Justice Department Seeks to Recover Over $225 Million in Stolen Cryptocurrency
The U.S. Justice Department is actively pursuing the recovery of more than $225.3 million in cryptocurrency that was fraudulently taken from American citizens through various confidence and romance scams orchestrated from Vietnam and the Philippines. A civil forfeiture complaint was lodged this week in the U.S. District Court for the District of Columbia. Investigators from the FBI and U.S. Secret Service utilized blockchain analysis to retrace the funds back to fraudulent schemes initiated by individuals in the Philippines. The perpetrators employed a multitude of cryptocurrency wallets to carry out thousands of transactions, aiming to obscure the origins of the misappropriated funds. The investigation identified over 430 potential victims across states including Texas, Arizona, Virginia, Iowa, and California.
Initial Reports and Victim Interviews Reveal Extensive Fraud Network
Two years ago, the cryptocurrency exchange OKX alerted law enforcement to numerous accounts suspected of being linked to scam activities. Following this tip-off, officers conducted interviews with approximately 60 victims, who collectively reported losses nearing $19 million. This initial investigation unveiled a network of interconnected blockchain addresses where victims had deposited substantial sums of virtual currency, mistakenly believing they were engaging with legitimate investment platforms. Special Agent in Charge Shawn Bradstreet of the U.S. Secret Service remarked, “These scams exploit trust and can lead to severe financial distress for the victims. The seizure of $225.3 million associated with cryptocurrency investment scams represents the largest cryptocurrency confiscation in the history of the U.S. Secret Service.”
Victims’ Personal Accounts Highlight the Deceptive Nature of Scams
The complaint outlines that many victims recounted similar experiences. Typically, they were approached by young individuals on social media, who presented enticing opportunities to invest in cryptocurrency platforms. Numerous victims transferred millions of dollars before requesting their funds back, only to be told that they needed to pay additional fees or taxes to access their money. Once they completed the final payment, many found themselves locked out of their accounts, unable to recover their investments.
Tracing the Laundered Funds to Foreign Nationals
According to the complaint, a significant number of accounts used to launder the stolen funds were associated with Vietnamese nationals, with several IP addresses traced back to the Philippines. U.S. officials collaborated with OKX and the blockchain company Tether to monitor the funds and the accounts involved. Almost all 144 OKX accounts identified were accessed via IP addresses located in the Philippines, and they were linked to email addresses that followed similar naming formats. The accounts were registered using Vietnamese identification documents, and many of the submission photos appeared to have been taken in the same setting. Prosecutors indicated, “This suggests that the accounts are managed by individuals operating from a ‘scam compound,’ a site dedicated solely to executing cryptocurrency confidence scams and laundering the proceeds.”
Evidence of a Scam Operation with Links to Call Centers
Two of the photographs submitted to validate the OKX accounts depicted individuals wearing lanyards featuring the name “ITECHNO Specialist Inc.,” a call center based in Manila. Law enforcement agencies discovered multiple job postings seeking Mandarin-speaking workers, offering to cover travel expenses to the Philippines for these positions. The Justice Department pointed out that the use of Vietnamese documentation for the 144 OKX accounts accessed through Philippine IP addresses indicates the involvement of foreign labor in these cryptocurrency confidence scam operations. Investigators also noted that the same IP address was linked to 132 of the 144 identified accounts on OKX.
International Victims and High-Profile Cases Highlighting the Issue
In addition to American victims, investigators uncovered individuals from the U.K., Australia, and Germany who were also affected. One notable victim was Shan Hanes, the former CEO of the now-defunct Heartland Tri-State Bank in Kansas. Hanes was sentenced to 24 years in prison last year for embezzling over $50 million from the bank to fund cryptocurrency investments, only to eventually fall victim himself to the same type of fraudulent scheme. The complaint also noted attempts by attorneys to contest the seizure, which ultimately went unpursued. One of these lawyers represented a prominent Chinese firm accused of serious crimes, including kidnapping and human trafficking.
The Rising Tide of Cryptocurrency Investment Fraud
Cryptocurrency investment fraud remains one of the most significant financial crimes reported to the FBI. In the previous year alone, the agency estimated losses exceeding $5.8 billion due to cryptocurrency investment schemes. FBI Special Agent in Charge Sanjay Virmani emphasized, “Cryptocurrency investment schemes can lead to devastating and enduring repercussions for victims, extending well beyond mere financial loss. In this instance, hundreds of individuals lost millions of dollars to a sophisticated scam.”
