DOJ to seize over $200M for victims of crypto fraud

Federal prosecutors planned to recoup more than $225 million from a network of cryptocurrency investment scammers and money launderers, the Department of Justice said Wednesday. The network laundered cryptocurrency and duped more than 400 victims into losing money with fraudulent crypto transactions under the guise of legitimate investment, according to the DOJ’s statement. Last year saw over $5.8 billion in losses from fraudulent cryptocurrency schemes, according to the FBI’s Internet Crime Complaint Center.

How did law enforcement track down the scammers? Investigators used blockchain analysis methods to track crypto transactions related to the laundered funds, according to the DOJ. Prosecutors filed a civil forfeiture complaint, which allows the government to seize assets involved in criminal activity. The government must still present evidence in court in order to officially recover funds, according to the DOJ page on federal forfeitures.

This civil forfeiture complaint is only the latest action prosecutors have taken to protect Americans from fraudsters in cryptocurrency scams, said the DOJ’s Criminal Division head Matthew R. Galeotti. Crypto scams undermine faith in the cryptocurrency ecosystem and cost people billions annually, he added. The FBI and the U.S. Secret Service aided in the operation, which shattered the Secret Service’s record for funds seized from cryptocurrency investment scams. The FBI will not stand by and let criminals target unsuspecting people who think they are making legitimate investments, said Jose A. Perez, assistant director of the FBI’s Criminal Division.

Dig deeper: Read Bekah McCallum’s report about how the Trump administration may impact the cryptocurrency market.