coinbase Assists in Recovering $225 Million in Crypto Scam Funds
Coinbase played a crucial role in helping the U.S. Secret Service recover $225 million in USDT. This recovery is tied to pig butchering scams, one of the largest crypto seizures in the agency’s history.
The exchange supported a multi-agency inquiry by analyzing blockchain transactions. This helped identify scam victims.
The Department of Justice filed an enforcement action to seize the funds on June 18. This followed a month-long investigation into fraud networks in Southeast Asia. The funds were initially frozen by Tether in late 2023, blocking 39 wallet addresses holding stolen USDT.
Many wallets were traced to 140 accounts on OKX, linked to individuals allegedly trafficked into scam compounds. These schemes involve building fake relationships before manipulating victims into sending crypto.
Coinbase joined an “investigative sprint” with the Secret Service between February 26 and 29, 2024. They traced millions in crypto transactions from illicit wallets back to wallets on its platform. This process identified over 130 Coinbase users who had unknowingly sent crypto to scam addresses, accounting for at least $2.3 million in losses. The exchange’s blockchain analysis was instrumental in flagging eligible victims. It has since published guidance to help customers submit their transaction records to law enforcement.
The USDT originally frozen by Tether was later burned and reissued, with the new tokens transferred to a wallet under Secret Service control. Alongside Coinbase and OKX, other unnamed exchanges also contributed to the investigation.
This operation marks one of the largest crypto-related fraud recoveries on record. It is one of the latest instances where digital asset firms have helped trace and recover illicit funds.
