- The US DOJ announced the seizure of virtual currency worth $112 million linked to cryptocurrency investment scams.
- Fraudsters cultivated long-term relationships with victims online, convincing them to invest in fraudulent cryptocurrency trading platforms.
This marks a significant step forward in the DOJ’s efforts to combat transnational criminal organizations that are using technological advancements to swindle Americans out of their hard-earned funds.
Virtual currency accounts used to launder the proceeds of various cryptocurrency confidence scams were targeted in the said operation. The fraudsters behind these schemes cultivate long-term relationships with victims met online before convincing them to invest in fraudulent cryptocurrency trading platforms.
However, instead of investing the funds as promised, the fraudsters siphoned them off into cryptocurrency addresses and accounts controlled by them and their associates.
DOJ obtains seizure warrants for crypto accounts
The DOJ obtained seizure warrants for six virtual currency accounts, authorized by judges in the District of Arizona, the Central District of California, and the District of Idaho.
The operation was carried out with assistance and coordination from the National Cryptocurrency Enforcement Team (NCET) and the Criminal Division’s Fraud Section.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division stated that these frauds have devastated families and cost individuals their life savings.
He further added that the DOJ is committed to disrupting these schemes and will work towards raising public awareness to help potential victims.
Cryptocurrency fraud causes highest reported losses in 2022
According to the FBI’s Internet Crimes Complaint Center (IC3), investment fraud caused the highest reported losses of any scam in 2022, amounting to $3.31 billion. Frauds involving cryptocurrency, including pig butchering, represented the majority of these scams, with reported losses increasing by 183% from 2021 to $2.57 billion last year.
Fraudsters often use social networking and online communications platforms, dating websites, phone calls, and text messages to target victims.
After gaining their trust, the fraudsters introduce the idea of trading in cryptocurrency and direct victims to fraudulent trading platforms or co-conspirators posing as investment advisors or customer service representatives.
Victims are often enticed with promises of substantial gains, and some are allowed to withdraw initial gains to engender trust in the scheme. It is only after significant investments are made that victims find they are unable to withdraw their funds.
The fraudsters then request additional investments, taxes, or fees, promising victims access to their accounts. In many cases, the fraudsters continue stealing from victims until they have stripped them of their remaining savings.
The FBI Phoenix Division is investigating this case, and Assistant US Attorneys for the District of Arizona, the Central District of California, and the District of Idaho are in charge of the seizures.
The FBI’s Assistant Director of the Criminal Investigative Division, Luis Quesada, reaffirmed the FBI’s unwavering commitment to investigating and pursuing criminal actors who defraud the American public.
Depriving scam organizations of their ill-gotten gains is an important part of the DOJ’s strategy to combat cryptocurrency fraud. Director Eun Young Choi of the NCET stated that they will continue using all tools at their disposal to disrupt and deter cryptocurrency confidence schemes. Today’s announcements also demonstrate the value of early notification by victims to law enforcement.
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