Feds on Wednesday said that they have filed to seize $225.3 million worth of Tether's USDT stablecoin in the largest such forfeiture related to "pig butchering" crypto scams, or confidence scams.
The U.S. Department of Justice said that following an investigation, it was able to determine that the huge sum of crypto had been laundered via the OKX exchange after scammers pinched it from would-be investors.
All of the seized crypto was in the form of crypto firm Tether's USDT coin, the third-biggest digital asset by market cap, the DOJ said.
Tether first announced the investigation back in 2023, saying at first that the illicit use of its token was connected to human trafficking.
"The complaint alleges that the cryptocurrency addresses that held the over $225.3 million in cryptocurrency were part of a sophisticated blockchain-based money laundering network that executed hundreds of thousands of transactions, and was used to conceal the nature, source, control, and ownership of proceeds derived from cryptocurrency investment fraud," the DOJ said in a statement.
"The scam operators dispersed proceeds across an extensive group of cryptocurrency addresses and accounts on the blockchain to conceal the source of the illicitly obtained funds,"it added.
Tether CEO Paolo Ardoino said in a statement: "We are setting the standard for compliance in digital assets, and leading efforts to ensure stablecoins are not misused by bad actors."
Court documents say that Tether in 2023 notified the United States Secret Service after discovering, along with crypto exchange OKX, that over 144 accounts on the exchange could be traced back to confidence scams—also known as "pig butchering."
Such scams—which originate from China—con people into handing over money after gaining their trust, usually with fake social media profiles and sob stories. They are named as such because scammers liken the process to that of fattening up a pig before it is slaughtered.
Law enforcement identified that the 144 accounts—from IP addresses in the Philippines—deposited $3 billion in crypto over the period of one year in what feds called "high-volume money laundering," court documents read.
The DOJ did not immediately respond to Decrypt's request for comment.
USDT is a stablecoin—a cryptocurrency pegged to the value of the dollar—and typically the most traded digital asset in the industry.
The USDT token, which runs on a number of blockchains, is typically used by traders to enter and exit crypto transactions. It is considered to be the backbone of the digital asset economy.
El Salvador-based Tether regularly works with law enforcement to determine if its crypto product has been used illicitly, and said that it has frozen $2.7 billion in tokens related to criminal activity.
Edited by Andrew Hayward
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