The United States seized over $6 million worth of cryptocurrency from perpetrators overseas, announced U.S. Attorney for the District of Columbia Matthew M. Graves, U.S. Attorney for the Eastern District of Tennessee Francis M. Hamilton III, Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Criminal Division, and FBI Special Agent in Charge Joseph E. Carrico of the Knoxville Division.
The perpetrators in Southeast Asia targeted one or more individuals in the United States and fraudulently obtained millions of dollars’ worth of cryptocurrency through a cryptocurrency confidence investment scheme.
The FBI was able to trace victim funds on the blockchain and located multiple cryptocurrency wallet addresses, which still held victim funds totalling more than $6 million.
Cryptocurrency confidence investment schemes begin with criminals contacting potential victims through seemingly misdirected text messages, dating applications, professional meetups or investment groups. Next, using various means of manipulation, the criminal gains the victim’s affection and trust. The perpetrator then recommends cryptocurrency investment by touting their or an associate’s success in the field. Means of carrying out the scheme vary, but a common tactic is to direct a victim to a fake investment platform hosted on a website.
These websites and the investment platforms hosted there are created by criminals to mimic legitimate platforms. The subject assists the victim with opening a cryptocurrency account, often on a U.S.-based exchange, and then walks the victim through transferring money from a bank account to that cryptocurrency account. Next, the victim will receive instructions on how to transfer their cryptocurrency assets to the fake investment platform.
On its surface, the fraudulent platforms often show lucrative returns, encouraging further investment; however, all deposited funds are actually routed to a cryptocurrency wallet address controlled completely by the perpetrators. The perpetrators frequently allow victims to withdraw some of their “profits” early in the scheme to engender trust and help convince victims of the platform’s legitimacy.
As the scheme continues, victims cannot withdraw their funds and are provided various excuses as to why. Ultimately, victims are locked out of their accounts and lose all their funds.
“In these scams, fraudsters trick U.S. citizens into believing they are transferring funds to cryptocurrency investment opportunities when, in fact, they are just unwittingly turning their money over to the fraudsters,” said U.S. Attorney Graves. “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 and to hold the people running them accountable.”
“Investment scams and schemes are not new, but committing fraud with digital currency presents new challenges for law enforcement attempting to recover lost funds,” said Special Agent in Charge Carrico. “The FBI, along with our law enforcement partners, will continue to investigate allegations of crypto scams, but the best defence is to educate yourself before making any investment. Remember, if it sounds too good to be true, it probably is.”
Based on data submitted to the FBI’s Internet Crime Complaint Center in 2022 alone, perpetrators of these schemes targeted tens of thousands of victims in the United States and resulted in over two billion dollars in private assets being siphoned overseas. The loss amount reported in IC3 complaints involving cryptocurrency increased 45 per cent since 2022, from over $3.8 billion to over $5.6 billion in 2023.
