The Department of Justice (DOJ) recently announced the seizure of virtual currency valued at approximately $112 million, linked to a number of cryptocurrency investment scams. DOJ Press Release
According to the DOJ press release, the seized virtual currency accounts were allegedly used to launder proceeds from various cryptocurrency confidence scams. In these schemes, fraudsters cultivated long-term relationships with their victims, usually through online platforms, and enticed them to invest in fraudulent cryptocurrency trading platforms. The victims' funds were then funneled to cryptocurrency addresses and accounts controlled by the scammers and their co-conspirators. Crypto Criminal Defense Lawyer
The scams often involved "pig butchering" or "Sha Zhu Pan," a Chinese phrase that loosely translates to the same. Scammers targeted victims through social networking platforms, online communications, dating websites, and even misdialed phone calls and text messages. After gaining the victims' trust, scammers would introduce the idea of trading in cryptocurrency and direct them to fraudulent investment platforms.
Victims would be encouraged to make an initial investment, which would appear to show substantial gains. In some cases, victims were even allowed to withdraw some of these gains to further engender trust in the scheme. However, after making a large investment, victims would find themselves unable to withdraw their funds.
The DOJ's seizure of virtual currency linked to these scams further reaffirms the government's focussed attention on investigating and prosecuting cryptocurrency fraud. Law enforcement agencies are using various tools to trace and seize illicit funds, including tracking transactions on the blockchain and dismantling online infrastructure used by scammers.
In 2022, investment fraud caused the highest losses of any scam reported by the public to the FBI’s Internet Crimes Complaint Center (IC3), totaling $3.31 billion. Frauds involving cryptocurrency, including pig butchering, represented the majority of these scams, increasing a staggering 183% from 2021 to $2.57 billion in reported losses last year. DOJ Press Release
This blog post was prepared with the assistance of ChatGPT-4 AI. Nothing in this post should be considered legal advice or the creation of an attorney-client relationship. This blog is strictly for informational purposes only.
