$1.4 million in Tether seized in customer support scam crackdown

abdelaziz Fathi

The U.S. Attorney’s Office in Chicago, Illinois, has seized around $1.4 million in Tether (USDT) as part of a crackdown on a customer support scam operation.

S&P casts doubt on Tether's stability, USDT reserves

The seizure was conducted on March 12 and targeted funds believed to be the proceeds of fraud, mainly victimizing elderly individuals.

This operation was led by the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI), with assistance from Tether. The scam involved tricking victims through a popup ad that falsely claimed their computers were compromised.

When victims called the provided fake customer support number, they were further misled into believing their bank accounts were at risk. Scammers posing as support agents then convinced the victims to transfer their bank funds into USDT under the guise of safeguarding their assets, effectively taking control of the victims’ tokens.

This case marks one of the first instances in the U.S. of recovering USDT from an unhosted digital currency wallet. While details on the exact method of recovery remain undisclosed, an affidavit filed on January 24 suggests that law enforcement was able to trace the stolen funds to five distinct wallets. These wallets appeared to have been involved in a wire fraud scheme, with assets moved in small amounts through intermediary addresses, likely in an attempt to launder the proceeds.

Despite Tether’s operations being outside the U.S., American regulators, through the Office of Foreign Assets Control (OFAC), has mechanisms to influence the stablecoin’s offshore activities.

One notable instance of regulatory intervention involves Tether’s connection with Tornado Cash, a cryptocurrency mixer on the Ethereum network, which was sanctioned by OFAC in August 2022 for money laundering activities. This action confirmed the ability of regulatory bodies to impact the usage of tether indirectly, through international cooperation and measures targeting associated entities.

Earlier in February, JPMorgan Chase suggested that impending stablecoin regulations could pose challenges for Tether. They argue that such regulations are likely to favor stablecoins offering greater transparency and adherence to emerging KYC and AML standards, thereby reducing Tether’s appeal. This regulatory shift could also affect the decentralized finance (DeFi) sector, where USDT plays a critical role as a form of collateral and liquidity.

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