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On Monday, April 3rd, the US Department of Justice announced it had seized around $112 million stolen from numerous victims in various digital assets scams. According to the press release, most of the digital currency was taken through so-called “pig butchering”, a practice where the scammer works to gain the victim’s trust before abusing the relationship to take their money in alleged investment schemes.
This Monday, the US Justice Department announced it has seized cryptocurrencies worth $112 million connected to various scams. According to the press release, the majority of the seized assets were taken by the scammers using a tactic commonly known as “pig butchering”. The warrants for seizing the digital currency from six accounts were issued by judges in the District of Arizona, the Central District of California, and the District of Idaho.
While the seized assets came from different schemes, all can be broadly considered “confidence scams”. These schemes are characterized as operations where the scammers cultivate long-term relationships with their victims before asking victims for money, usually alleging they would be used for profitable investments.
According to court documents, the virtual currency accounts were allegedly used to launder proceeds of various cryptocurrency confidence scams. In these schemes, fraudsters cultivate long-term relationships with victims met online, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms. In reality, however, the funds sent by victims for these purported investments were instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators.
According to the press release, the FBI’s data shows that Americans lost, throughout 2022, $3.31 billion to investment scams. Additionally, most of these scams allegedly involved cryptocurrencies and the year was significantly more damaging compared to 2021 when scammers stole $2.57 billion.
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While the SEC’s and the CFTC’s enforcement actions targeting well-known digital assets companies like Coinbase and Binance have taken the bulk of the attention, the Department of Justice has also been stepping up its efforts to combat cryptocurrency-related crime. Perhaps the most notable of these is the DoJ indictment against FTX’s former CEO.
While US authorities were quiet for several weeks after FTX went bankrupt, by mid-December multiple agencies including the SEC, the CFTC, and the DoJ announced their charges against the exchange’s founder and former CEO Sam Bankman-Fried. Furthermore, the Department filed several superseding indictments against SBF the latest of which is also accusing him of bribing Chinese officials with $40 million in various cryptocurrencies.
Another high-profile suit the DoJ filed is against Terraform Labs and its CEO, Do Kwon. The charges have been made in connection with the LUNA collapse from May 2022 which saw an estimated $60 billion worth of investments wiped out. After a months-long search, Kwon has been arrested in Podgorica, Montenegro, while trying to flee to Dubai using falsified documents.
Do you think there will be a decrease in cryptocurrency-related fraud in 2023? Let us know in the comments below.