Binance, the world’s largest cryptocurrency exchange, has aided the US Department of Justice (DOJ) in seizing over $112 million linked to cryptocurrency investment scams. 

On April 3, the DOJ announced that it had taken control of six virtual currency accounts after judges in the District of Arizona, the Central District of California, and the District of Idaho authorized seizure warrants. The funds were allegedly used to launder proceeds from various cryptocurrency confidence scams.

According to the agency, fraudsters involved in the scheme “cultivated long-term relationships with victims” online before luring them to invest their money in fake crypto investment platforms, a practice known as “pig butchering.” 

“Funds sent by victims were instead funnelled to cryptocurrency addresses and accounts controlled by the scammers and their co-conspirators,” the report said.

The crypto industry’s lack of safeguards and promise of anonymity has made it a hotbed for transnational criminal organizations. Investment fraud was the most significant scam reported by the public to the FBI’s Internet Crimes Complaint Center (IC3), resulting in $3.31 billion in losses in 2022. Frauds involving cryptocurrency, including pig butchering, represented the majority of these scams, with reported losses rising by 183% from 2021 to $2.57 billion last year.

Despite some lost funds being tracked, victims of cryptocurrency scams are often reluctant to report them, making it challenging to identify the perpetrators. This reluctance can be due to a fear of looking foolish in public or lacking the knowledge to identify the fraud, according to popular crypto sleuth “FatmanTerra.”

Binance expressed satisfaction with the takedown on April 7, noting on Twitter that they were proud to have supported that “significant case”.

“It’s a huge win for the FBI & demonstrates how the transparency of blockchain enables law enforcement to disrupt organized crime that can operate under the cloak of darkness in traditional finance,” a tweet from the exchange stated.

“Binance will continue to work closely with regulators and law enforcement to raise more awareness of scams, including “pig butchering” cases, to protect users across the globe and to help prevent more crime,” it added.

Binance Problems with the US

Meanwhile, Binance’s unwavering commitment to combat bad actors in the industry comes amidst growing tensions with US regulators. The exchange was recently hit with a lawsuit by the Commodity Futures Trading Commission (CFTC) alongside CEO Changpeng Zhao “CZ” and former chief compliance officer Samuel Lim for allegedly violating US derivatives laws.

Recently, CZ also debunked rumours that The International Criminal Police Organization has issued a red notice against him, indicating how regulators, particularly those in the US, hope to clamp down on the cryptocurrency industry by whatever means, including using FUD.

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Filed under: Bitcoin - @ April 8, 2023 7:22 pm