The US Government has made its move to tackle cryptocurrency fraud, with the Department of Justice announcing the seizure of virtual currency worth approximately $112 million linked to cryptocurrency investment scams.
This move came after the DOJ authorized seizure warrants for six virtual currency accounts in the District of Arizona, the Central District of California, and the District of Idaho. According to court documents, the virtual currency accounts were allegedly used to launder the proceeds of various cryptocurrency confidence scams.
Fraudsters typically cultivate long-term relationships with victims online, 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.
The DOJ says it is committed to raising public awareness and helping to inform potential victims of cryptocurrency fraud. Investment fraud caused the highest losses of any scam reported by the FBI’s Internet Crimes Complaint Center in 2022, totaling $3.31 billion. Frauds involving cryptocurrency, including “pig butchering,” represented the majority of these scams.
In these schemes, scammers often target their victims through social networking and online communications platforms, dating websites, and phone calls and text messages that appear to have been misdialed.
After gaining the trust of their victims – sometimes over a period of months – scammers eventually introduce the idea of trading in cryptocurrency. They then direct victims to cryptocurrency investment platforms or to co-conspirators posing as investment advisors or customer service representatives.
To disrupt and deter cryptocurrency confidence schemes, the DOJ is using all tools at its disposal, including following the money on the blockchain and seizing cryptocurrency to return funds to victims. It also targets and takes down online infrastructure used by scammers.
