The United States Department of Justice (DOJ) has filed a civil complaint seeking the forfeiture of over $225 million in cryptocurrency tied to large-scale "pig butchering" scams. This marks the largest-ever U.S. seizure of cryptocurrency linked to these types of confidence schemes. The DOJ's action underscores the growing efforts by law enforcement to combat crypto-related fraud and protect investors in the digital asset space.
Pig butchering scams are a type of investment fraud where scammers build relationships with victims, often through dating apps, social media platforms, or even random text messages. After gaining the victim's trust, the scammer introduces the idea of investing in cryptocurrency. Victims are then directed to fraudulent cryptocurrency investment platforms and persuaded to invest money. Once the money is sent to the fake investment application, the scammer vanishes, taking all the money with them, resulting in significant financial losses for the victim. The term "pig butchering" comes from the idea of "fattening" up the victim before the kill, similar to how a pig is fattened before slaughter.
According to the DOJ, the seized funds, totaling approximately $225.3 million, were primarily in Tether's USDT stablecoin. These funds were part of a sophisticated blockchain-based money laundering network used by the scammers to conceal the nature, source, and ownership of the proceeds derived from the cryptocurrency investment fraud. The network executed hundreds of thousands of transactions in an attempt to obfuscate the flow of illicit funds. However, authorities were able to leverage blockchain analytics tools to trace the transactions and link them to the fraudulent operation.
The investigation revealed that the scammers defrauded more than 400 victims globally. The funds were allegedly laundered through the OKX exchange after being stolen from unsuspecting investors. Tether, the issuer of USDT, acknowledged its collaboration with authorities and assisted in the seizure of the assets. The U.S. Secret Service and the Federal Bureau of Investigation (FBI) conducted the investigation that deemed the millions of dollars in USDT to have been derived from crypto scams.
Tether CEO Paolo Ardoino emphasized the company's commitment to transparency, proactive engagement with law enforcement, and the protection of users across the digital asset ecosystem. He stated that Tether is setting the standard for compliance in digital assets and leading efforts to ensure stablecoins are not misused by bad actors. Tether has a history of working with law enforcement to identify and freeze tokens linked to criminal activities, having previously frozen billions of dollars in tokens related to such activities.
This recent action builds upon Tether's ongoing support of global law enforcement. In the past, Tether has assisted in freezing millions of dollars in USDT linked to sanctioned entities and illicit activities, working with various law enforcement agencies across multiple countries.
The DOJ's efforts to combat pig butchering scams and other crypto-related investment frauds come amid increasing concerns about the prevalence of these schemes and the significant financial losses they inflict on victims. Reports from the FBI's Internet Crime Complaint Center indicate that crypto-related investment fraud schemes have resulted in billions of dollars in losses for unsuspecting victims.
The seizure of $225 million in cryptocurrency represents a significant victory for law enforcement and a warning to those who seek to exploit the digital asset space for illicit purposes. It also highlights the importance of collaboration between law enforcement agencies and cryptocurrency companies in combating crypto-related crime and protecting investors.
