Federal and State Agencies Recover Millions in Crypto Linked to Investment Fraud

Federal and state authorities have announced the recovery or freezing of more than $225 million in cryptocurrency connected to fraudulent investment schemes that deceived hundreds of victims across the United States. In coordinated actions, the Department of Justice seized $225 million linked to widespread crypto scams, while New York officials recovered and froze $440,000 from a separate operation that targeted Russian-speaking residents with fake social media ads. 

DOJ Seizes $225 Million in Cryptocurrency Linked to Investment Scams as Crackdown Intensifies

In a sweeping move to curb the rise in cryptocurrency-related fraud, the United States Department of Justice (DOJ) has announced the seizure of more than $225 million in digital assets allegedly tied to investment scams. The seizure, executed by the US Secret Service and announced Wednesday, marks one of the largest cryptocurrency forfeitures in US history and underscores a growing focus on consumer protection amid the proliferation of digital finance.

The DOJ filed a civil forfeiture complaint — a legal mechanism allowing the government to seize property linked to illegal activity — against the assets. Unlike criminal charges, such complaints are directed at the assets themselves, not necessarily individuals, and can proceed even if no one is charged with a crime. The funds in question are reportedly tied to money laundering efforts stemming from fraudulent cryptocurrency investment schemes that duped hundreds of victims across the country.

'Pig Butchering' at the Center of the Fraud

According to the DOJ, the scams involved a form of fraud commonly referred to as “pig butchering.” This tactic entails cultivating a fake relationship with a victim over weeks or months to build trust — ”fattening the pig” — before persuading them to invest increasing sums in fraudulent crypto projects or trading platforms.

Tether, the issuer of the world’s most widely used stablecoin, USDT, confirmed in a blog post that it assisted US authorities in the investigation and seizure efforts. The company has previously committed to working with law enforcement to block addresses associated with criminal activity.

The DOJ’s announcement comes amid growing alarm over the scale of cryptocurrency-related crime. In 2024 alone, crypto investment scams led to more than $5.8 billion in reported losses, according to the FBI’s Internet Crime Complaint Center. Total losses from digital asset fraud in the same year exceeded $9.3 billion, as scammers continued to exploit the relative anonymity and lack of consumer safeguards within the crypto ecosystem.

A separate action by New York authorities, also announced Wednesday, saw $140,000 seized and another $300,000 frozen in a similar scheme involving fake investment advertisements on social media platforms. That fraud impacted at least 300 people and caused losses topping $1 million.

Political and Regulatory Backdrop

At a press conference unveiling the civil forfeiture case, Pirro was asked whether the Justice Department would apply a similarly aggressive approach to examining President Donald Trump’s connections to the cryptocurrency industry, especially in light of his recent public endorsements and the political momentum surrounding the space.

While the forfeiture process does not automatically mean victims will receive compensation, it significantly raises the likelihood that funds will eventually be returned. In civil forfeiture cases like this one, courts typically evaluate whether the government has demonstrated, on a ”preponderance of the evidence” standard, that the assets were involved in criminal activity.

Victims of the scams are expected to be contacted during the restitution phase once legal proceedings conclude. However, given the size and complexity of the case, full recovery may take years.

Still, many see the move as a landmark moment for crypto enforcement.

New York Authorities Disrupt Crypto Investment Scam Targeting Russian Speakers, Recover Over $440K

Meanwhile, in a coordinated law enforcement effort, New York state officials have announced the recovery of $140,000 in stolen cryptocurrency and the freezing of an additional $300,000 tied to a widespread cryptocurrency investment scam that preyed on Russian-speaking residents in the Brooklyn area and beyond. The operation, which utilized deceptive social media ads to lure victims, has already led to the identification of more than 300 individuals who suffered financial losses totaling over $1 million.

The investigation was spearheaded by the Brooklyn District Attorney’s office, New York State Attorney General’s office, and the New York State Department of Financial Services (DFS), with the goal of dismantling what they described as a sophisticated and targeted fraud operation.

“These scammers targeted Russian speakers on Facebook with enticing ads, and my office, together with DFS and the Brooklyn District Attorney’s office, took action to stop these scammers and protect New Yorkers,” said New York Attorney General Letitia James in a statement issued Wednesday.

James also issued a stern warning to state residents: “I urge all New Yorkers to be vigilant of online cryptocurrency investment ads. If something looks too good to be true, it probably is.”

How the Scam Operated

According to law enforcement officials, the perpetrators used Facebook and other social media platforms to publish professionally designed ads written in Russian, offering lucrative returns on supposed cryptocurrency investments. These ads led users to a fake crypto investment website that falsely claimed to hold a BitLicense—New York’s official regulatory license for cryptocurrency firms operating in the state.

The use of a counterfeit BitLicense was especially insidious, as it added a veneer of legitimacy to the scam and helped lower the guard of potential victims. New York’s BitLicense, introduced in 2015, is known for its rigorous regulatory requirements, and many crypto users associate it with strong consumer protections.

Meta, the parent company of Facebook, cooperated with authorities and reportedly removed more than 700 fraudulent ads after being notified of the investigation.

This case adds to a growing list of “Black Hat” advertisement scams—ads that exploit loopholes in social media platforms’ ad vetting systems to target unsuspecting users with false or misleading claims about cryptocurrency investments.

In recent years, these scams have become increasingly difficult to track, especially when they target niche communities, such as Russian speakers or other non-English-speaking groups. By narrowing their focus, scammers can appear more trustworthy and often tailor their schemes to exploit cultural trust cues and language familiarity.

Among the more high-profile examples of this tactic were fake XRP airdrops impersonating Ripple CEO Brad Garlinghouse, which promised users free crypto in exchange for small “activation fees.” These ads misused Garlinghouse’s image and references to Ripple’s high-profile legal case against the US Securities and Exchange Commission (SEC) to boost credibility.

Crypto Scams Evolve with Technology

The case also highlights growing concerns about the evolving tactics of crypto scammers, particularly as new technologies such as artificial intelligence (AI) begin to be used in fraud campaigns. AI-generated deepfakes, voice cloning, and automated scam bots have already been documented in various fraud cases.

A recent report from blockchain analytics firm Chainalysis revealed that illicit transaction volume involving digital assets reached approximately $51 billion in 2024. While ransomware payments saw a 35% decline, investment scams and social engineering attacks remained stubbornly high, fueled in part by the use of AI tools to craft more convincing narratives and phishing attempts.

Though the seizure and freezing of approximately $440,000 in crypto assets is a promising step forward, law enforcement officials acknowledged that full restitution for all victims is far from guaranteed. Legal proceedings will now determine how and when the recovered funds can be returned to those defrauded.

The case also raises broader questions about platform responsibility, crypto regulatory enforcement, and digital asset consumer protection in an age where scams are increasingly conducted at scale and with technological sophistication.

Brooklyn District Attorney Eric Gonzalez commended the swift multi-agency response and pledged continued efforts to protect New Yorkers from financial crime in the digital realm.