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US Seizes $1.4 Million USDT in Virtual Wallet from Crypto Scammers

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By Erika John - - 5 Mins Read
Illustration of the law: handcuffs and gavel
Photo | Shutterstock

In a fight against US crypto scams, the US Attorney’s Office in Chicago successfully seized approximately $1.4 million in Tether (USDT) from an unhosted crypto wallet. 

This action is a remarkable step in the United States’ ongoing battle against financial fraud, particularly within the cryptocurrency sector.

The seizure unfolded due to a coordinated effort by various US agencies.

The Justice Department’s Computer Crime and Intellectual Property Section and the National Cryptocurrency Enforcement Team played major roles in this successful operation.

The US government's initiative to reclaim these funds is a significant win and one of the first instances in which the United States successfully recovered USDT from an unhosted virtual currency wallet.

At the heart of this seizure, the scam targeted unsuspecting victims, primarily the elderly, through a deceptive computer popup.

Victims were led to believe that their computers were compromised, prompting them to convert their savings into cryptocurrency as a protective measure against hackers. Unfortunately, this conversion turned out to be how the scammers stole over $1.4 million.

As part of its broad strategy to combat cryptocurrency-related crimes, this action was taken by the US Government.

In a notable instance from November 2023, a civil forfeiture action to recover $54 million in crypto linked to a narcotics ring shows the government’s approach to disrupting criminal enterprises' financial operations.

These endeavors reflect a strategic effort to target criminal networks' financial resources, ultimately mitigating their impact.

Moreover, the US government's engagement in recovering cryptocurrency assets comes amidst the backdrop of escalating cybercrime.

February witnessed a surge in personal crypto scams, with a staggering 57,000 people falling victim to sophisticated phishing attempts.

Within this surge, Ethereum mainnet users bore the brunt, accounting for 78% of the total exploits, resulting in losses of $36.2 million.


Graph indicating illicit crypto transactions by category and asset type
Illicit crypto transactions by category and asset type | Chainalysi


Blockchain Technology: A Tool Against Financial Fraud

The successful seizure of $1.4 million in USDT shows the effectiveness of blockchain technology in tracing illicit funds.

As crypto scams become more sophisticated, the ability to trace and recover stolen funds is critical to maintaining trust in the digital financial ecosystem.

The Justice Department and the National Cryptocurrency Enforcement Team's collaboration exemplifies the synergy needed to combat financial crimes in the age of technology.

This success not only serves justice but also sends a strong message to potential perpetrators that the long arm of the law is extending into the digital space.

The US government's commitment to returning the seized funds to the victims adds a layer of reassurance to those affected by such scams, fostering confidence in the legal system's ability to address crypto-related crimes.

US Crypto Scams and Regulatory Measures

The US government's seizure of $1.4 million in USDT highlights the need for robust regulatory measures in crypto to protect investors, especially vulnerable populations like the elderly.

The US government actively monitors and intervenes in cryptocurrency cases as part of its broader strategy.

The government’s substantial Bitcoin holdings, acquired from criminal activities and valued at approximately $12.4 billion, serve as a deterrent and a potential source of restitution for victims.

However, the process of liquidating these assets is intricate, involving legal and investigative procedures to ensure a fair and lawful distribution of recovered funds.