US Pig Butchering Victims ‘Will’ Get Refunds — Feds Seize $225M Cryptocurrency – Source: securityboulevard.com

Pretty girls plus investment fraud equals forfeiture  recovery  (eventually).

U.S. federal agencies have spent the past 18 months piecing together this complex money-laundering web. And now they’re ready to announce the seizure of a few hundred million from an industrial scale pig butchering scam—the biggest yet.

You can practically hear the bacon sizzling. In today’s SB  Blogwatch, we grab the lettuce and tomato.

Your humble blog­watcher curated these bloggy bits for your enter­tain­ment. Not to mention:  “AI” hype bubble.

DoJ, FBI, USSS Yoinked USDT

What’s the craic? Sean Lyngaas reports: US seizes record $225 million from crypto investment scammers

“Pig butchering”
It’s the largest-ever seizure of funds stolen in so-called “crypto confidence” scams, which dupe people into investing in fraud­u­lent crypto­currency schemes, … the Justice Department said. … The scam affected more than 400 people worldwide, including dozens of Americans, and caused millions of dollars in losses. … The US government now has poss­ession of the stolen crypto and will be working to return as much of it as possible to victims.
…
A large volume of crypto confidence scams — also referred to as “pig butch­er­ing” — are conducted by networks of scammers in Southeast Asia, [for example in] large compounds along the Myanmar–Thailand border. In this case, invest­i­ga­tors traced at least some of the fraud­u­lent activity to the Philippines. … The scammers conducted “hundreds of thousands” of trans­act­ions in an effort to launder the stolen crypto­currency.

How did the laundering work? Jonathan Greig explains: DOJ moves to seize $225 million in crypto stolen by scammers

“Prominent victims”
U.S. officials worked with OKX and blockchain company Tether to track the funds and the accounts. Nearly all … were accessed via IP addresses in the Philippines and all of them were associated with email addresses using the same naming conventions. The accounts were opened using Vietnamese identification documents and photos that appeared to have all been taken in the same location.
…
One of the most prominent victims was Shan Hanes, the former CEO of defunct Kansas bank Heartland Tri-State. Hanes was sentenced to 24 years in prison last year for stealing money from the bank to invest in cryptocurrency schemes. … Prosecutors said Hanes stole more than $50 million from the bank before he was eventually scammed himself into sending some of the funds to the cryptocurrency confidence scheme.
[PREVIOUSLY: “Oink, Oink, FAIL: You’re in Jail”]

Want more detail? Bill Toulas got your back: US recovers $225 million of crypto stolen in investment scams

“Civil forfeiture recovery”
Funds were consolidated into seven final USDT wallet groups, each holding between $3M and $135M, triggering significant amounts of unnecessary gas fees (up to $125,000) to disrupt traceability. TRM Labs found 144 OKX accounts used in the scheme.
…
Despite the complex obfuscation, the blockchain investigators could still map the laundering network by using … Last-In-First-Out tracing to follow funds through 93 scam deposit addresses, then 35 intermediary wallets, and finally consolidated into seven groups. Stablecoin Tether (USDT) froze the tokens linked to these groups, burned them, and reissued the equivalent amount to the U.S. government, enabling civil forfeiture recovery [under] 18 U.S.C. § 981(a)(1)(A) and … (C), which allow forfeiture of property involved in money laundering and derived from wire fraud, respectively.

But can they map sums back to the victims? ShanghaiBill wonders how much of it will be returned:

They are returning the money to victims, but there is no reasonable way to trace particular recovered bitcoins to specific victims. Arguably, putting it into a general fund for restitution is more “fair” anyway.
…
The DOJ will reimburse American victims, but most pig butchering victims are Chinese citizens. China even intervened in Myanmar’s civil war to shut down scammer call centers along the border. Some of the trafficking victims had been abducted in China. Others were from ethnicities who live in both Myanmar and Yunnan.

Did someone mention the C-word? Douglas Singer goes off on one:

It’s about time someone stood up to these scams most that run out of China. These scams take tens of billions out of the US every year and end up in China, where the funds can’t be touched. Can you prosecute China as Xi knows about and sanctions these scams?

Anyone feeling some déjà vu? u/Direct_Shopping_3117 looks back—and notes where a lot of the funds might be going:

The actual freeze happened in November 2023 and it took this long to continue their investigations and follow through the proper judicial process. I believe part of the reason this was looked into in the first place was that the wallets were linked to the failed Kansas bank falling victim to a pig butchering scam in mid 2023 after its CEO embezzled $47M to pour into the scheme. In the end, they were only able to recover $8M for the bank investors and the depositors’ losses had been covered by FDIC insurance.

Wanna alt PoV? Kellzilla reframes the story:

The Gov used force to seize the perfect Libertarian “money”🤣😅🤔

Cue: More scammers, claiming they can recover your lost money. u/teratical brings this “reminder”:

There is no entity that can recover money or accounts for people outside of law enforcement (for money) or the platform’s customer service (for accounts). There are no private “recovery agencies” that work with victims. Anyone online who says they do is a recovery scammer.
…
Recovery scams target people who have already fallen for a scam. The scammer may contact you, or may advertise their services online. They will usually either offer to help you recover your funds, or will tell you that your funds have already been recovered and they will help you access them. … They usually call themselves either “recovery agents” or hackers. … Anyone suggesting you should reach out to a hacker is scamming you.

Meanwhile, Rudolph Hackett brings up this neat summary:

DOJ rugpulled scammers. $225M seized. Poetic justice.😎

And Finally:

Pay attention: Advances in distillation and orchestrating agentic thought

CW: A couple of swears.

Previously in And Finally

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Image sauce: Pascal Debrunner (via Unsplash; leveled and cropped)