Inside the fed’s $8M crypto recovery mission: how victims lost their money in the first place

US law enforcement is trying to forfeit more than $8 million worth of the tether (USDT) stablecoin related to potential crypto scams in order to return the money to victims.

The funds have already been transferred to a law-enforcement-controlled crypto wallet, and with the Complaint in Forfeiture filed last week, the US is attempting to forfeit the entire USDT 8.2 million stash.

Investigators allege that the crypto accounts also contained additional funds above the victims’ traceable losses. As proceeds of fraud, these are also subject to forfeiture. If this forfeiture is successful, victims will get their stolen money back.

According to the US Attorney's Office for the Northern District of Ohio, the FBI has already identified 33 victims of an investment fraud scheme across the country. Additionally, five more affected accounts have been found, and the FBI is working to identify these victims, who collectively lost more than $1 million in crypto assets.

The investigation has shown that the scammers contacted their potential victims via "wrong number" text messages and then attempted to manipulate them into trusting them. Once trust was gained, the criminals would brag about their own or someone else’s success in crypto investing in an attempt to convince the victims to invest.

"The fraudster would then guide the victim, step by step, on how to open a legitimate cryptocurrency account, most often with a US-based virtual currency exchange such as Crypto.com or Coinbase," investigators said.

However, after helping victims buy crypto, the fraudsters instructed them to send it to a legitimate-looking, lucrative-returns-promising "investment platform," which was actually a fake website designed to steal crypto assets.

As is usual with so-called pig-butchering scams, fraudsters even allowed their victims to withdraw a portion of the "profits" just to strengthen their trust and encourage them to increase their investments. However, eventually, victims were locked out of their accounts – even after paying a "tax" that was supposedly required to regain access to their money.

For example, a woman in Lake County, Ohio, is said to have become the target of such a scam after responding to a text from an unknown number in November 2023. In this case, the bond and trust were built through discussions about hobbies and religion. Soon after, once the fraud scheme was completed, the woman lost "her entire life savings of approximately $663,352, including funds from her Roth IRA," and subsequently filed a complaint with the FBI’s Internet Crime Complaint Center.