US Government Seeks to Reclaim Fraud-Linked Crypto Assets

In an announcement made on Tuesday, the US Attorney’s Office revealed its plan to initiate a civil forfeiture action to recover cryptocurrency proceeds relating to a business email compromise (BEC) fraud scheme that targeted a Massachusetts-based company. The government’s focus is to seize crypto assets held in seven accounts at Binance, a cryptocurrency exchange popular among traders.

Crypto-related phishing scams have increased in the United States over the past few years, presenting a significant national concern for individuals, businesses, and law enforcement agencies. In addition to crypto-related phishing scams, another alarming trend has emerged in pig butchering schemes that primarily target individuals or businesses involved in the livestock industry.

The BEC fraud incident was brought to investigators’ notice in March 2022, triggered by an elaborate scheme that manipulated the Massachusetts company using a fraudulent email. The company transferred almost $900,000 to a bank account based in California, believing it to be legitimate.

Funds Redirected to Crypto Exchange

The US government aims to seize and claim cryptocurrency confiscated from various accounts held at Binance, encompassing a range of digital assets, including Bitcoin, Tether, ApeCoin, JASMY, OGN, Shiba Inu, eCash, TLM, and Binance Coin. The scammers deceived the company by transferring the funds from their local bank account to another account. The money was then converted to Bitcoin on a cryptocurrency exchange after being wired from the victimized company through an additional bank account.

Subsequently, the Bitcoin was transferred through various crypto addresses, following patterns commonly observed in money laundering transactions. Eventually, a portion of the funds found their way to Binance, a well-known cryptocurrency exchange. However, the authorities were successful in seizing these funds from Binance in August and September 2022. To complicate the tracing of funds, the money was routed through numerous intermediary wallet addresses, typical of money laundering transactions.

In wire communications as part of a fraudulent scheme to obtain money or property, this strategy aimed to obscure the trail of funds, making it more challenging for investigators to track their exact origin and destination. A violation under federal law, the complaint presented by the US Attorney’s Office firmly states that the seized cryptocurrency represents the ill-gotten proceeds from the wire fraud and serves as evidence of property involved in money laundering.

Individuals involved in the scheme face legal consequences for their actions, and in the context of civil forfeiture action, claims made by third parties regarding the property necessitate examination and resolution before the property can be forfeited to the US and returned to the victims.