The Department of Justice reported yesterday that it filed a civil complaint to seize roughly $225.3 million in cryptocurrency linked to crypto investment scams. In a press release, the DOJ said it traced and targeted accounts that were “part of a sophisticated blockchain-based money laundering network” dispersing funds taken from more than 400 suspected victims of fraud.
The 75-page complaint filed in the US District Court for the District of Columbia lays out more detail about the seizure. According to it, the US Secret Service (USSS) and Federal Bureau of Investigation (FBI) tied scammers to seven groups of Tether stablecoin tokens. The fraud fell under what’s typically known as “pig butchering:” a form of long-running confidence scam aimed at tricking victims — sometimes with a fake romantic relationship — into what they believe is a profitable crypto investment opportunity, then disappearing with the funds. Pig butchering rings often traffic the workers who directly communicate with victims to Southeast Asian countries, something the DOJ alleges this ring did.
The DOJ says Tether and crypto exchange OKX first alerted law enforcement in 2023 to a series of accounts they believed were helping launder fraudulently obtained currency through a vast and complex web of transactions. The alleged victims include Shan Hanes (referred to in this complaint as S.H.), the former Heartland Tri-State Bank president who was sentenced to 24 years in prison for embezzling tens of millions of dollars to invest in one of the best-known and most devastating pig butchering scams. The complaint lists a number of other victims who lost thousands or millions of dollars they thought they were investing (and did not commit crimes of their own). An FBI report cited by the press release concluded overall crypto investment fraud caused $5.8 billion worth of reported losses in 2024.
Money recovered from this seizure will be put toward returning funds to the known victims of the scammers, the DOJ says. The fervently pro-crypto Trump administration has previously said forfeited money that isn’t sent to victims could be used to fund a US cryptocurrency reserve.
Source: The Verge
