FBI recovers $6M from scammers who target Americans

The Federal Bureau of Investigation (FBI) has seized over $6 million worth of cryptocurrency from scammers based in Southeast Asia who targeted U.S. citizens.

According to a Sept. 26 FBI announcement, the fraud led to substantial financial losses for victims who were misled into believing they were investing in legitimate opportunities.

Assistant Director Chad Yarbrough of the FBI's Criminal Investigative Division said,

“These types of schemes are devastating, and they’re impacting thousands of Americans every day...The FBI has seen victims lose millions of dollars, take second and third mortgages on their homes, all in the hopes of finding the next big investment opportunity.”

Victims were instructed to transfer money from their bank accounts to cryptocurrency wallets and then move the assets to fraudulent platforms abroad. Initially, some victims were allowed to withdraw small amounts to build trust, but eventually, they were locked out and lost their entire investments.

In a related case, a Los Angeles-based crypto entrepreneur, who went by the alias “The Godfather,” allegedly impersonated the FBI to steal cryptocurrency at gunpoint. During the 2018 incident, Adam Iza reportedly stole a laptop containing cryptocurrency, held a person known as “Victim T.W.” and his girlfriend at gunpoint, and demanded access to the laptop’s passwords. Iza was arrested earlier this week and now faces charges of conspiracy and tax evasion.

U.S. Attorney Matthew M. Graves for the District of Columbia emphasized in a Sept. 26 announcement that “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."

Data submitted to the FBI's Internet Crime Complaint Center (IC3) for 2022 showed that such schemes targeted tens of thousands of victims in the U.S., resulting in over $2 billion in stolen funds. The amount of losses reported in IC3 complaints involving cryptocurrency fraud increased by 45% since 2022, from $3.8 billion to more than $5.6 billion in 2023.

Special Agent in Charge Joseph E. Carrico of the FBI's Knoxville Division stressed that “the best defense is to educate yourself before making any investment.”

In a similar effort, the UK's National Crime Agency (NCA) and police have been granted broader powers to "seize, freeze, and destroy" cryptocurrency linked to criminal activity. As of today, police are no longer required to make an arrest before seizing crypto from a suspect. They will also have the authority to confiscate items such as written passwords or memory sticks that could provide information useful to investigations.

In this case, the FBI was able to track the stolen funds on the blockchain and identify multiple cryptocurrency wallet addresses holding over $6 million. The FBI’s Virtual Asset Unit and the Justice Department's Office of International Affairs assisted in the investigation, with Tether playing a key role in facilitating the recovery of the seized assets.

Seizing cryptocurrencies is more challenging than freezing traditional bank accounts due to the decentralized and permissionless nature of the blockchain.

Law enforcement agencies worldwide continue to search for new methods to facilitate the seizure of digital assets, as demonstrated by the UK's new powers to seize, freeze, and destroy cryptocurrency tied to criminal activities. Similarly, Brazilian police recently seized $28.7 million worth of cryptocurrencies, according to reports from late August.