U.S. Authorities Move to Permanently Seize $3.4 Million in Stolen Tether (USDT) Following Major Fraud Bust
U.S. federal prosecutors have launched a decisive action to permanently forfeit $3.4 million in stolen Tether (USDT), seized earlier this year from an online investment fraud and money laundering scheme. The U.S. Attorney's Office filed a civil forfeiture action this week, seeking a judge's approval to keep the 3.44 million USDT, which agents confiscated in February and March 2025 as proceeds of crime. The case, initiated after victims in Massachusetts, Utah, and South Carolina reported losses in late 2024, marks a significant enforcement move against crypto-related financial crime.
How the scam worked
According to prosecutors, scammers behind these types of fraud operations typically begin by building trust with their targets online before steering them into fake cryptocurrency investment deals.
The financial and emotional damage to victims can be severe. Authorities noted that the people running these schemes are often based outside the United States.
Court documents describe how the unknown suspects first made contact with victims through what looked like messages sent to the wrong number, either through regular text messages or encrypted apps like WhatsApp and Telegram.
Once they had established a rapport with their targets, the suspects persuaded the victims to put money into what they described as a special Ethereum investment opportunity, which they falsely claimed was backed by physical gold.
The victims were instructed to purchase the popular cryptocurrency Ethereum and transfer it to digital wallets under the scammers’ control. The victims thought they were investing in a reputable site.
In actuality, the suspects were transferring the deposited Ethereum to private digital wallets, converting it to USDT, and keeping the money.
Prosecutors pointed out that using electronic communications to carry out fraud is a federal crime, as is conducting financial transactions intended to hide where stolen money came from or who owns it.
A civil forfeiture case allows anyone with a legitimate claim to the seized property to come forward before the government takes final possession and works to return the money to victims.
This filing is part of a broader effort by the U.S. Attorney’s Office, which has brought several similar civil forfeiture cases involving cryptocurrency fraud targeting victims in Massachusetts.
The Woburn Police Department provided assistance in this investigation. Assistant U.S. Attorney Matthew M. Lyons of the Asset Recovery Unit is handling the case.
Prosecutors noted that the details in the forfeiture complaint are allegations at this stage.
Tether joins global crackdown on crypto fraud
This case comes as law enforcement agencies around the world have grown more active in pursuing stolen cryptocurrency. According to a Cryptopolitan report, Tether announced at the end of 2025 that it had helped Thai police and the U.S. Secret Service recover $12 million in stolen USDT connected to a transnational scam running across Southeast Asia.
Tether’s chief executive, Paolo Ardoino, said the company is committed to working with law enforcement globally to freeze illegal assets and protect victims.
This operation highlights how blockchain transparency can empower law enforcement to act quickly and effectively against criminal activity…
–Paolo Ardoino, CEO of Tether
The company also said it has actively cooperated with authorities across multiple countries, contributing to seizures of criminal proceeds in various jurisdictions.
The forfeiture highlights how blockchain tracing tools now enable faster asset recovery even in cross-border schemes. Yet it also shows that perpetrator identification remains elusive when operators are overseas and use layered wallet transfers.
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