The US Department of Justice announced it has seized nearly $9 million in USDT from a cryptocurrency scam involving the Tether (USDT) stablecoin. Federal prosecutors said they took control of the funds after Tether froze $225 million as part of an investigation into a Kazakhstan-based Ponzi scheme. The company responsible for the fraudulent scheme, Wolfpackbot, allegedly duped investors from 2018 to 2020 and used the misappropriated funds to purchase cars, luxury apartments and even a pig farm in Bulgaria.
The Justice Department alleged Wolfpackbot deceived investors into believing they were buying legitimate cryptocurrency trading robots, but in reality, the company only used the money to pay out false profits to earlier investors. The scheme attracted thousands of investors, including US-based victims, who invested at least $20 million dollars in the scam.
Tether informed the Justice Department in July about the scam and froze the 225 million USDT held in 81 wallets operated by Wolfpackbot. The federal government seized the additional $9 million in USDT following an emergency restraining order.
The case illustrates how digital currencies can be used for criminal activities, including digital currency frauds, and potentially demonstrates the need for tighter regulation in the cryptocurrency space. It also highlights the importance of crypto exchanges and platforms doing their due diligence to protect their customers from such scams and to cooperate with law enforcement bodies such as the DOJ.