US Seizes $112 Million Stolen in Crypto Scams, Seeks Rightful Owners

The US Department of Justice (DoJ) has seized an estimated $112 million from six accounts allegedly used to launder proceeds linked to cryptocurrency investment scams.

In such scams, fraudsters cultivate long-term relationships with victims they meet online, eventually enticing them to invest in fraudulent cryptocurrency trading platforms, court documents say.

In reality, victims’ investments are instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators.

Last year, the FBI’s Internet Crimes Complaint Center (IC3) revealed that investment fraud inflicted more losses than any other scam reported by the public, at $3.31 billion.

Frauds involving cryptocurrency represented the majority of these scams, increasing a staggering 183% from 2021 to $2.57 billion in reported losses last year, the DoJ says. In some instances, victims lose their entire life’s savings.

“These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings,” said Assistant Attorney General Kenneth A. Polite, Jr. of the DoJ’s Criminal Division. “Now that we have seized this virtual currency, we will seek to swiftly return it to victims.”

Most reports came from victims between the ages of 30 and 49, with scammers often targeting them through social media, dating websites, text messages and misdialed phone calls.

Scammers sometimes spend months gaining the trust of their victims before eventually introducing the idea of trading in cryptocurrency.

Victims are then directed to cryptocurrency investment platforms or to co-conspirators posing as investment advisors or customer service representatives.

The criminals serve up fake websites designed to mimic legitimate trading platforms or applications that victims download onto their phones, or malicious smart contracts through cryptocurrency wallet software.

“Once victims make an initial ‘investment,’ the platforms purport to show substantial gains,” the DOJ notes. “Sometimes, victims are even allowed to withdraw some of these initial gains to further engender trust in the scheme. It is not until a large investment is made that victims find that they are unable to withdraw their funds.”

The feds encourage US residents to contact their local FBI field office or visit www.fbi.gov/cryptoguard if they believe they’ve fallen victim or know someone caught in a crypto swindle.

Citizens can also visit IC3.gov to report a cryptocurrency scam. If doing so, include as much detail as possible, including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers, the DoJ instructs.

Victims of crypto investment scams are advised to maintain copies of all communications with scammers and records of financial transactions to assist investigators.