Returned crypto: US returns $8.2M to scam victims
US authorities are making progress in returning $8.2 million in cryptocurrency to victims who were swindled in a scam. This crypto was frozen and seized from three addresses linked to the fraudulent scheme, which involved deceptive messages and a fake investment opportunity.
Here’s how the scam unfolded: criminals sent out messages to random phone numbers, acting as if they had the wrong number. This was just a hook. They’d then try to befriend the person on the other end, building trust over time, with the ultimate goal of convincing them to invest in a bogus crypto scheme.
The FBI has so far identified 33 individuals who fell victim to this con, and they are still working to identify another five. According to a statement released by the Ohio District Attorney’s office on Feb. 28, the total losses reported so far amount to a staggering $6 million.
The FBI has identified 33 people snared by the scam, with another five still to be identified. Source: US Department of Justice
After one victim reported the scam to the FBI’s Internet Crime Complaint Center in June, investigators sprang into action, conducting a blockchain analysis. This investigation revealed that some of the stolen funds had been converted into Tether
and moved to three different cryptocurrency addresses.
Following this discovery, authorities obtained a federal seizure warrant, and Tether stepped in to freeze the funds. These funds were then transferred to a secure digital wallet controlled by law enforcement, where they have remained untouched ever since.
According to a forfeiture complaint filed on Feb. 27 in an Ohio District Court, acting US Attorney for Ohio Carol Skutnik and assistant US Attorney James Morford are now asking the court to officially forfeit all the funds in these three addresses. This legal step would pave the way for the funds to be returned to the people who were victimized by the scam.
Skutnik and Morford explained that these accounts actually “contained additional funds beyond the victims’ traceable losses.” They believe these extra funds were linked to money laundering and wire fraud, bringing the total amount associated with the case to $8.2 million.
How the scam worked
In their complaint, Skutnik and Morford detailed how the scammers initiated contact with their victims. It often started with what seemed like innocent “wrong number” messages sent via text, dating apps, or even professional networking groups.
“The scammer would then work on building a relationship, gaining the victim’s trust and even affection through various manipulative techniques. Once they felt they had established a strong connection, the conversation would shift to stories of cryptocurrency investment success – either their own supposed success or that of someone they knew,” Skutnik and Morford elaborated.
“These personal stories were designed to ease any doubts the victims might have had about virtual currencies. The intention was to make the idea of investing seem less risky and more appealing, and ultimately persuade the victim to get involved.”
Related: Bybit hackers resume laundering activities, moving another 62,200 ETH
The fraudsters didn’t just stop at persuasion. They allegedly walked victims through the process of setting up accounts on legitimate cryptocurrency exchanges. Once that was done, they guided them to transfer funds to a fake website that the scammers controlled. This sham site would promise high returns to lure victims in further and encourage them to invest even more.
In one particularly heartbreaking case, authorities describe how an Ohio woman was tricked into sending even more money to the scammers. They falsely claimed she needed to make “additional payments” to unlock her initial investment.
After she had lost her entire life savings, amounting to $663,000, and could no longer send any more money, the fraudsters stooped to a chilling tactic: they allegedly threatened to harm her friends and family if she didn’t comply with their demands for even more funds.
Looking at the bigger picture, blockchain analytics firm Chainalysis, in their Feb. 13 Crypto Scam Revenue 2024 report, highlights a worrying trend. They point out that generative AI is making scams easier and cheaper for criminals to execute on a large scale. This could unfortunately lead to record-breaking losses in the crypto space throughout 2025.
Adding to these concerns, onchain security firm Cyvers reports that “pig butchering” scams, like the one described above, are becoming a major threat to crypto investors. They estimate that these scams have caused billions in losses, affecting around 200,000 identified cases in 2024 alone.
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