Coinbase Plays Key Role in Record-Breaking $225M Crypto Seizure

US cryptocurrency exchange Coinbase has confirmed its involvement in a large-scale operation assisting federal authorities in seizing over $225 million worth of stolen digital assets tied to “pig butchering” – or romance investment – scams.

Billion-Dollar Scams Under Investigation

According to a blog post published Tuesday by Coinbase, the exchange joined other exchanges in an effort to support the US Secret Service investigation into several multi-million and potentially billion-dollar investment fraud schemes.

US Secret Service officials announced this month that they had secured more than $225 million in cryptocurrency recovered from scammers, a figure deemed the largest seized by the agency in its history (“the most technologically complex and financially audacious finances investigation in our history”).

The investigation identified victims who sent crypto acquired fraudulently from various attempts to dupe them into trading non-existent securities or blockchain assets. “Pig butchering” scammers typically groom victims for weeks before tricking them into depositing funds into a sham trading platform.

Investigative Sprint Yields Arrests

Person working on a laptop displaying blockchain data.

Coinbase stated: “Coinbase and several other exchanges participated in an ‘investigative sprint’ with the Secret Service throughout 2024 to identify scam victims, analyze transaction chains, and help build cases leading to seizures and potential enforcement actions, including arrests.”

Operation Fortitude, as the Secret Service campaign is apparently titled, flagged over 130 Coinbase customers. “This blockchain analysis and subpoena record production provided critical foundation for the team to identify more than 130 Coinbase customers who were unknowingly defrauded, representing $2.3 million in losses,” the exchange reported.

Stablecoin Link & Tether’s Role

Representation of stablecoins backing different cryptocurrency assets.

According to Coinbase’s account, much of the frozen crypto was held as Tether (USDT) on the platform. The USDOJ credited Tether with its cooperation in the investigation.

DoJ officials acknowledged Tether’s efforts on Friday, elaborating that the stablecoin issuer had frozen over 39 wallets containing the $225 million amount “at the very beginning.” Stating Tether’s “unparalleled traceability,” Coinbase noted that the stablecoin issuer “burned” the tokens – rendering them unusable – transferred the equivalent amount through the Secret Service’s wallet, and “continued to re-issue” the USDT.

“This voluntary freezing and burn, coupled with its ability to re-issue and transparently move the un-hacked crypto,” Coinbase wrote[xxx], “allowed the Secret Service to seize crypto from scammers that victims fully funded with fiat or other currencies (like USDT).” They emphasized that the process of freezing, burning, and transferring was visible on-chain.

“This process was visible onchain, offering a real-time example of how crypto can enhance transparency in law enforcement operations,” Coinbase said.

Tether founder Paolo Ardoino previously clarified that the company “burned the swaps” related to the operation and re-issued the equivalent USDT.

Global Efforts Against Illicit Crypto

Efforts to reclaim stolen crypto are not confined to the US. Earlier this year:

In May, the Australian Federal Police seized nearly 25 Bitcoin (BTC), worth over $2.6 million, originally stolen in a 2013 heist from French crypto exchange eToroFX, though the link suggested was ultimately to a separate, large-scale theft.
In February, German law enforcement seized $38 million in cryptocurrency from assets stored on the eXch platform.