US Authorities Seize $225 Million in Cryptocurrency Linked to Scams
In a landmark operation, the U.S. government has seized over $225 million in cryptocurrency connected to elaborate confidence schemes. The Justice Department announced the seizure, highlighting the scale of the fraud and the sophisticated money laundering techniques employed by the perpetrators.
The scams, often referred to as “pig butchering” or romance scams, lured victims into investing in cryptocurrency platforms controlled by the fraudsters. These platforms, such as YoBitPro[.]lol, FX6, and Bitdu, initially allowed victims to withdraw small amounts to build trust before ultimately blocking access to their funds.
How the Scams Worked
The scammers would build relationships with victims online, often through dating apps or social media, before suggesting cryptocurrency investments. The victims were then directed to fraudulent exchanges where they deposited their money. Early withdrawals were permitted to foster trust, encouraging larger investments. Eventually, the scammers would freeze the accounts and demand additional fees or taxes to release the funds, effectively stealing the entire investment.
One notable case involved Shan Hanes, a bank CEO who diverted $47 million from his institution into one of these schemes. The bank subsequently collapsed, and Hanes was arrested.
Money Laundering Operations
The U.S. government revealed that the scammers operated from “scam factories” in Southeast Asia, including Myanmar, the Philippines, Laos, and Cambodia. Victims of human trafficking were often forced to engage with potential targets, using various online platforms to build trust and solicit investments.
The stolen funds were then laundered through a complex network of blockchain transactions. According to the Justice Department, the cryptocurrency addresses holding the $225.3 million were part of a sophisticated money laundering network designed to conceal the origin and ownership of the funds.
“The operators dispersed the profits through a wide network of blockchain addresses and accounts to make it difficult to trace the funds,” the Justice Department stated.
Investigators discovered that the group created 144 accounts on the cryptocurrency exchange OKX. However, the scammers made several errors, such as using similar email addresses and logging in from the same IP addresses in the Philippines. The photos used for Know Your Customer (KYC) verification were also suspicious, with multiple accounts being verified from the same location and time.
Some photos even showed individuals wearing badges from ‘ITECHNO Specialist Inc.,’ a call center in the Philippines known to be involved in forced labor schemes.
Funds to Be Returned to Victims
Unlike other cases where seized cryptocurrency is added to government reserves, the $225.3 million will be returned to the victims of the scams. The FBI is urging victims to come forward and file a complaint through the Internet Crime Complaint Center, using the code BT06182025, to participate in the reimbursement program.
So far, 434 victims have been identified, and the FBI has contacted approximately 60 of them. Given the global nature of the scams, authorities believe that many more victims may exist worldwide.
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