US Seeks to Forfeit $3.4M in USDT Tied to Crypto Scam

A crypto investment scam that convinced victims to hand over Ethereum through a fake gold-backed opportunity has landed squarely in federal court — with US prosecutors now moving to permanently forfeit $3.44 million in USDT that authorities say traces directly back to the fraud. The US Attorney's Office in Boston filed the civil forfeiture action on Tuesday, targeting stablecoin funds that were seized during February and March 2025.

How Did the Scammers Pull It Off?

What tactics did the crypto investment scam use?

The playbook here is disturbingly familiar to anyone who follows financial fraud. Scammers initiated contact through messages that looked like accidental texts — a classic 'wrong number' opener sent over SMS, WhatsApp, or Telegram. From there, they spent weeks cultivating trust before introducing what they pitched as an exclusive crypto investment scam opportunity: an Ethereum-based investment supposedly backed by physical gold.

Victims were told to buy Ether (ETH) and send it to wallet addresses provided by the perpetrators. Once those funds arrived, court documents describe a rapid laundering chain — ETH moved through intermediary addresses, got converted into USDT, and ended up in unhosted wallets that the scammers controlled outright. By the time anyone realized something was wrong, the money was long gone.

In such fraud schemes, scammers obtain funds from victims using manipulative tactics — they establish a level of trust with a victim and then entice the victim into investing in a fraudulent investment scheme.

Who Were the Victims and What Did Investigators Find?

The investigation kicked off in late 2024 after at least four people came forward with loss reports: two residents of Massachusetts, plus individuals from Utah and South Carolina. That geographic spread suggests the scammers weren't targeting a single community — they were casting a wide net across states.

Federal investigators traced the flow of funds and moved to seize the $3.44 million in USDT during February and March 2025. The Tuesday filing from Boston asks a federal court to authorize permanent forfeiture — meaning the government wants the money locked up for good, not just held pending further proceedings. The civil forfeiture cryptocurrency investment fraud action is now before the court.

Is This Part of a Larger USDT Fraud Wave?

Short answer: yes, and the numbers are getting hard to ignore. This case doesn't exist in isolation — it sits inside a mounting pile of federal actions targeting USDT tied to fraud. The same Massachusetts US Attorney's Office recently filed a separate forfeiture action seeking $327,829 in USDT connected to a romance scam that targeted a Massachusetts resident in 2024. In North Carolina, federal authorities moved on an entirely different operation — seizing over $61 million in USDT from a large-scale pig-butchering scheme that used fake investment platforms to drain victims.

Stablecoin issuer Tether has been on the other side of these actions more often than most people realize. Last month, the company disclosed that it had frozen roughly $4.2 billion in USDT linked to suspected illicit activity over the past three years — a figure that reflects ongoing cooperation with law enforcement globally. That's not a small number. That's a signal that regulators and prosecutors are leaning harder on Tether as an accountability checkpoint, whether Tether likes the association or not.

What Does This Mean for Crypto Fraud Enforcement?

The government's ability to trace ETH through intermediary wallets, watch it convert to USDT, and then nail down which unhosted wallets received it — that's the part that should concern anyone running a fraud operation right now. On-chain traceability keeps improving, and prosecutors are getting faster at using it.

The real question isn't whether the DOJ can catch these schemes after the fact. It's whether the pace of enforcement is actually deterring anyone. Scammers rotated out of romance scams into 'wrong number' texts. They're adapting. Four victims in this case lost enough money to trigger a federal investigation — but how many others sent smaller amounts and never reported anything at all?