The U.S. Department of Justice has filed a request to seize $225.3 million, which is the proceeds of crypto investment scams, specifically “pig butchering.”
The fraudulent activity is a long-running “confidence scam” that involves tricking victims into investing in cryptocurrency, often with the promise of a romantic relationship, before the perpetrators disappear with the invested funds.
“These scams prey on trust, often resulting in extreme financial hardship for the victims,” said Special Agent in Charge Shawn Bradstreet of the U.S. Secret Service San Francisco Field Office.
It also involves workers who are trafficked and enslaved in Southeast Asian countries to commit fraud on behalf of their masters, which happened to be the case.
In 2024, crypto investment scams resulted in $5.8 billion in losses, according to the FBI’s Internet Crimes Complaint Center (IC3). In 2023, Americans lost $4 billion to crypto scams, up from $2.57 billion in 2022, highlighting the upward trend.
The DOJ, the FBI, and the U.S. Secret Service collaborated with private partners, Tether and TRM Labs, to effect the forfeiture. When effected, the seizure will be the largest in the U.S. Secret Service’s history.
“Today’s civil forfeiture complaint is the latest action taken by the Department to protect the American public from fraudsters specializing in cryptocurrency-based scams, and it will not be the last,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division.
U.S. authorities shut down a network of crypto investment scams
According to the DOJ, law enforcement agents utilized cryptocurrency analysis and other investigative tools to link the funds to crypto-related money laundering. They belonged to a “sophisticated blockchain-based money laundering network” involving “hundreds of thousands of transactions” and affected over 400 victims.
According to the unsealed civil complaint, notable victims include Shan Hanes (S.H.), the former CEO of Heartland Tri-State Bank, who was sentenced to 24 years in a federal prison for embezzling millions of dollars to invest in a pig butchering crypto scam. The civil complaint also listed other victims who innocently lost millions of dollars in the crypto investment scams.
Stablecoin company Tether and crypto trading platform OKX notified American law enforcement authorities of over 144 accounts linked to the fraudulent activity, which were likely controlled by the same entity for money laundering.
Twenty-two accounts were confirmed to have received funds from crypto investment scams, while the rest were used in laundering the stash. OKX noted that all the 144 accounts received and sent money to the same accounts, thus linking them to a single group of scammers.
One of the accounts identified had received $3.1 million from the convicted Tri-State Bank CEO, who had invested $47.1 million into pig butchering crypto investment scams, hoping to make a killing.
Most OKX accounts were linked to Vietnamese nationals’ identity documents, with their face ID photos taken in the same location, suggesting that highly organized crime was at play.
Each group of accounts held between $3 million and $135 million and triggered unnecessary gas fees to cover their tracks by discouraging tracking.
Tether assisted the seizure by freezing the accounts, burning the tokens, and reissuing the same Uncle Sam to enable the process. Victims of the intricate crypto investment scams are still being identified to allow them to recover their stolen funds.
“The USSS, FBI, and our private partners worked diligently to trace these illicit transactions, identify victims and seize these funds so that they can eventually be returned to their rightful owners,” said USSS Special Agent Bradstreet.
Meanwhile, the Trump administration has proposed utilizing unclaimed crypto assets recovered from investment scams to establish America’s first cryptocurrency reserves.
