US Secret Service has seized a record $225 million in USDT. How it happened

The US Secret Service, in conjunction with the Federal Bureau of Investigation, conducted an operation to disrupt an international group of fraudsters who were building advanced infrastructure to defraud users. GetBlock AML Research explains how US law enforcers managed to seize a record amount of cryptocurrency.

Essence of the scheme

At least 430 victims were identified worldwide (about 60 are in the United States). They were offered profitable ways to invest using fake trading platforms. Victims deposited funds on such platforms, and the attackers imitated high profit growth on user trading accounts. Victims were blocked or required to pay tax deductions when attempting to withdraw funds.

In the English-speaking world, this type of fraud is called pig butchering. Scammers use social engineering techniques to gain the trust of a potential victim and then offer to earn money through investments.

How funds were laundered

A complex scheme involving hundreds of disposable addresses was used to legalize cryptocurrency stolen from gullible users. Funds were passed through various cross-chain bridges to interrupt the chain of movement of coins. All this was done to eventually send the cryptocurrency to the centralized OKX exchange. A total of 144 addresses were discovered on the trading platform, which stored $225 million worth of stolen cryptocurrency.

The accounts on OKX that were used to launder the funds were verified using Vietnamese government-issued documents. The individuals who maintained these accounts often used Philippine IP addresses.

Tracing

Law enforcement officials were able to track down a scheme to launder stolen funds using on-chain data. One of the victims turned out to be the former CEO (full name withheld as part of the investigation) of Heartland Tri-State Bank in Elkhart, Kansas. He misappropriated more than $47 million of the bank’s assets, which he decided to invest in cryptocurrency, and transferred the funds to a fraudulent platform. One of the transactions for $3 million was passed through 16 intermediate addresses before reaching the OKX wallet.

Money laundering transaction chain leading to OKX

After uncovering the money laundering scheme, law enforcers, with the help of OKX exchange and Tether, conducted an operation to block the accounts and seize the criminal proceeds, which were represented in USDT stablecoins.

Further fate of assets

The United States will seek forfeiture of the seized $225 million to the government based on two federal statutes: 18 U.S.C. § 981(a)(1)(A) and 18 U.S.C. § 981(a)(1)(C).