Federal authorities hope to recover $25 million in cryptocurrency connected to romance/investment scam investigations.
The Justice Department (DOJ) announced Tuesday (July 21) it had filed complaints in federal court seeking forfeiture of more than $25 million in cryptocurrency recovered during separate fraud investigations conducted by the Secret Service.
That investigation, the DOJ said, uncovered multiple laundering networks as well as thousands of thousands of victims around the world who were misled into thinking they were making legitimate investments into crypto.
“This seizure is the result of months of tireless work by Washington Field Office investigators, who are among the best in the world at tracking down cyber criminals and tracing their illicit transactions,” Tara McLeese, special agent in charge of that office, said in a news release. “These investigations are far from over and we encourage anyone who thinks they may be a victim of these scams, or similar cryptocurrency crimes, to contact us.”
The largest of the five cases involves more than $12 million, from an investigation that found more than 200 people who had been defrauded by online romance scams. In another case, authorities are seeking forfeiture of $10.4 million in an investigation related to fraudulent crypto investment platforms.
“In each of these five cases, launderers were predominantly located in Southeast Asia, with IP addresses located in China, Malaysia, and Cambodia,” the release added. “These funds are the latest in the more than $800 million recovered as part of the Scam Center Strike Force.”
As covered here last year, that effort targets criminals engaged in “pig butchering” scams, which get their names from criminals’ practice of slowly gaining victims’ trust to “fatten them up,” before making off with their money.
PYMNTS spoke earlier this year with Andrew Balthazor, associate and co-lead of the crypto asset disputes team at Holland and Knight LLP, about the challenges of recovering money stolen from people in crypto scams.
In an interview for the “From the Block” podcast, he said the industry still hasn’t found a way to keep criminals from exploiting the technology. Until it does, he added, expanding access without stronger guardrails will mostly mean greater harm.
“That framing matters because it reorders the usual crypto debate,” PYMNTS wrote. “The question isn’t whether blockchain rails are faster or cheaper. It’s whether the protections that make traditional finance trustworthy, such as the remedies, accountability and recourse, exist yet in crypto.”
Balthazor said they largely don’t, citing the example of a situation that didn’t involve fraud at all: someone simply typing the wrong destination address and sending a payment stablecoin to an inaccessible wallet.