U.S. Government Targets $225.3 Million in Cryptocurrency Fraud
The U.S. Department of Justice is working to recover over $225.3 million in cryptocurrency that was illicitly obtained from American citizens through various confidence and romance scams originating from Vietnam and the Philippines. A civil forfeiture complaint was submitted in the District of Columbia, where FBI and U.S. Secret Service investigators detailed their use of blockchain analytics to connect the funds to fraudulent operations in the Philippines. The perpetrators utilized a multitude of crypto wallets to carry out thousands of transactions, all while attempting to obscure the origins of the money. The investigations revealed over 430 potential victims from states including Texas, Arizona, Virginia, Iowa, and California.
Initial Discovery of Scam Operations
Two years ago, the cryptocurrency exchange OKX alerted law enforcement about numerous accounts suspected of involvement in scam activities. Following this tip, authorities interviewed around 60 victims who reported losses nearing $19 million. These discussions led to the discovery of numerous additional blockchain addresses where victims had inadvertently deposited substantial amounts of cryptocurrency, believing they were engaging with credible platforms.
Scams Exploit Victims’ Trust
According to Special Agent in Charge Shawn Bradstreet of the U.S. Secret Service, “These scams prey on trust, often resulting in extreme financial hardship for the victims.” He noted that the seizure of $225.3 million tied to cryptocurrency investment fraud represents the largest such seizure in the history of the U.S. Secret Service. Many victims shared similar narratives, often being approached by attractive individuals on social media who lured them into investing in cryptocurrency. Victims frequently sent large sums, only to be confronted with requests for additional fees or taxes to access their supposed returns. Ultimately, after making these final payments, they found themselves locked out of their accounts.
Collaboration Between Agencies
This case illustrates the growing capability of U.S. law enforcement in tracking cryptocurrency transactions and potentially returning a portion of the funds to victims. The complaint indicated that many accounts involved in laundering the stolen funds were registered to Vietnamese citizens, with numerous IP addresses traced back to the Philippines. U.S. officials collaborated with OKX and blockchain firm Tether to monitor the flow of funds and account activities. A significant majority of the 144 accounts identified by these companies were accessed via IP addresses from the Philippines, all linked to email addresses that exhibited similar naming patterns.
Evidence of Organized Scam Operations
The accounts were opened using Vietnamese identification and photographs that appeared to be taken at the same location. Prosecutors suggested that this indicates the accounts were managed by individuals operating in a “scam compound,” a term used to describe locations dedicated to running cryptocurrency scams and laundering proceeds. Among the submitted verification photos for the OKX accounts, individuals were seen wearing lanyards from “ITECHNO Specialist Inc.,” a call center based in Manila. Investigators also discovered job advertisements seeking Mandarin-speaking workers, promising to cover travel expenses to the Philippines for employment.
International Victims and Notable Cases
The Justice Department noted that the use of Vietnamese documentation across the 144 OKX accounts accessed through Philippine IP addresses suggests the utilization of foreign labor in these cryptocurrency scam operations. Further investigation revealed that the same IP address was linked to 132 of the 144 accounts identified on OKX. In addition to U.S. victims, investigators uncovered individuals from the U.K., Australia, and Germany who were also targeted. A particularly notable victim was Shan Hanes, the former CEO of Heartland Tri-State Bank in Kansas, who received a 24-year sentence last year for embezzling over $50 million from the bank to invest in cryptocurrency schemes, only to become a victim himself.
Cryptocurrency Fraud Continues to Rise
The complaint also mentioned attempts by attorneys to contest the seizure efforts, which were ultimately abandoned. One of these lawyers represented a prominent Chinese firm accused of serious crimes, including kidnapping and human trafficking, in the Philippines. The FBI has reported that cryptocurrency investment fraud remains among the most financially damaging crimes, with losses exceeding $5.8 billion last year alone. “Cryptocurrency investment schemes can have devastating and long-lasting consequences for victims, far beyond just financial losses,” stated FBI Special Agent in Charge Sanjay Virmani, emphasizing the extensive impact of such elaborate schemes on countless victims.
