Justice Department Seeks Recovery of $225.3 Million in Cryptocurrency Fraud Cases
The U.S. Justice Department is actively pursuing the return of over $225.3 million in cryptocurrency that was fraudulently obtained from American citizens through confidence schemes and romance scams orchestrated primarily from Vietnam and the Philippines. This week, a civil forfeiture complaint was lodged in the U.S. District Court for the District of Columbia, where FBI and U.S. Secret Service investigators revealed that they utilized blockchain analysis to trace the stolen funds back to fraudulent operations originating in the Philippines.
Investigation Uncovers Extensive Network of Fraudulent Transactions
The perpetrators of these scams employed hundreds of cryptocurrency wallets to conduct thousands of transactions, deliberately obscuring the origins of the stolen funds. Investigators managed to connect the money to over 430 alleged victims across various states, including Texas, Arizona, Virginia, Iowa, and California. The investigation was initially sparked two years ago when the cryptocurrency exchange OKX alerted law enforcement about a substantial number of accounts suspected of involvement in fraudulent activities.
Victims Targeted by Deceptive Online Schemes
Law enforcement interviewed around 60 victims who collectively lost approximately $19 million. These initial findings led to the discovery of numerous additional blockchain addresses linked to victims who believed they were engaging with legitimate cryptocurrency platforms and ended up depositing millions. “These scams exploit trust, often leading to severe financial distress for the victims,” remarked Shawn Bradstreet, Special Agent in Charge of the U.S. Secret Service. “The seizure of $225.3 million in funds related to cryptocurrency investment scams represents the largest such seizure in the history of the U.S. Secret Service.”
Common Patterns Among Victims
Many victims cited in the complaint recounted similar experiences. They were often approached by young individuals on social media, enticing them with investment opportunities in cryptocurrency platforms. Some victims transferred millions of dollars before attempting to withdraw their funds, only to be informed they needed to pay an additional fee or tax to access their money. After making this final payment, they were subsequently locked out of their accounts.
Enhanced Law Enforcement Capabilities in Tracing Crypto
This case showcases the growing ability of U.S. law enforcement to trace cryptocurrency transactions and recover a portion of the lost funds for victims. Prosecutors noted in the complaint that many of the accounts used for laundering the money were registered to Vietnamese nationals, with numerous IP addresses traced back to the Philippines. Collaborating with OKX and blockchain company Tether, U.S. officials tracked the funds and accounts involved in the schemes.
Evidence of Organized Crime in Scams
Almost all of the 144 OKX accounts identified by the companies were accessed via IP addresses located in the Philippines, with all accounts linked to email addresses that followed similar naming patterns. These accounts were registered using Vietnamese identification documents, and the associated photographs appeared to have been taken at a single location. Prosecutors commented that this suggested the accounts were managed by individuals operating from a “scam compound,” a site dedicated to carrying out cryptocurrency confidence scams and laundering the proceeds.
Connections to Broader Criminal Activity
In verification submissions for the OKX accounts, some individuals were seen wearing lanyards from “ITECHNO Specialist Inc.,” a call center based in Manila. Authorities discovered several job postings that sought Mandarin-speaking applicants, with offers to cover travel expenses to the Philippines for the roles. The Justice Department indicated that the use of Vietnamese documents for the 144 OKX accounts accessed via Philippine IP addresses suggests the involvement of foreign labor in cryptocurrency confidence scam operations.
International Victimization and High-Profile Cases
Along with U.S. victims, investigators uncovered individuals affected in the U.K., Australia, and Germany. A notable victim among them was Shan Hanes, the former CEO of the now-defunct Heartland Tri-State Bank in Kansas, who was sentenced to 24 years in prison last year for embezzling over $50 million from the bank to invest in cryptocurrency schemes. The complaint noted that Hanes himself fell victim to a scam, sending some of the stolen funds to a cryptocurrency confidence scheme.
Widespread Impact of Cryptocurrency Investment Fraud
The complaint also highlighted attempts by at least two lawyers to contest the seizure efforts on behalf of a prominent Chinese company, which has been accused of “kidnapping and human trafficking” in the Philippines. Cryptocurrency investment fraud remains one of the most financially damaging crimes reported to the FBI, with losses exceeding $5.8 billion last year from such schemes. “Cryptocurrency investment schemes can inflict severe and enduring repercussions on victims, extending far beyond mere financial losses,” stated Sanjay Virmani, FBI Special Agent in Charge. “In this instance, hundreds of victims suffered millions of dollars in losses due to an intricate scheme.”
