The United States Secret Service (USSS) has seized over $102 million in cryptocurrencies during investigations into criminal and fraud cases since 2015, said David Smith, Assistant Director of Investigations. Smith leads the USSS’ global investigative wing with 161 offices and over 3,000 employees.
To track illicit currency transactions and crackdown on them, US Secret Service agents and analysts monitor the flow of bitcoin and other digital assets on different blockchain networks, he informed. In all, 254 cryptocurrency-related cases were investigated by the agency during the period, the Secret Service Officer told CNBC.
“When you follow a digital currency wallet, it’s not different than an email address that has some correlating identifiers… And once a person and another person make a transaction, and that gets into the blockchain, we have the ability to follow that email address or wallet address, if you will, and trace it through the blockchain.”
Fraud With a Crypto Extension
In a case that involved 900 US citizens as victims, Smith’s team of investigators worked with the Romanian Police to deconstruct the fraud. It was a case of some non-existent luxury items being sold on auction and retail sites through fake ads.
On the purchase, fake invoices in the name of reputable companies were delivered to the customers. The money received from the victims was converted into digital assets, Smith explained. It illustrated how old-fashioned fraud is now using cryptocurrency to hide away the money, he alluded.
“One of the things about cryptocurrency is it moves money at a faster pace than the traditional format… What criminals want to do is sort of muddy the waters and make efforts to obfuscate their activities. What we want to do is to track that as quickly as we can, aggressively as we can, in a linear fashion.”
A popular modus operandi of cryptocurrency criminals is to transfer the stolen bitcoin or other cryptocurrencies into stablecoins to avoid market volatility, the Secret Service agent told.
USSS Probe into Banana Fund
In a case reported by CryptoPotato in August 2020, USSS executed a seizure warrant for 482 bitcoins and 1.7 million USDT from an alleged kingpin of a Ponzi scheme. As per the details, a scheme called Banana Fund, a cryptocurrency crowdfunding platform for startups, received investments from ordinary investors for shares in the fund.
Later, the fund administrator claimed that the scheme had failed and he would return 557 bitcoins and 1.73 million USDT that he had received from the investors. But, the victims approached the USSS, saying that the administrator had not returned their investments. Instead, he took out 100 bitcoins from the fund for personal use.
After its investigation, the agency was able to locate 482 bitcoins and 1,721,868 USDT in one cryptocurrency account linked to the Banana Fund administrator. It executed a seizure warrant for the recovered digital coins.
In October 2021, the Federal Bureau of Investigation (FBI), with the help of Israeli Police, arrested 26 Israelis on suspicion of their involvement in a crypto fund scheme.
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