US seizes $112 million from cryptocurrency investment scammers

Today, the U.S. Department of Justice seized six virtual currency accounts containing over $112 million in funds stolen in cryptocurrency investment schemes.

Judges in the Central District of California, the District of Arizona, and the District of Idaho authorized today's action. The DOJ says the next step is to return the stolen cryptocurrency to the victims.

The criminals behind these cryptocurrency fraud scams (also known as pig butchering or cryptocurrency confidence scams) approach their victims via various dating platforms, messaging apps, or social media platforms, build trust, and introduce them to investment schemes which eventually allow them to empty the targets' crypto wallets.

They do this by funneling all the funds victims provide to cryptocurrency accounts under the fraudsters' control instead of investing them as promised.

"These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings," said Assistant Attorney General Kenneth A. Polite, Jr. of DOJ's Criminal Division.

"Now that we have seized this virtual currency, we will seek to swiftly return it to victims." 

The FBI revealed in its 2022 Internet Crime Report that Americans lost over $3 billion to investment fraud last year.

"In 2022, investment scam losses were the most (common or dollar amount) scheme reported to the IC3. Investment fraud complaints increased from $1.45 billion in 2021 to $3.31 billion in 2022, which is a 127%," the FBI said.

"Within those complaints, cryptocurrency investment fraud rose from $907 million in 2021 to $2.57 billion in 2022, an increase of 183%."

'Pig butchering' warnings

The FBI also warned in a public service announcement issued last month of a spike in 'pig butchering' crypto investment schemes that resulted in over $2 billion worth of cryptocurrency losses in 2022, according to U.S. victims' reports.

These scams have become increasingly sophisticated and are now also using psychological manipulation to lure more victims into parting with their money by encouraging them to invest more and asking them to pay fees or taxes when trying to withdraw their money.

​That was not the first warning regarding 'pig butchering' scams issued by the FBI. In October, the law enforcement agency also cautioned against a rise in scams stealing ever-increasing amounts of cryptocurrency from unsuspicious investors.

Previous FBI alerts warned of scammers using fraudulent cryptocurrency investment apps and fake rewards in so-called "play-to-earn" games that help crooks steal millions from cryptocurrency investors.

"Financial fraud schemes like these demonstrate the great lengths criminals will take to swindle innocent victims out of their money, We continue to see these schemes evolve and provide new avenues for criminals to exploit," Assistant Director Luis Quesada of the FBI's Criminal Investigative Division added today.

"Today's announcement should serve as reminder of the FBI's unwavering commitment, alongside our federal and international law enforcement partners, to investigating and pursuing criminal actors who seek to defraud the American public. There is no place beyond the reach of the FBI."