As the cryptocurrency market continues to offer lucrative opportunities for investors, it has also attracted malicious actors who are constantly devising new schemes to defraud inexperienced or novice investors.
Latest press release by the US Department of Justice (DoJ) highlighted a recent example of such fraud. The report revealed that an Ohio man fell victim to a cryptocurrency scam and lost his savings due to fraudulent activities.
How did you fall?
As reported by the Department of Justice, the incident began in October 2023 when an Elyria resident encountered a pop-up on his computer warning of a “technical issue.”
After claiming, he called the number provided, only to be told that his retirement account had been hacked. The scammers falsely claimed that funds from his account were transferred to China, Russia and a Las Vegas casino.
To solve the problem, he granted the victim remote access to his computer, giving the scammers full control of his financial accounts without his knowledge. Over time, the scammers transferred $425,000, the victim’s life savings, to different cryptocurrency wallets.
The stolen funds were eventually converted into 947,883 Tether (USDT), a blockchain-based stablecoin, and transferred to a digital wallet.
Intervention by federal authorities
Federal investigators used “blockchain analysis” to trace the stolen cryptocurrency after the theft. On July 31, 2024, law enforcement executed a federal forfeiture warrant, recovering 947,883 stolen USDT tokens and transferring them to a government-controlled virtual wallet.
The U.S. Attorney’s Office for the Northern District of Ohio has since filed a civil forfeiture complaint seeking forfeiture of the recovered funds. If successful, the government plans to provide compensation to the victim.
The complaint also alleges that additional cryptocurrencies in the associated wallet are subject to forfeiture as the fraud continues. However, the allegations in the complaint remain allegations at this point, and require to be proven by a “preponderance of the evidence” at trial.
According to the report, Tether facilitated the investigation. The US Department of Justice noted:
The FBI’s Cleveland Division is actively investigating cryptocurrency fraud schemes committed against victims throughout the United States, including the Northern District of Ohio. The United States is represented in this matter by Assistant U.S. Attorney James L. Morford. USAO would like to express its thanks to Tether for its assistance in this matter.
It is worth noting that this incident is just one of many cases of cryptocurrency-related fraud uncovered by the US Department of Justice in recent months. Earlier this month, the department uncovered a $73 million cryptocurrency laundering operation.
One of the key individuals involved, Darren Lee, has pleaded guilty to one count of conspiracy to commit money laundering using cryptocurrencies, marking an important step towards justice.
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