryptocurrency Enforcement Team (NCET). “We will continue to use all tools at our disposal to disrupt and deter cryptocurrency confidence schemes, including by following the money on the blockchain and seizing cryptocurrency to return funds to victims, and by targeting and taking down online infrastructure used by the scammers.”