United States Seeks to Forfeit 200,000 Tether (“USDT”) Cryptocurrency, Valued at $200,000, Fraudulently Transferred from the Virtual Currency Wallet of an Ohio Victim

CLEVELAND - The United States filed a civil complaint in forfeiture against a total of 200,000 Tether ("USDT") cryptocurrency, valued at approximately $200,000. In February 2024, bitcoin valued at approximately $340,000 was fraudulently transferred from the virtual currency wallet of an Ashtabula, Ohio, victim to a cryptocurrency address unknown to the victim. The victim did not initiate or authorize the transaction.

Many virtual currencies publicly record all of their transactions on what is known as a "blockchain." The blockchain is essentially a distributed public ledger, run by the decentralized network of computers, containing an immutable and historical record of every transaction utilizing that blockchain's technology. The blockchain records every virtual currency address that has ever received virtual currency and maintains records of every transaction and all the known balances for each virtual currency address.

Through several steps of "blockchain analysis," investigators were able to trace approximately $200,000 of the funds that were fraudulently transferred out of the victim's virtual currency wallet to two cryptocurrency addresses on the Ethereum blockchain. As part of this analysis, it was determined that the fraudulently transferred bitcoin had been converted by the fraudsters to USDT cryptocurrency. USDT is a "stablecoin," a type of blockchain-based currency that is tied - or tethered - to a fiat currency and exists on several third-party blockchains, including Ethereum. Tether seeks to peg USDT to the U.S. Dollar at a 1:1 ratio.

In March, 2024, the USDT tokens - valued at approximately $200,000 - at the two cryptocurrency addresses were frozen by Tether Limited Inc. Thereafter, pursuant to a federal seizure warrant issued on July 31, 2024, 200,000 USDT tokens were transferred by Tether Limited to a U.S. law enforcement-controlled virtual currency wallet.

By the Complaint in Forfeiture filed on October 3, 2024, the United States seeks to forfeit the subject 200,000 USDT cryptocurrency. If successful, the United States would then seek to return the forfeited funds to the Ashtabula, Ohio, victim. It is specifically noted that the claims made in the Complaint in Forfeiture are allegations that the United States will need to prove by a preponderance of the evidence should the case proceed to trial.

The Federal Bureau of Investigation (FBI), Cleveland Field Office, is actively investigating cryptocurrency fraud schemes perpetrated on victims throughout the United States, including in the Northern District of Ohio.

This case is being handled by Assistant U.S. Attorneys James L. Morford and Daniel J. Riedl.

View Complaint in Forfeiture