United States Seizes $1.4 Million in USDT Linked to Alleged Tech Support Scam

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United States Seizes $1.4 Million in USDT Linked to Alleged Tech Support Scam

On Friday March 8, 2024, the US Department of Justice announced the court authorized seizure of over $1.4 million worth of USDT – the stablecoin issued by Tether – from five Ethereum addresses. According to DOJ, the funds, which are suspected fraud proceeds, will be returned to the victims of a massive tech support fraud scheme.  

The seizure marks one of the first times law enforcement has recovered USDT from a self hosted cryptocurrency wallet. Notably, the seizure warrant application ordered Tether to effectuate the seizure process by (1) burning the USDT tokens currently associated with the [scammer] virtual currency addresses and (2) reissuing the equivalent value of USDT tokens to a U.S. law enforcement-controlled virtual currency account.

According to the seizure warrant, the alleged tech support fraud scheme, which remains under investigation, was initiated by a computer popup that indicated a victim’s computer had been compromised.  The popup directed the victim to contact Microsoft or Apple, depending on the victim’s operating system, at a certain telephone number.  Once on the phone, the perpetrators, posing as tech support employees, informed the victim that the victim’s bank account had also been compromised.  The perpetrators convinced the victims to convert money from traditional bank accounts into cryptocurrency to keep it “safe” from hackers.  The funds were then transferred into crypto wallets controlled by the perpetrators.

The TRM graph above show USDT flowing from a centralized exchange referenced in the affidavit, (likely where victims were directed to acquire USDT), then shows funds moving to intermediary scammer addresses, then funds move again to subsequent subject addresses where the government was able to effectuate the seizure.

The seizure was announced by Morris Pasqual, Acting United States Attorney for the Northern District of Illinois, and Robert W. “Wes” Wheeler, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI with assistance provided by the Justice Department’s Computer Crime and Intellectual Property Section, National Cryptocurrency Enforcement Team.  The government is represented by Assistant U.S. Attorney Steven J. Dollear.

In its most recent Internet Crime Report, the FBI estimated that tech support scams caused losses in excess of $924 million in 2023. According to TRM, total payments into addresses connected to fraud or scams dropped from about $13.5 billion in 2022 to $10.6 billion in 2023.

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