Federal Prosecutors Target $3.4M in Tether Linked to Cryptocurrency Fraud Operation
Federal authorities have initiated forfeiture proceedings for $3.44 million in USDt connected to an elaborate cryptocurrency scam that deceived victims into transferring Ether to digital wallets under the control of criminal actors.
Federal prosecutors in the United States have initiated a civil forfeiture proceeding aimed at seizing approximately 3.44 million USDt connected to what authorities describe as a sophisticated online cryptocurrency investment fraud that victimized individuals across multiple states.
Based on a statement released Tuesday by the US Attorney's Office in Boston, the cryptocurrency assets were connected to a fraudulent operation that convinced victims to transfer digital currency to wallets under the scammers' control. Federal authorities indicated they confiscated the USDt (USDT) during February and March 2025, and have now petitioned a court for authorization to permanently forfeit these assets.
"In such fraud schemes, scammers obtain funds from victims using manipulative tactics," prosecutors said, adding that they establish a level of trust with a victim and then entice the victim into investing in a fraudulent investment scheme.
The probe was initiated in late 2024 following reports from at least four individuals who reported financial losses, including two people residing in Massachusetts along with others located in Utah and South Carolina.
Fake ETH investment scheme
In this particular instance, the fraudsters initiated contact with victims through communications that seemed to be misdirected messages, frequently using text messages or encrypted messaging applications such as WhatsApp and Telegram.
Following the establishment of trust with their targets, the perpetrators allegedly promoted what they characterized as a limited-access Ethereum investment opportunity that was purportedly secured by physical gold reserves. Victims received instructions to acquire Ether (ETH) and send it to cryptocurrency wallets furnished by the criminals.
Based on the official announcement, legal filings indicate that upon the ETH arriving at those specified wallets, the digital assets were channeled through intermediary addresses, exchanged into USDt, and transferred to unhosted wallets under the scammers' control.
US seizes more crypto tied to crypto scams
US law enforcement agencies have recently confiscated additional cryptocurrency connected to fraudulent operations. In one instance, the US Attorney's Office for Massachusetts initiated a civil forfeiture action aimed at recovering approximately $327,829 in USDt, which investigators assert was linked to a romance scam that targeted a Massachusetts resident in 2024.
In a separate instance, federal law enforcement officials in North Carolina confiscated more than $61 million in USDt connected to an extensive "pig-butchering" scheme that utilized fraudulent investment platforms to swindle victims.
Last month, stablecoin issuer Tether said it had frozen about $4.2 billion in USDt linked to suspected illicit activity over the past three years, reflecting increased cooperation with law enforcement.