US seeks $26.4M in crypto in five civil forfeiture cases

On July 21 U.S. prosecutors filed five civil-forfeiture complaints seeking about $26.4 million in cryptocurrency traced in separate international fraud investigations, the Department of Justice reported. The filings were made in U.S. federal court in the District of Columbia and were brought by the U.S. Attorney’s Office for the District of Columbia.

Investigators traced hundreds of suspect transactions across the five matters and used the civil-forfeiture complaints to freeze the identified crypto addresses while searches for the individuals behind the schemes continue. One case connected more than 270 transactions to fraudulent investment platforms. Another involved funds from more than 200 romance-scam victims that were commingled through hundreds of intermediary addresses.

The Justice Department identified suspected launderers largely in Southeast Asia and associated internet protocol addresses in China, Malaysia and Cambodia with the activity.

Civil judicial forfeiture allows authorities to restrain property and request that a court transfer ownership to the government without a criminal conviction. Prosecutors must prove the connection between the assets and illegal activity by a preponderance of the evidence. Courts will decide whether to order forfeiture, which individuals are responsible and whether victims may recover money.

One complaint in the group involves a person who had previously lost funds to a different fraud and then was contacted by scammers claiming to recover the loss. The victim paid a fee and sent a series of transactions; the filing seeks roughly $285,000 and efforts to trace additional funds are ongoing.

The Department of Justice tied the five filings to more than $800 million it reports as recovered through the Scam Center Strike Force. A department status update from June 18 uses a different metric and lists $832.8 million in cryptocurrency restrained; the department cautioned the figures use different terms and dates and are not directly comparable or a tally of victim payouts.

Restraining or recovering cryptocurrency does not automatically return funds to victims. The department administers remission and restoration processes and may send forfeited assets to courts for restitution only after courts resolve forfeiture claims and eligible victims are identified. For these five matters the Justice Department has not disclosed how much, if any, of the restrained cryptocurrency will be distributed to victims.