Key Takeaways
- U.S. law enforcement has seized over $225 million in USDT.
- The funds were traced back to major crypto scam operations.
- Prosecutors said the schemes “are perpetrated primarily in Southeast Asia,” often exploiting trafficking victims and forced labor.
U.S. authorities have seized over $225 million in USDT, described by the Secret Service as the largest cryptocurrency seizure in its history.
A U.S. Attorney’s complaint alleges the funds were taken from a “sophisticated blockchain-based money laundering network” tied to kidnapping, human trafficking and other crimes.
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Busting a Multimillion-Dollar Crypto Crime Ring
The investigation that led to the latest seizure was initiated when the crypto exchange OKX contacted law enforcement regarding a network of 144 accounts believed to be laundering cryptocurrency scam proceeds.
Upon analysis, officers identified 434 suspected fraud victims. They were able to interview around 60 of them, who confirmed that they had lost approximately $19 million in cryptocurrency to scammers.
The scams centered on tricking victims into using fraudulent crypto investment platforms that mimicked legitimate exchanges.
Identified victims include Shan Hanes, the former CEO of Heartland Tri-State Bank. In 2023, Hanes embezzled $47 million from the bank to invest on a crypto exchange that turned out to be part of a confidence scam.
Southeast Asian ‘Scam Compounds’
In detailing the complex criminal network that orchestrated the scams, prosecutors said the schemes “are perpetrated primarily in Southeast Asia, often via forced labor.”
Victims are trafficked into “scam compounds” in Myanmar, Philippines, Laos and Cambodia, where they are forced to target marks via text messages, dating websites and other online platforms.
Links to the Philippines
While the money laundering network crossed international borders, the locus of its operations appears to be the Philippines.
All of the 144 OKX accounts had IP addresses that were traced back to the Philippines.
Moreover, after the USDT was frozen, several Philippines-based entities came forward claiming ownership of the funds.
One of these was Infiniweb Technology Inc., which the US Attorney’s complaint observes has reported ties to Xionwei Technologies.
In 2023, a report submitted to the Philippines Congress accused Xionwei of being involved in kidnapping and human trafficking.
A controversial offshore gambling operator, Xionwei is also implicated in the cascading controversies surrounding Rodrigo Roa Duterte, the former president of the Philippines.
With Duterte currently on trial at the International Criminal Court for crimes against humanity, many of his associates, including some who sit on Xionwei’s board, have been accused of corruption.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
