DOJ Seizes $6 Million Linked to ‘Devastating’ Crypto Romance Schemes

The Federal Bureau of Investigations (FBI) has seized over $6 million worth of cryptocurrency from scammers based in Southeast Asia who targeted US citizens.

According to a Sept. 26 FBI announcement, the fraud resulted in significant financial losses for victims who were misled into believing they were investing in legitimate opportunities. Assistant Director Chad Yarbrough of the FBI’s Criminal Investigative Division highlighted the impact of these schemes on Americans.

“These types of schemes are devastating, and they’re impacting thousands of Americans every day,” he said in a press release. “The FBI has seen victims lose millions of dollars, take second and third mortgages on their homes, all in the hopes of finding the next big investment opportunity.”

Victims were guided to transfer funds from their bank accounts to cryptocurrency accounts and then move the assets to fraudulent platforms abroad. Initially, some victims were allowed to withdraw funds to build trust. But eventually, they were locked out and lost their investments.

US Attorney Matthew M. Graves for the District of Columbia wrote in a Sept. 26 announcement that “the fact these fraudsters and their accounts are typically located outside the United States will not stop us or our partners at the FBI from doing all we can to recover the proceeds of these frauds.”

Data submitted to the FBI’s Internet Crime Complaint Center (IC3) in 2022 showed that such schemes targeted tens of thousands of victims in the United States, resulting in over $2 billion stolen. The loss amount reported in IC3 complaints involving cryptocurrency increased by 45% since 2022, from more than $3.8 billion to over $5.6 billion in 2023.

Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Division said, “the best defense is to educate yourself before making any investment.”

In this case, the FBI was able to trace the victim’s funds on the blockchain and identify multiple cryptocurrency wallet addresses holding over $6 million. The Justice Department’s Office of International Affairs and the FBI’s Virtual Asset Unit assisted in the investigation. The press release also acknowledged Tether for its role in facilitating the transfer of the seized assets.

Seizing cryptocurrencies is significantly harder than freezing a bank account, largely due to the decentralized and permissionless nature of the blockchain.

Law enforcement agencies are searching for new instruments facilitating digital asset seizure, with United Kingdom police and National Crime Agency recently being granted powers to “seize, freeze and destroy” crypto used by criminals.

The development follows Brazilian police being able to seize $28.7 million worth of cryptocurrencies, according to late August reports.

Edited by Stacy Elliott.