Coinbase aids US Secret Service in $225M crypto scam crackdown

On Tuesday, the US crypto exchange Coinbase revealed that it had helped the US Secret Service retrieve millions in crypto, linked to a 2023 scam case.

According to the exchange, it assisted the federal agency in tracing the millions in crypto transactions from the illicit wallets.

Last week, US Secret Service Special Agent in Charge Shawn Bradstreet even confirmed that seizure of $225.3 million in funds marked the largest cryptocurrency seizure in US Secret Service history. 

The US Secret Service investigated the scam case with the Federal Bureau of Investigation

In December 2023, Tether froze roughly $225 million worth of USDT in self-custodial wallets, believing the assets were tied to a human trafficking organization behind the “pig butchering” romance scam. Typically, “Pig butchering” involved fraudsters posing as successful crypto investors on social media to lure victims into opening accounts and making fake investment deposits with promises of high returns.

The US Secret Service took on the case, working alongside the Federal Bureau of Investigation and the US Attorney’s Office, and uncovered dozens of victims in the US and more than 400 victims worldwide. 

The federal agents reportedly used blockchain analysis and other investigative techniques to determine whether the crypto funds were connected to theft and money laundering. Moreover, per their investigations, hundreds of thousands of blockchain transactions were made to obscure the origin of the stolen crypto. 

Coinbase, one of the largest crypto exchanges, said it played a role in tracing the stolen crypto assets and helped pinpoint victims entitled to restitution. It commented, “Coinbase team members conducted a multi-day effort to trace millions in cryptocurrency transactions back from illicit wallets to the sends from our platform and analyze account activity to flag victims.”

Coinbase also asked that anyone who believed they were duped into investing in the scam file a claim with the FBI Internet Crime Complaint Center. 

Pig butchering and address poisoning scams increased significantly in 2024

According to a Chainalysis report, scam cases involving pig butchering, address poisoning, crypto drainers, livestream, and blackmail scams grew astoundingly in 2024. Pig butchering revenue increased 40% and deposits to pig butchering scams surged nearly 210% from 2023.

However, the average deposit amount to pig butchering scams dropped 55% year-over-year, hinting at a play change. Scammers might prioritize volume, accepting smaller payouts in exchange for scamming more people. 

In 2024, crypto drainers also saw close to a 170% revenue growth, about a 55% rise in deposit size, and a 75% growth in the number of deposits from 2023. One of the key draining cases last year involved one scammer taking on the name of the US Securities and Exchange Commission to dupe unsuspecting investors into claiming fake tokens through an airdrop.

Additionally, address poisoning scams drew in more crypto, more than a 15000% rise since 2023, most of it coming from a single attack in May.

An unknown whale nearly lost $68 million in wrapped Bitcoin (WBTC) on the Ethereum blockchain on May 3rd. Luckily, the attacker returned the funds to the victim. The report also showed that address poisoning scammers targeted users with higher-than-average wallet balances.

Meanwhile, Tether clarified that it had frozen over $2.7 billion in USDT tied to illegal activity since its launch, hinting at crypto attackers’ preference to convert stolen crypto to stablecoins.

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