The U.S. Department of Justice (DOJ) has announced the seizure of over $112 million from digital asset wallets linked to fraudulent activities.
The DOJ confirmed that it obtained seizure warrants for six digital currency wallets suspected of housing the proceeds of illicit activities. The warrants were issued by judges in Los Angeles, Arizona, and Idaho, with a large chunk of the funds obtained from pig butchering scams.
According to the affidavit supporting the seizure warrant, the scammers typically feign a romantic relationship with the victims for several months before introducing them to investment opportunities in digital assets. In reality, the schemes are fraudulently designed to mimic legitimate investments using fake websites to show bogus returns.
“We all know that investment scams are not new, but the use of digital currency to commit fraud presents new challenges to victims and to law enforcement trying to recover lost funds – which likely total billions of dollars in the so-called ‘pig butchering’ schemes,” said U.S. Attorney Martin Estrada.
After securing an initial investment from victims, the scammers continue to “fatten the pig” by allowing the victims to withdraw their returns to foster confidence in the scheme. The scammers often cut ties with the victim after a sizable investment is made in the scheme in a move akin to killing the fattened pig.
Data from the Federal Bureau of Investigation’s (FBI) Internet Crimes Complaint Center (IC3) revealed that investment scams involving the use of digital currency caused U.S. residents losses above $3 billion. Incidents of pig butchering scams spiked by over 183% from 2021, with law enforcement agents warning citizens to be wary of forging relationships over the internet.
“We will continue to use all tools at our disposal to disrupt and deter cryptocurrency confidence schemes, including by following the money on the blockchain and seizing cryptocurrency to return funds to victims, and by targeting and taking down online infrastructure used by the scammers,” said Eun Young Choi, an official of the National Cryptocurrency Enforcement Team (NCET).
New team strengthens DOJ’s resolve
In 2021, the DOJ established NCET to combat the rising spate of virtual currency fraud, and the unit has scored some impressive wins barely one year since its launch.
In November 2022, the unit spearheaded efforts to seize $3.36 billion worth of BTC linked to the infamous Silk Road while opening nearly 100 investigations linked to digital asset scams.
Given the DOJ’s impressive wins, the U.S. Securities and Exchange Commission (SEC) disclosed that it would be increasing the size of its Crypto Assets and Cyber Unit in the coming months as it ramps up its enforcement activities.
Watch: Trust But Verify: Everything
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