The scam began with a message, then a friendly exchange. A stranger directed the victim to a cryptocurrency investment site that appeared professional — slick design, charts, even customer support. The first deposit showed a modest profit. So did the next. Encouraged, the victim sent more, even borrowing money to keep up. Then, without warning, the platform stopped responding. The account balance disappeared.
“That’s how they do it,” Jamie Lam, an investigative analyst with the US Secret Service, told law enforcement officials in Bermuda last month. “They’ll send you a photo of a really good-looking guy or girl. But it’s probably some old guy in Russia.”
Secret Service investigators traced the fraud to the domain name behind the fake investment site. Using open-source tools, they found out when it was registered, by whom and how it had been paid for. A cryptocurrency payment pointed them to another wallet. A brief VPN failure exposed an IP address.
Lam is part of the agency’s Global Investigative Operations Center or GIOC, a team specializing in digital financial crimes. Their tools are software, subpoenas, and spreadsheets, not badges or guns.
“It’s not always that hard,” Lam said. “Sometimes you just need patience.”
Patience and digital tools have helped the GIOC seize nearly $400 million in digital assets over the last decade, a figure not previously reported, according to people familiar with the matter who asked not to be identified discussing private conversations.
Much of that trove sits in a single cold-storage wallet that now ranks among the most valuable anywhere. After leading crackdowns on digital currencies such as Liberty Reserve and E-Gold in the 1990s, the agency best known for protecting US presidents has become one of the world’s biggest crypto custodians.
At the center of the operation is Kali Smith, a lawyer who directs the Secret Service’s cryptocurrency strategy.
Her team has conducted workshops in more than 60 countries to train local law enforcers and prosecutors in unmasking digital crimes. The agency targets jurisdictions where criminals exploit weak oversight or residency-for-sale programs, and provides the training for free.
“Sometimes after just a week-long training, they can be like, ‘Wow, we didn’t even realize that this is occurring in our country,’” she said.
Last month, the team flew to Bermuda, a British overseas territory that has marketed itself to digital-asset firms with one of the world’s most comprehensive crypto frameworks — and exposed itself to new threats in the process.
“Technologies and financial services are fantastic for economic growth, but they can also be exploited,” Bermuda’s governor, Andrew Murdoch, said in an interview. “Alongside the benefits, you need strong investigative powers to deal with abuse under the law.”
Inside a conference room on a hill overlooking Hamilton Harbor, Smith told her class that scam victims usually see opportunity. “They think they can use Bitcoin and be safe. But that isn’t the case,” she said.
One real-life case involved an Idaho teenager who thought he was flirting online and sent a nude photo to a stranger. The stranger then demanded $300 or the image would be sent to his relatives. He paid twice before going to police.
GIOC analysts reconstructed the extortion with screenshots, receipts and blockchain data. Payments had been routed through another American teenager coerced into acting as a money mule, then funneled to an account that had processed about $4.1 million across nearly 6,000 transactions and was registered to a Nigerian passport, according to an analyst who asked not to be named because the investigation is ongoing.
British officers arrested the suspected extortionist when he landed in Guildford, England. He remains in custody awaiting extradition, the analyst said.
Fraud tied to digital currencies now drives a majority of US internet-crime losses. Americans reported $9.3 billion in crypto-related scams in 2024, more than half of the $16.6 billion logged that year, FBI data show. Older victims bore the largest share, losing nearly $2.8 billion, much of it to bogus investment sites.
Some schemes spill into real-world violence. In New York, two investors were indicted for allegedly kidnapping and torturing a longtime friend inside a townhouse to force access to his digital wallet. In Connecticut, six men were charged with abducting the parents of a teenage hacker who had stolen $245 million in Bitcoin, beating them in a failed ransom attempt.
To claw back stolen funds, the Secret Service leans on industry partners. Coinbase and Tether have publicly acknowledged assisting in recent cases, providing trace analysis and wallet freezes. One of the largest recoveries involved $225 million in USDT, the dollar-pegged token known as Tether, linked to romance-investment scams.
“We’ve been following the money for 160 years,” said Patrick Freaney, head of the agency’s New York field office, which oversees Bermuda. “This training is part of that mission.”
Source link
