Coinbase has helped the secret services seize 225 million in crypto

Yesterday, Coinbase revealed that it had helped the secret services to seize 225 million dollars in stolen cryptocurrencies.

It did so with a post on its official blog in which it recounted one of the largest seizures of cryptocurrencies by law enforcement related to online investment scams.

The post states that the United States Secret Service managed to seize 225 million dollars in USDT stolen through scams known as “pig butchering“.

“html The role of Coinbase “

The company claims to have played a key role in this operation.

His role was to support the investigations by tracing the funds on-chain and helping to identify the victims entitled to compensation.

In fact, the United States Secret Service (USSS) managed to seize USDT for about 225 million dollars, and then initiated the procedure to return those funds to the victims of the bull

The members of the team at Coinbase conducted, together with USSS agents, a multi-day operation to trace millions of crypto transactions and analyze the activity of suspicious accounts to identify the victims.

Part of those transactions had passed through the accounts of users on the Coinbase platform

Thanks to on-chain analysis and subpoena records, the USSS identified over 130 Coinbase customers who were unknowingly scammed, with total losses amounting to 2.3 million dollars. However, this was only a small fraction of the thousands of people who were affected by this type of scam

The USSS had previously traced the frozen funds, including several deposited in 140 accounts at the exchange OKX, and registered to individuals involved in fraudulent activities in Southeast Asia

Between February 26 and 29, 2024, Coinbase and several other exchanges participated in the joint investigation with the USSS to identify the victims of the scam, analyze the on-chain flows, and help build the case for the seizure of the funds

The truffa

The scams of the “pig butchering” type involve gaining the trust of victims over time, then deceiving them and leading them to invest in false criptovalute or other fake fraudulent investment opportunities.

They often begin with false romantic or business relationships online, which only serve to gain the trust of the victims

The term “pig butchering” (macellazione dei maiali) refers to the practice used in the agricultural and livestock sector of fattening pigs before slaughter, similar to what these fraudsters do by “fattening” their victims before “slaughtering” them.

In the specific case mentioned by Coinbase, everything started in 2023, when Tether froze 39 wallet addresses containing 225 million dollars in USDT, because they were linked to scams of this type.

Coinbase and the USSS return funds to victims

The USSS has already seized the 225 million dollars, and has also launched a public campaign to return the funds to the victims.

Now anyone who believes they have been defrauded in this way can file a complaint directly with the Internet Crime Complaint Center of the FBI at the address, entering the code “BT06182025” in the description of the complaint.

The victims will also have to provide proof of having sent funds to wallets related to the scam

In reality, Tether had already burned the 225 million dollars in USDT frozen on-chain, therefore they had to issue an equal amount of new USDT, which were then transferred to a wallet controlled by the USSS, where they will remain until distribution to verified victims.

The process is visible on-chain

The victory of the law enforcement forces

One must not forget that on-chain transactions are public, although pseudo-anonymous.

Therefore, if the wallet address from which the funds initially departed is known (that of the defrauded user), all subsequent movements can be publicly tracked, usually using specific software capable of indicating where they ended up

In this way, not only did Tether manage to identify and burn the stolen funds, but Coinbase and the other exchanges were able to trace back to the names of the scammed individuals

Furthermore, now that Tether has created the new 225 million USDT to return, it will be possible to follow the return transactions on-chain in order to verify, for example, that it is only 225 million tokens and not more.