Coinbase helps US Secret Service recover $225M in USDT tied to pig butchering scams

Coinbase helped the U.S. Secret Service trace and recover $225 million in USDT tied to pig butchering scams in one of the largest crypto seizures in the agency’s history.

According to a June 24 blog post, the exchange supported the multi-agency investigation by analyzing onchain fund flows and helping identify scam victims for restitution.

As previously reported by crypto.news, the Department of Justice filed an enforcement action to seize the funds on June 18, following a month-long investigation into fraud networks operating across Southeast Asia. The funds were originally frozen in late 2023 by stablecoin issuer Tether, which blocked 39 wallet addresses holding the stolen USDT.

Many of the wallets were traced to 140 accounts on OKX, linked to individuals allegedly trafficked into scam compounds and forced to operate fraudulent investment platforms. These schemes typically involve building fake romantic or business relationships with victims before manipulating them into sending crypto.

Coinbase said it joined an “investigative sprint” with the Secret Service between February 26 and 29, 2024, working alongside agents to trace millions in crypto transactions from illicit wallets back to wallets on its own platform.

This process allowed the Secret Service to identify over 130 Coinbase users who had unknowingly sent crypto to scam addresses, accounting for at least $2.3 million in losses.

The exchange added that its subpoena record production and blockchain analysis were instrumental in flagging eligible victims. It has since published guidance to help customers access and 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. 

The operation marks one of the largest crypto-related fraud recoveries on record and is one of the latest instances where digital asset firms have helped trace and recover illicit funds.

As previously reported by crypto.news, in March, Cryptocurrency exchange MEXC froze over 1,500 accounts linked to a market manipulation scheme spanning Vietnam and CIS countries.

Earlier this year, the T3 Financial Crime Unit, a collaboration between Tether, blockchain network TRON, and analytics firm TRM Labs, reported freezing over $100 million in criminal assets tied to illicit USDT activity.