In a major crackdown on crypto-related fraud, the United States government has filed a forfeiture action against $200,000 worth of Tether (USDT) held in the Binance exchange. The seized funds are linked to a notorious "pig-butchering" scam that cost a victim a staggering $1.1 million.

The court documents, filed in the US District Court of Columbia, describe the scam as a complex web of "wire fraud, wire fraud conspiracy, money laundering, and money laundering conspiracy activity." The Federal Bureau of Investigation (FBI) successfully traced the illicit funds to Binance, where the exchange promptly froze the assets and alerted the authorities.

Anatomy of a Pig-Butchering Scam

Pig-butchering scams, also known as romance scams, involve perpetrators creating fake online profiles to lure unsuspecting victims into fraudulent investment schemes. In this case, an anonymous victim fell prey to two separate scams, losing a total of $1.1 million between January 2021 and December 2022.

The first scammer, posing as "Eva Markus" on Facebook's dating app, convinced the victim to send over $400,000 to hire an attorney after claiming that the diamond mine she was working on had exploded. In the second scam, another perpetrator, "Lisa Warren," persuaded the victim to invest in crypto, ultimately draining nearly $600,000 from the victim's house sale.

Feds Crack Down on Crypto Scams

The US government's forfeiture action aims to punish and deter criminal activity by depriving scammers of their ill-gotten gains. The seized Tether will be used to promote cooperation among federal and foreign law enforcement agencies and potentially compensate victims of these heinous crimes.

The Federal Trade Commission (FTC) has also issued a timely warning about the rise of crypto-related pig-butchering scams, urging the public to be vigilant against such fraudulent schemes. As the crypto landscape continues to evolve, it is crucial for both individuals and exchanges to remain proactive in combating financial crimes and protecting vulnerable investors.