FBI investigates crypto romance scammers that swindled $5m

The Federal Bureau of Investigation is investigating crypto scammers who posed as romantic interests to defraud victims of nearly $5 million through dubious investment schemes.

Federal prosecutors in North Carolina are seeking to seize more than $4.99 million recovered from unhosted Tether (USDT) wallets linked to an elaborate crypto romance scam, Triangle Business Journal reports.

The funds were seized by a search warrant issued in August and are now in the possession of the U.S. Marshals Service.

Romance scams, often referred to as hog-slaughtering scams, involve scammers posing as potential love interests to establish trust with victims. Once victims are tricked into making fake cryptocurrency investments, the scammers disappear without a trace.

The operation targeted at least 71 victims, including a 60-year-old Angier resident and an 83-year-old Minnesota man, and led them into lucrative crypto investments on a fake trading platform called Bitkanant, according to the FBI. Bitkan exchange based in Singapore.

Once victims transferred USDT to the scammers’ wallets, thinking it was an ordinary investment, they were informed that their accounts were frozen and withdrawals were not allowed until additional taxes and fees were paid.

This tactic is often used to obtain more funds from victims, and even if the victims comply and pay the additional amount, the funds are never released. In this case, the site disappeared after a short time, leaving the victims with no recourse.

Court documents reveal that scammers used fake identities such as “Jeanie” and “Alice” to reach victims on social media platforms such as WhatsApp. In one example, scammers made up a story about an uncle who developed a complex algorithm to predict Bitcoin price movements and used this as a hook to convince victims of the legitimacy of the investment plan.

Just two of the victims identified by the FBI cost these scammers more than $2.75 million. The FBI is currently investigating the incident, although no arrests have been made.

Senior citizens are at risk

In recent years, the Bureau has repeatedly warned about the increasing prevalence of such scams, which increasingly target older adults. According to the September report, crypto fraud losses exceeded $5.6 billion in 2023 alone; The most affected demographic group was individuals over the age of 60.

In March 2023, the Virtual Currency Unit at the Brooklyn District Attorney’s Office found that a 51-year-old woman lost more than $22.00 to a crypto romance scam.

Earlier this year, the United States Federal Trade Commission also issued an alert regarding the rise in romance scams, warning the public against transferring any funds to people met online promising investment opportunities.

A March study by the University of Texas found that more than $75 billion was lost in crypto romance schemes between January 2020 and February 2024.