Federal prosecutors in Seattle aim to win forfeiture of millions worth of crypto tied to an investment scheme, hoping to distribute it to victims.
The US seeks $7.1 million worth of crypto Homeland Security seized in December, which ties to an allegedly fraudulent oil and gas investment scheme.
The Seattle US Attorney’s Office filed a civil action on Tuesday, stating it sought the forfeiture of some of the $97 million the alleged scheme took in between June 2022 and July 2024.
“The co-schemers in this fraud moved their ill-gotten gain through various cryptocurrency accounts to try to launder the money stolen from victims,” Acting US Attorney for Seattle Teal Luthy Miller said.
Miller’s office stated that the crypto accounts they seek forfeiture for belong to individuals residing in Russia and Nigeria. These individuals used victims’ funds to purchase crypto and transmitted a portion of those funds to exchanges in their home countries.
Individual Indicted in Alleged Scheme
At least one individual has allegedly facilitated money laundering for transnational criminal organizations.
Prosecutors indicted Geoffrey Auyeung in August 2024 after charging him with receiving the lion’s share of funds from the fraudulent investment scheme.
Prosecutors accused Auyeung of purchasing Bitcoin ($118,302), Tether ($1), USDC ($1), and Ether ($3,684) with the allegedly stolen funds. He then sent the majority of the crypto to crypto exchange Binance.
US authorities seized almost $2.3 million from his bank accounts at the time of his arrest.
The Justice Department claimed that an investment scheme lured investors under the guise of profiting by purchasing oil tank storage facilities and then renting them out to others for substantial gains.
However, once victims sent their money, those involved in the scheme would simply stop responding, prosecutors alleged.
Prosecutors claim they identified victims who lost $17.9 million to the alleged scam. They expect more to come forward after they identify and verify them as victims.
If the court approves the $7.1 million forfeiture request, the reclaimed funds would total $9.4 million, which they would distribute to any alleged victims.
Recent Regulatory Clampdown
In recent weeks, regulators have cracked down on malicious actors in the crypto space.
Earlier this month, two men who were the promoters of OmegaPro were charged by US prosecutors. They allegedly defrauded investors of $650 million. If they are found guilty, they could face up to 40 years in prison.
On Friday, a US federal prison sentenced former rugby player Shane Donovan Moore to two-and-a-half years for operating a $900,000 Ponzi scheme that duped more than 40 investors.
On Thursday, Hong Kong police arrested four individuals who defrauded investors of 3 million Hong Kong dollars ($382,000). However, the alleged mastermind behind the operation managed to flee abroad.
