In brief
- Federal prosecutors have filed a complaint to forfeit USDT funds traced to a spoofed trading platform.
- Victims were recruited through text messages and directed into fake investment accounts.
- Civil forfeiture is being used as a tool to disrupt scams and recover funds for victims, Decrypt was told.
Federal prosecutors in Albany have filed a civil forfeiture complaint seeking to recover more than $12 million in Tether’s USDT stablecoin linked to an investment fraud scheme.
Filed last Friday, the complaint targets balances traced to wallets used by a spoofed trading platform and details how victims were steered into off-platform deposits, according to a Justice Department statement released Tuesday.
Crypto investment scams are “the latest vehicle for con artists from all over the world to victimize Americans right here in our backyards,” Acting United States Attorney Sarcone said in a statement.
Ten Mandarin-speaking victims were approached through unsolicited text messages which later spiraled into conversations about investment opportunities. The victims were then directed to ShakepayEX, a site designed to resemble a legitimate Canadian exchange, the DOJ detailed, citing findings from the FBI.
Once deposits were made, the platform blocked withdrawals by inventing fees and new requirements, while scammers continued to pressure victims to send more funds. Losses totaled more than $10 million, according to prosecutors.
Civil forfeiture an “important tool”
The case comes as U.S. authorities increasingly rely on civil forfeiture to intercept funds on stablecoin networks, demonstrating coordination between prosecutors and issuers to freeze assets before they slip into harder-to-trace channels.
In June, the Department of Justice initiated a civil forfeiture action targeting $225 million in USDT tied to so-called “pig butchering” scams, describing it as the largest crypto-linked seizure of its kind.
“Civil forfeiture has become one of the most important tools in crypto investigations because it not only disrupts illicit activity but also allows prosecutors to actually get funds back to victims,” Ari Redbord, global head of policy at blockchain intelligence firm TRM Labs, told Decrypt.
Civil forfeiture’s dual function has become “a critical point” such that regulators no longer just weigh asset seizure, but also consider restitution for victims, Redbord explained.
“We’ve seen a growing number of cases where prosecutors, working with issuers and exchanges, have used civil forfeiture actions to freeze funds quickly and return them, even when arrests are difficult in non-cooperative jurisdictions,” he added.
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