DOJ targets $327K in USDT while Tether’s total freezes reach $4.2B

Prosecutors from the Massachusetts District of the United States Attorney’s Office attempted to seize USDT worth $327,829, particularly through civil forfeiture, after Tether announced it had frozen USDT assets valued at $4.2 billion linked to illegal activities over the past three years.

The federal prosecutors filed a civil forfeiture action to seize USDT, alleging that an anonymous resident in the state was manipulated into transferring funds to an individual who claimed to be “Linda Brown” on an online dating app. At this point, it is worth noting that the inquiry into what officials referred to as an “online romance fraud scheme” commenced in the fall of 2024.

Concerning the incident, sources familiar with the situation, speaking on condition of anonymity, disclosed that Brown presented a fake cryptocurrency investment opportunity to the Massachusetts resident after weeks of conversations with the victim.

To further clarify on the situation, the attorney’s office issued a statement noting that, “Under the pretense of legitimately investing the victim’s money, Brown instead deceived the victim into sending funds to wallets that were controlled by Brown and/or their accomplices,” adding that, “The victim realized it was a scam when they tried and failed to withdraw their money.”

Surge in crypto criminal activities sparks concerns

The romance scam sparked tension in the crypto industry. Investigations revealed that the alert regarding the fraudulent activity was issued approximately three weeks after international Valentine’s Day celebrations. Interestingly, before this holiday, the US Attorney’s Office for the Northern District of Ohio had cautioned individuals against sending money, gift cards, or cryptocurrency to people they had never met in person.

At this particular moment, analysts discovered that Tether can enforce a freeze on its stablecoin through address blacklisting. To support this claim, reports mentioned that the fintech firm has frozen about $544 million in USDT as of February this year. Notably, this frozen stablecoin is linked to money laundering and unlicensed betting sites following a formal request from Turkish authorities.

In the meantime, regarding the romance scam, reports noted that the victim’s funds were transferred between various wallets and later converted into Tether’s stablecoin, citing information retrieved from the complaint.

In response to this finding, the US Attorney’s Office for the District of Massachusetts claimed that it is against federal law to carry out a financial transaction if you know that it aims to hide the nature, location, source, ownership, or control of criminal gains. According to them, a civil forfeiture action allows third parties to claim ownership of property, and these claims must be resolved before the property can be forfeited to the United States and returned to victims.

This assertion prompted a thorough investigation into the matter. The inquiry traced the victim’s funds to cryptocurrency wallets that were subject to a seizure order in August of last year. Nonetheless, reports stressed that the US must first present clear evidence of legal eligibility for forfeiture before the assets can be returned to the victim.

Meanwhile, it is crucial to note that although the romance scam occurred two years ago, sources pointed out that the forfeiture filing occurred just weeks after the criminal act alert.

Crypto ecosystem increases enforcement actions against criminal activities

While the romance scam has heightened concerns among investors, Tether has emphasized its broader enforcement efforts, noting that it has frozen billions of dollars’ worth of USDT linked to illicit activity since the stablecoin’s launch. Sources with knowledge of the matter acknowledged that the fintech company has more than $180 billion of its stablecoin in circulation.

On the other hand, given a significant surge in enforcement actions, the US Department of Justice and Homeland Security Investigations (HSI) issued a press release on February 24. In this press release, the HSI praised Tether’s decision to assist the federal agents in seizing USDT worth $61 million. This incident took place just after they realized that money launderers were using specific crypto addresses to move stolen funds.

“The Department of Justice and HSI appreciates Tether for its help in transferring these assets,” said the press release. Meanwhile, Tether issued a statement claiming that it has decided to join forces with over 310 law enforcement agencies across 64 nations and actively partnered with international entities to track, freeze, and recover illegal funds. 

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