Coinbase Helped Secret Service Crypto Seizure Operation

Crypto exchange Coinbase says it played a “key role” in supporting a US Secret Service investigation that resulted in the seizure of $225 million linked to crypto investment scams earlier this month.

On June 18, the Department of Justice filed to seize more than $225 million in crypto recovered by the Secret Service that was allegedly stolen by pig butchering scammers, which Agent in Charge Shawn Bradstreet said at the time was the largest cryptocurrency seizure in the agency’s history.

Coinbase said in a blog post on Tuesday that it joined several other exchanges in an “investigative sprint” with the Secret Service in 2024 to identify scam victims, analyze chain flows and help build a case to seize the crypto.

Over 130 Coinbase customers caught by scam

Coinbase said that between Feb. 26 to Feb. 29 last year, its team traced millions in crypto transactions to illicit wallets and other account activity that could help flag scam victims for the Secret Service.

“This blockchain analysis and subpoena records production allowed the USSS to identify more than 130 Coinbase customers who were unknowingly defrauded, representing $2.3 million in losses,” Coinbase said.

The Secret Service also traced some of the frozen funds back to 140 accounts at the crypto exchange OKX, many of which were held in the names of individuals being held at scam compounds in Southeast Asia, according to Coinbase.

Tether burns $225 million in USDT

Stablecoin issuer Tether, which the DOJ acknowledged for its assistance in the investigation, froze 39 wallet addresses containing the $225 million in 2023, which were mainly in its self-titled stablecoin Tether (USDT). The stablecoin issuer later burned all the tokens.

Coinbase said the equivalent amount of new USDT was then reissued and transferred to a wallet controlled by the Secret Service.

“This process was visible onchain, offering a real-time example of how crypto can enhance transparency in law enforcement operations,” the exchange said.

Related: Australia unmasks $123M crypto laundering ring behind security firm

Burning tokens means they are permanently removed from circulation. Generally, this is achieved by sending them to an inaccessible wallet address.

Global authorities seizing stolen crypto

In May, the Australian Federal Police seized nearly 25 Bitcoin (BTC), worth over $2.6 million, which were allegedly linked to a heist of 950 Bitcoin stolen from a French crypto exchange in 2013.

A few months earlier, in February, German law enforcement seized 34 million euros ($38 million) in crypto from eXch, a cryptocurrency platform allegedly used to launder funds stolen after Bybit’s $1.4 billion hack. 

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