U.S. Government Targets Cryptocurrency Scams with Major Asset Seizure
Introduction to the Case
The U.S. Department of Justice (DOJ) has taken significant action against cryptocurrency fraud by filing a civil forfeiture case involving $848,247 in Tether (USDT). This amount is suspected to stem from a series of sophisticated confidence scams that have victimized individuals across various states. The investigation has revealed a complex web of cryptocurrency wallets used to launder these funds, with activities linked to fraudulent operations occurring from September 2022 to February 2025.
Details of the Legal Proceedings
The civil complaint was initiated in the District of Columbia and was made public by U.S. Attorney Jeanine Ferris Pirro. This operation received backing from Acting Assistant Attorney General Matthew R. Galeotti of the DOJ’s Criminal Division, as well as FBI Special Agent in Charge David K. Porter, situated in the Honolulu Field Office. Their collaborative efforts underline the seriousness of this case and the commitment to combat financial crime.
Understanding Confidence Scams
The Human Element of Deception
The inquiry into these confidence scams, spearheaded by the FBI’s Honolulu Division Cyber Squad, was prompted late last year when a Hawaiian victim reported losing $1.3 million to a fraudulent group dubbed the LME Crypto Group. This group falsely marketed itself as associated with the London Metal Exchange and crafted an elaborate cryptocurrency investment scheme. Utilizing online relationships, they persuaded victims to deposit funds into fake trading platforms.
One notable case involved a resident of D.C. who reported losing $30,000 in December 2023. This individual was led to believe they were making a sound investment that promised substantial returns. They deposited money through a platform named “LME,” only to discover later that their access to these funds had been cutoff.
Tactics Employed by Scammers
The confidence scams highlighted in the DOJ’s complaint often commence with seemingly innocuous text messages enticing victims. Once contact is established, scammers exploit various platforms—ranging from dating apps to professional networking sites—to build trust over time. They frequently recommend fictitious investment opportunities while showcasing their (fabricated) financial triumphs to persuade victims to invest.
The Mechanics of Fraudulent Platforms
Mimicking Legitimate Operations
A prevalent pattern observed in these scams involves directing victims to websites that bear a striking resemblance to legitimate trading platforms. Scammers typically assist in opening U.S.-based cryptocurrency exchange accounts, guiding victims to transfer their funds. Throughout this process, victims may be misled into believing they are generating profits, with scammers occasionally allowing small withdrawals to enhance credibility.
In all reality, the funds are funneled into wallets controlled by the fraudsters. Ultimately, once the scammers achieve their financial goals, they cut off all access, leaving victims stranded and unable to recover their investments.
The Illusion of Profit
These fraudulent platforms are meticulously designed to look convincing, often including fake dashboards showcasing seemingly impressive returns. Such imagery is crafted to lure victims deeper into the trap, encouraging them to invest more funds. However, the unfortunate truth is that all activities on these platforms are routed through addresses entirely under the control of the criminals. Victims are left with nothing but empty promises.
In 2024 alone, the FBI’s Internet Crime Complaint Center (IC3) reported losses amounting to approximately $5.8 billion from cryptocurrency-related investment fraud.
Government Response and Ongoing Investigations
The DOJ has acknowledged Tether’s cooperation in the seizure of these assets, highlighting the role of the cryptocurrency issuer in confronting the rise of fraud in the digital space. The agency also received support from its Office of International Affairs and the FBI’s Virtual Asset Unit, both pivotal in addressing these scams.
The prosecution of this case is being undertaken by Assistant U.S. Attorneys Kevin Rosenberg and Rick Blaylock Jr. in collaboration with highly specialized attorneys from the DOJ, including members of the Computer Crime and Intellectual Property Section and the Consumer Protection Branch. This coordinated effort illustrates the government’s determination to hold scammers accountable and protect potential victims from falling prey to similar fraudulent schemes.
