The US Department of Justice (DOJ) has saved the funds of victims of many crypto investment scams by seizing over $112 million from crypto accounts linked to fraudulent schemes.
According to the press release by the US DOJ on Monday, April 3rd, the agency seized six cryptocurrency accounts linked to crypto scams after seizure warrants “authorized by judges in the District of Arizona, the Central District of California, and the District of Idaho.”
Justice Department Seizes Over $112M in Funds Linked to Cryptocurrency Investment Schemeshttps://t.co/8anAAIAeEy
— Criminal Division (@DOJCrimDiv) April 3, 2023
Pig Butchering Crypto Scams Accounted for $2.57B Losses in 2022
As per the announcement, the funds seized were linked to what is commonly called “pig butchering,” also known as romance scams. They are long-term scams where scammers win victims’ trust and entice them to invest in fake trading platforms controlled by them or their co-conspirators.
According to the FBI, individuals between 30 and 49 reported the most about these kinds of scams. In these pig butchering schemes, scammers target their victims through social media, other communications apps like Whatsapp or Telegram, phone, and messages “that are meant to appear to have been misdialed.”
After winning the victims’ trust over weeks or months, they eventually introduced the idea of cryptocurrency investments and directed victims to legitimate-looking crypto trading websites or apps controlled by them.
During small initial investments, victims were shown substantial gains and could even withdraw some of their profits. The press release adds:
“It is not until a large investment is made that victims find that they are unable to withdraw their funds. Even when a victim is denied access to their funds, the fraud is often not yet over. Scammers request additional investments, taxes, or fees, promising that these payments will allow victims access to their accounts. These scam operations often continue to steal from their victims and do not stop until they have deprived victims of any remaining savings.”
Six accounts seized by DOJ were used to launder the proceeds of these crypto investment scams. Instead of any trading activity, victims’ funds were funneled to accounts controlled by scammers and their accomplices. These accounts held more than $112 million.
The FBI’s Internet Crimes Complaint Center (IC3) data recalls $3.31 billion in losses related to investment fraud in 2022. Scams using cryptocurrency, such as pig butchering, represented the vast bulk of these schemes, reaching $2.57 billion.
A separate release by the US Attorney’s Office, Central District of California, reveals that more than half of the funds were seized from a single account in Los Angeles. The DOJ took control of that account containing $66.4 million in different cryptocurrencies. According to assistant attorney General Kenneth A. Polite, victims of these scams will now get their funds back. DOJ has asked victims to contact FBI with as many details as possible.
The US DOJ has been proactive for the past few months. The agency has seized cryptocurrency on many other occasions. In November 2022, it reported the seizure of 50,000 BTC tied to the Silk Road and seized 94,000 BTC tied to a Bitfinex theft in February 2022. It has also recently brought legal action against many fraudulent cryptoprojects, from the defi cases to cases like the famous OneCoin and the ponzi scheme Forsage.