DOJ Orders Seizures In Giant Cryptocurrency Crackdown

On Monday, the Justice Department announced that it had seized approximately $112 million from six cryptocurrency accounts linked to crypto investment scams in California, Arizona, and Idaho.

The six accounts were allegedly laundering money from various cryptocurrency scams in which fraudsters cultivated relationships with victims they met online before enticing them to invest in fraudulent crypto trading platforms. The so-called “investments” were funneled to cryptocurrency accounts controlled by the fraudsters and their co-conspirators, according to court documents.

In its press release, the Justice Department said it hoped to raise public awareness about cryptocurrency investment schemes, warning the public to be wary of investment advice from people they meet online, especially if the investments appear too good to be true or involve cryptocurrency. 

Last year, investment fraud was responsible for the highest losses of any scams reported to the FBI’s Internet Crimes Complaint Center, with frauds involving cryptocurrency representing the majority. In 2022 alone, cryptocurrency scams accounted for $2.57 billion in reported frauds.

Most of the victims reporting investment fraud are between the ages of 30 and 49, as scammers often target victims through social media and other online platforms, including dating websites. Scammers will also seek out victims through text messages and phone calls that appear as misdials.

Once the scammers gain the trust of their victims, which can take months, they finally suggest trading in cryptocurrency. Eventually, the scammers will direct their victims to fake crypto investment platforms controlled by the scammers.

Initial investments appear to show substantial gains, prompting the victim to invest larger sums. It is only after the larger sums are invested that the victims discover they can no longer withdraw their funds.

Even after they are locked out, the scam continues, with the fraudsters requesting additional investments, fees, or taxes on the promise that these will permit the victim to access their accounts.