Tether has assisted the US Department of Justice to seize $6M in funds linked to alleged crypto scams. Tether has a growing list of frozen addresses, often linked to hacks or other exploits.
Tether, Inc. announced Friday it assisted the US Department of Justice in seizing up to $6M USDT. The funds have been linked to wallets used in alleged confidence scams. USDT is one of the most widely used tokens for payments between private wallets and has been linked to both minor illegal activity and major attempts to circumvent sanctions.
Crypto scams also often invite a new breed of malicious links, called recovery scammers. They often target the victims at a later stage, again posting a malicious link that could drain or compromise wallets.
US DOJ cracks down on USDT scheme in Southeast Asia
The latest assistance of Tether will involve investigations against scams from the Southeast Asian region. The involvement of the US DOJ follows a series of targeted attacks against US individuals. In the past year, Tether has assisted in several operations against scammers, intercepting groups of wallets containing a total of $14M from confidence scams. An additional $1.4M was recouped from tech support scams. In total, Tether.Inc has clawed back $128M in USDT and sent it back to victims.
Investigators have also discovered USDT balances of $6M from remaining user funds. Tether has the ability to blacklist those addresses and potentially recoup the losses of individuals. In the past, Tether has frozen up to 1.8B USDT tokens to prevent scammers from laundering or mixing the funds.
The confidence scheme often started with individuals contacted through chat apps. The scammers then redirected them to legitimate-looking sites offering high returns for depositing cryptocurrency.
The victims were instructed on creating accounts with legitimate crypto brokers and acquiring USDT. The funds were then sent to the investment platform, which fully controlled the tokens through its wallet. Initially, the scheme paid out returns as promised. Later, once the criminals had gained the victim’s confidence, the payments stopped. Some of the schemes even go as far as sending out messages for additional payments to release the funds.
“In these scams, fraudsters trick U.S. citizens into believing they are transferring funds to cryptocurrency investment opportunities when, in fact, they are just unwittingly turning their money over to the fraudsters,” said U.S. Attorney Graves.
Cryptocurrency became the preferable tool for digital financial crimes, noticed the FBI Internet Crime Complaint Center. Since 2022, crypto-related digital scams expanded by 45%, as crypto was the easiest way to remove funds without a trace.
USDT allows for address-banning
USDT is not entirely censorship-free. Tether can ban or blacklist addresses, and some exchanges can also refuse to swap coins with a shady origin. As of September 2024, Tether has banned a total of 1,814 addresses.
The blacklist can only be completed if the funds are not mixed or sent out to smaller wallets. The confidence scams are often also known as pig-butchering scams. The same confidence game is played to make the victim entrust funds as a form of investment. Again, initially, the victim even received high returns on their investment.
The pig-butchering scammers usually don’t leave funds lying around in their wallets. Earlier this year, researchers from Eliptic noted most of the proceeds from confidence games were laundered through Huione Guarantee, a P2P marketplace that disguised illegal crypto activity. Once the victim’s funds were secured, they moved through the marketplace, becoming virtually untraceable.
The United States Institute of Peace also came up with a report on the Southeast Asia wave of cybercrime. The confidence scams often originate from organized compounds, often located in Myanmar, Cambodia, or Laos. The scam centers, however, are spread to both mainland and island locations in Southeast Asia and the broader Indo-Pacific region.
TRON-based USDT raises more doubts of scams
Stablecoin usage has increased in the past few months, with some of the traffic headed for exchanges or transparent crypto operations. However, USDT has more than 61.8B tokens minted on TRON.
The actual version of the token is not as crucial to performing a scam. Yet USDT on TRON is suspicious of its transaction profile.
Unlike other stablecoins, TRON-based USDT has a prevalence of large-scale transactions, often exceeding $100K. The token is extremely efficient in transferring value, with transactions under $100 taking a relatively small share of all transfers.
Cryptopolitan reporting by Hristina Vasileva