A group of U.S. government officials led by U.S. attorney Tracy Wilkinson have filed a civil complaint to the U.S. District Court for the Central District of California, following their investigation of four crypto wallets holding over 9.8 million Tether ($USDT).
The funds were allegedly involved in wire fraud, cyber fraud, and money laundering. The case follows transactions from April 2021 which were made in connection to these four crypto wallets, with the total amount of swindled funds going over 200 Bitcoin ($BTC).
The penalty suit, titled as “USA vs Approximately 9,816,861 Tether Digital Currency” was filed with civil forfeiture as cause. The court documents reveal how the legitimate owner of the funds is a civilian individual residing in California. The purported victim was made to believe that a fake Coinbase employee was communicating with them, but it was instead an impersonation of Coinbase’ customer service.
The civil complaint in question describes how the unidentified victim was contacted by the Coinbase customer support representative right after their purchase of some 200 BTC through the Coinbase Pro exchange. The fraudulent representative then told the victim that their account had been frozen because of an undisclosed transaction limit, with the purchase of 200 BTC exceeding the exchange’s policy.
The fake representative then proceeded to suggest that the victim opt in for Coinbase Prime, the exchange’s integrated solution for secure custody and advanced trading of crypto assets. The victim complied, but was duped into allowing the fake representative access to their device through a remote tool. The threat actor then promptly initiated a transfer of some 206 BTC from the victim to the new, fake “Coinbase Prime” wallet address.
The total value of assets executed and stolen from the victim’s Coinbase account exceeded $11.5 million, with more transactions following the first transfer of 206 BTC. According to the filed claim, the compromised account from the victim had transactions that were “broken up and moved through multiple smaller transactions” right before exiting to the four identified wallets.
Essentially, the U.S. government is exercising its right to ask the court to allow the seizure of these specified assets during the civil forfeiture proceeding.
“This action is one of a growing trend where the federal government is attempting to use its civil forfeiture authority to obtain custody of digital assets. […] One can expect that as interest and trading in digital assets grows, civil forfeiture actions like this one will grow if the government identifies assets it believes were part of illegal activity.” opined Daniel Davis, partner at Katten Muchin Rosenman LLP.
This means that the U.S. government bears the burden of proof that the identified funds are indeed subject to forfeiture. However, once seized, the proceeds or the assets in question will remain within the U.S. government’s hold, until such time that it has cleared the assets for the legitimate owner.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.