US seeks forfeiture of more than $25mn in crypto scam probes
The Justice Department said Secret Service investigations traced funds tied to romance and fraudulent crypto investment schemes.
By Rafael Ortiz · Fintech Correspondent
· 3 min read
US federal prosecutors have asked a court to forfeit more than $25mn in cryptocurrency recovered in separate fraud investigations led by the Secret Service, the Justice Department said Tuesday. The cases point to the continued use of digital assets in cross-border romance and investment scams, with alleged laundering networks linked to Southeast Asia.
The Justice Department said it filed complaints in federal court seeking forfeiture of the assets. Such complaints are the legal mechanism prosecutors use to ask a court to transfer control of recovered property when the government alleges it is connected to unlawful activity.
According to the department, the Secret Service investigations identified multiple laundering networks and victims around the world who were led to believe they were placing money into legitimate cryptocurrency investments. The department did not identify the defendants in the announcement.
Tara McLeese, special agent in charge of the Secret Service’s Washington Field Office, said in the Justice Department release that the seizure followed months of work by investigators tracing illicit transactions. She said the investigations were continuing and encouraged people who believe they may have been affected by similar cryptocurrency crimes to contact authorities.
Five cases tied to romance and investment fraud
The Justice Department said the forfeiture actions cover five cases. The largest involves more than $12mn and stems from an investigation that found more than 200 people had been defrauded through online romance scams.
In another case, authorities are seeking forfeiture of $10.4mn connected to an investigation of fraudulent cryptocurrency investment platforms, according to the department.
Romance and investment scams often overlap in cases described by law enforcement as “pig butchering” schemes. In those operations, criminals build a relationship with a target over time, then persuade the person to send funds to what appears to be an investment account or trading platform. The Justice Department announcement said victims in these investigations believed they were making lawful crypto investments.
Laundering networks traced overseas
The Justice Department said launderers in each of the five cases were predominantly located in Southeast Asia, with IP addresses in China, Malaysia and Cambodia. It did not provide further detail on the people or entities allegedly involved in the laundering networks.
The department said the recovered funds are part of more than $800mn recovered through the Scam Center Strike Force. That initiative targets criminal networks involved in scam compounds and related fraud activity, including cryptocurrency schemes tied to overseas operators.
The cases also show the enforcement challenge created by cryptocurrency transfers. Blockchain transactions can be traced, but funds may pass through multiple wallets, platforms and jurisdictions before investigators can identify and recover assets. The Justice Department said the Secret Service’s Washington Field Office carried out the tracing work in the latest cases.
The department said the matters remain under investigation. The forfeiture complaints will determine whether the government can take formal control of the recovered cryptocurrency under the court process.
This story draws on original reporting from PYMNTS.
