On Monday, the US Department of Justice (DoJ) made an announcement regarding cryptocurrency scams. Reportedly, the DoJ has seized $112 million worth of digital assets related to crypto investment scams.
Kenneth A. Polite Jr., Assistant Attorney General said that authorities will return the seized funds to victims and will attempt to build public awareness. He wrote that these frauds and scams have caused huge devastation to families and taken away their lifelong savings. Quoting him:
These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings.
In the reported scams, it was observed that the accused gradually gained the trust of their prey through a variety of channels like social networks, dating websites, phone calls, text messages, and similar means of communication. Over a period, the perpetrators put in efforts to convince their targets to invest in fake cryptocurrency platforms before funneling the stolen funds to their own addresses.
The DOJ noted that this type of scam is called “Sha Zhu Pan,” a Chinese saying which implies “pig butchering.” In simple words, pig butchering scams are a type of fraud that preys on people’s desire to make money through cryptocurrency trading. These scams frequently begin with an unexpected message from a stranger, who may pose as a financially successful individual who has made millions of dollars through trading techniques.
According to the DoJ’s report, most of the victims of the reported scams were between the ages of 30 and 49. The DoJ confiscated six crypto accounts across three states with authorization in the District of Arizona, the Central District of California, and the District of Idaho. In addition, investigations found that seized cryptocurrency accounts were allegedly used to launder funds from the above scams.
Sources reveal that the DOJ’s report noted that crypto frauds including pig butchering schemes have marked a remarkable increase over a period. The DoJ stated that the frauds have increased by almost 183% between 2021 and 2022, amounting to $2.57 billion of stolen funds. As per data, this accounted for most fraud reported to the Federal Bureau of Investigation’s (FBI) online crime center, which amounted to $3.31 billion in total.
The FBI, which is the principal investigative arm within the DoJ has seized cryptocurrencies on various occasions. In February last year, it reported the seizure of 50,000 Bitcoin tied to Silk Road, then worth $1.05 billion. In June, it also charged a former Open Sea employee with wire fraud and money laundering in connection with a scheme to commit insider trading in Non-Fungible Tokens, or “NFTs.”
To tackle crimes related to crypto, the FBI has also extended collaborations with international agencies and countries across the globe. In February, the National Authority for Investigation and Prosecution of Economic and Environmental Crime of Norway announced the seizure of approximately $5.84 million in cryptocurrency, marking the largest crypto seizure in Norway’s history. The agency said that they work with FBI specialists on tracking cryptocurrency.
Notably, the DOJ has also taken direct action against certain cryptocurrency projects and related individuals. In January, the court sentenced the 56-year-old American Ronald Craig IIg to eight years in federal prison. The latter hired hitmen on the Dark Web to kidnap his wife and beat his former colleague and paid them over $60,000 worth of Bitcoin.
The crypto scams have been on an incessant increase coming out as a nightmare for regulators as well as investors across the globe. In the line with the same, the regulators in California released a tracker to help investors fight bad actors. The Crypto Scam Tracker is an online tool allowing investors to report any crypto-related crime. The tracker is designed to help California’s DFPI identify and track fraudulent activities in the crypto market.