Tech
Feds Seize $1.4 Million in Proceeds from Tech Support Scams with Help from Cryptocurrency Firm
Cryptocurrency firm Tether has seized $1.4 million on behalf of US law enforcement officials investigating a tech support scam targeting senior citizens, the company announced Tuesday, in a bid to burnish its reputation amid allegations that its USDT currency is the currency of choice for online scammers.
The U.S. Attorney’s Office for the Northern District of Illinois announced the seizure on Friday and “acknowledged Tether for its assistance in effecting the transfer of these assets.”
“The company will continue to voluntarily assist law enforcement to protect the safety of its users and the broader crypto community,” Tether said in a liberation.
Second a January affidavit requesting permission to seize funds, the ongoing investigation concerns a tech support scam in which cybercriminals pose as Microsoft or Apple employees after a pop-up on a victim’s computer alerts them that their device is compromised and that they should call the companies for assistance.
“The scheme affected individuals located throughout the United States,” the affidavit reads.
In one case, a victim called a number purportedly for Apple support after a pop-up warning appeared on his computer. They convinced him that his Social Security number had been compromised, that his financial assets were in jeopardy and that he should transfer his funds to a so-called “treasury account.”
As part of the elaborate scheme, the scammers provided a letter bearing the forged signature of Federal Reserve Chairman Jerome Powell stating that a “fraud prevention officer” would complete the “Revalidation of…bank accounts and assets financial”. They also provided a fake letter from the bank holding the victim’s retirement account, instructing him to liquidate the funds and transfer them to the supposedly safe account.
He was then asked to install a program that allowed remote access to third parties and to “leave a phone line ‘open’” throughout the day to monitor activity. The scammers told him to make wire transfers to two banks that had deals with Crypto.com, where he opened accounts.
He was asked to install the Exodus digital currency wallet and ended up transferring $3 million to $4 million to several accounts before also following the same procedure for his wife’s accounts, which he was told could be compromised.
Much of the funds were then transferred to USDT, a stablecoin pegged to the US dollar, and then moved elsewhere by cybercriminals. According to the affidavit, the FBI identified wallets containing stolen funds from five victims, which Tether froze at their request.
After “burning” the funds, Tether reissued “the equivalent amount of USDT tokens associated with each address and [transferred] that USDT on a government-controlled wallet.” According to the FBITech support scams caused more than $924 million in losses in 2023.
Tether and law enforcement have worked together in the past to seize illicit funds. In November, the Department of Justice announced the seizure of $9 million in USDT stolen from more than 70 victims in so-called hog slaughter scams.
The same week, Tether announced that it had “voluntarily” frozen $225 million worth of USDT “linked to an international human trafficking syndicate in Southeast Asia responsible for a global ‘pig slaughter’ romance scam.”
A large United Nations Office on Drugs and Crime report on transnational crime in Southeast Asia recently found that USDT “has become the preferred choice for regional cyber fraud operations and money launderers due to its stability, ease, anonymity and low transaction fees.”
The company responded directly to the report, stating that its collaboration with law enforcement provides “unparalleled monitoring, surpassing traditional banking systems that for decades have been the vehicle for laundering large sums.”
This week, Tether announced that USDT circulation exceeded $100 billion for the first time.
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