On April 3, the U.S. Department of Justice (DOJ) announced that it has seized virtual currency worth an estimated $112 million linked to cryptocurrency investment scams. Seizure warrants for six virtual currency accounts were authorized by judges in the District of Arizona, the Central District of California, and the District of Idaho. The virtual currency seized is expected to be returned to the victims.
According to court documents, the scammers in these schemes would cultivate long-term relationships with victims they met online, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms. In reality, the funds sent by the victims were funneled to cryptocurrency addresses and accounts controlled by scammers. Once victims make an initial “investment,” the platforms purported to show substantial gains. Sometimes, victims were even allowed to withdraw some of these initial gains to further engender trust in the scheme. It was not until a large investment was made that victims found that they were unable to withdraw their funds.
In 2022, investment fraud caused the highest losses of any scam reported by the public to the FBI’s Internet Crimes Complaint Center, totaling $3.31 billion. Frauds involving cryptocurrency represented the majority of these scams, increasing a staggering 183% from 2021 to total $2.57 billion in losses last year. The highest number of reports came from victims between the ages of 30 and 49 who were often targeted through social networking platforms, dating websites, and phone calls/ text messages meant to appear to have been misdialed.