KEY TAKEAWAYS
- The U.S. Secret Service seized $225 million in USDT linked to ‘pig butchering’ scams, marking a significant law enforcement operation.
- Coinbase played a crucial role in the investigation, collaborating with the USSS to trace and seize the illicit funds.
- Tether froze and burned the stolen USDT, issuing new tokens to a USSS-controlled wallet for victim restitution.
- This case underscores the potential of blockchain forensics and public-private cooperation in combating crypto-related scams.
In a significant law enforcement operation, the U.S. Secret Service (USSS) has seized $225 million in USDT linked to online investment scams known as ‘pig butchering.’ This operation marks one of the largest seizures of cryptocurrency tied to such scams, with Coinbase playing a crucial role in the investigation.
Pig butchering scams typically involve long-term fraud schemes that start with fake romantic or business relationships, leading to substantial financial losses for victims. In late 2023, Tether froze 39 wallet addresses holding the stolen USDT. The USSS traced these funds to 140 accounts at the exchange OKX, many of which were linked to individuals trafficked into scam operations in Southeast Asia.
Tracing and Seizure Efforts
Between February 26 and 29, 2024, Coinbase collaborated with the USSS and other exchanges in a joint investigative effort. This involved tracing onchain funds, identifying scam victims, and building a case for the seizure. Coinbase team members worked alongside USSS agents to track millions in cryptocurrency transactions from illicit wallets back to their platform, analyzing account activity to flag victims for USSS outreach.
This detailed blockchain analysis and subpoena records production enabled the USSS to identify over 130 Coinbase customers who were unknowingly defrauded, representing $2.3 million in losses. These victims are part of a larger group affected across the crypto ecosystem.
Returning Funds to Victims
Following the seizure, the USSS has initiated a public campaign to return the funds to scam victims. Affected individuals can submit claims to the FBI Internet Crime Complaint Center, using the code ‘BT06182025’ in their complaint narrative. To verify eligibility, victims must provide proof of transactions to scam-related wallets, often by downloading their transaction history from the crypto platform they used.
Coinbase has published guidance to assist customers in accessing and submitting their transaction history. The company is also working closely with law enforcement to ensure victims receive the necessary information and support.
As part of the seizure process, Tether burned the $225 million in frozen USDT onchain. An equivalent amount of new USDT was issued and transferred to a USSS-controlled wallet, where it will be held until distribution to verified victims. This process was visible onchain, demonstrating how cryptocurrency can enhance transparency in law enforcement operations.
Impact and Future Steps
Pig butchering scams are often linked to human trafficking networks, causing significant harm to victims. This case highlights the potential of blockchain forensics, public-private cooperation, and trusted platforms like Coinbase to help reverse the damage caused by such scams.
Individuals who suspect they may be victims of a pig butchering scam are encouraged to download their transaction history from their Coinbase account, follow USSS guidance to file a claim, and contact Coinbase Support for assistance with account recovery or transaction verification.
Why This Matters: Impact, Industry Trends & Expert Insights
The U.S. Secret Service, with the assistance of Coinbase, has seized $225 million in USDT linked to ‘pig butchering’ scams, marking one of the largest cryptocurrency-related seizures.
A recent Chainalysis report highlights the significant impact of large-scale crypto asset seizures on the market and law enforcement strategies. These operations disrupt criminal networks and reduce the profitability of illicit activities, aligning with the recent seizure by the USSS and Coinbase.
A Blockpit report emphasizes the importance of a multi-faceted approach to cryptocurrency scam mitigation, including education and legislative action. This supports the collaborative efforts seen in the USSS and Coinbase operation, showcasing how strategic partnerships can effectively combat crypto scams.
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Disclaimer: The views expressed in this article are those of the authors and do not necessarily reflect the official policy of CoinsHolder. Content, including that generated with the help of AI, is for informational purposes only and is not intended as legal, financial, or professional advice. Readers should do their research before taking any actions related to the company and carry full responsibility for their decisions.
