DOJ Seizes Crypto Wallets Connected with Scams Containing $112M

The Department of Justice (DOJ) announced that it seized $112 million worth of digital assets found to be related to cryptocurrency scams.

On Monday, the United States DOJ announced that it made a significant move against fraudulent cryptocurrency activities. The department said it confiscated around $112 million in digital assets found to be involved in numerous investment scams. According to the department, seizure warrants for six digital asset accounts were authorized by judges in the District of Arizona, the District of Idaho, and the Central District of California.

According to court documents, the DOJ said the accounts were believed to have been used to launder the proceeds from numerous crypto confidence schemes. The crypto confidence schemes involved fraudsters cultivating long-term relationships with victims they contacted online, eventually convincing these unwitting persons to invest in fraudulent crypto trading platforms. The funds were, however, funnelled to wallet addresses and accounts held by criminals.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, explained:

Transnational criminal organizations are combining confidence scams with technological savvy to swindle Americans out of their hard-earned funds.

He added that the department would seek to return the stolen funds to victims:

These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings. Now that we have seized this virtual currency, we will seek to swiftly return it to victims.

Crypto Scams Accounted for $2.57B in Losses in 2022

In its statement, the DOJ published shocking statistics regarding investment fraud. In 2022, investment fraud accounted for the highest losses of any scam reported to the FBI’s Internet Crimes Complaint Centre, totalling a whopping $3.31 billion. What’s more shocking is that frauds involving crypto, including pig butchering, represented the overwhelming majority and totalled $2.57 billion. This number represents a 183% increase from 2021.  

Pig butchering scams are a new phenomenon in the crypto crime space. This scam involves fraudsters trawling through social media to create a ‘chance’ encounter with a victim that they can develop into a relationship that grows slowly. The scammer takes time and patience to ‘groom’ their victims and finally guides their victims into a conversation about cryptocurrencies and their potential for good returns.

The scammer typically settles any concern the victim might have by paying small returns. The victim is thereafter persuaded to invest a large sum into a website the scammer controls. Once this is completed, the money and the romantic partner disappear.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.