Feds Confiscate $225 Million in Tether Stablecoin from Pig Butchering Scams

Federal authorities have executed a huge operation, seizing approximately $225.3 million in cryptocurrency linked to widespread investment scams, marking the largest such seizure in U.S. Secret Service history. The joint effort, involving the U.S. Secret Service, FBI, and the U.S. Attorney’s Office for the District of Columbia, targeted funds held in digital wallets tied to fraudulent schemes known as "pig butchering." Announced on Wednesday, the operation highlights a growing crackdown on crypto related fraud. By leveraging advanced blockchain analysis, investigators traced the illicit funds through a complex web of transactions designed to conceal their origins.

The seized funds, primarily in Tether (USDT), a stablecoin pegged to the U.S. dollar, were stored across seven virtual currency addresses on the Ethereum blockchain, now under the custody of the U.S. Marshals Service. Authorities allege these funds stem from wire fraud and money laundering tied to confidence scams that exploit trust to lure victims into fake investment platforms. The operation exposed a sprawling network that defrauded hundreds of victims, including dozens in the U.S. and over 400 worldwide, with losses in 2024 alone reaching $7 billion, according to federal data.

Unraveling a Global Fraud Network

The investigation revealed how scammers, often operating from Southeast Asian scam compounds, manipulated victims through fake romantic or professional relationships to invest in fraudulent crypto platforms. These platforms such as Haowang (Huione), typically disguised as legitimate mobile apps or websites, displayed fabricated gains to encourage further deposits, primarily in USDT due to its ease of payment rails and price stability. Federal agents identified 93 initial deposit addresses that received over $62 million from 434 suspected victims, with 60 confirmed victims losing about $19 million. Specific cases included a Kansas resident who embezzled $47.1 million from a bank to invest in a scam and a Texas victim whose address received $3.6 million from 39 others.

To obscure the funds’ origins, perpetrators employed sophisticated money laundering techniques, including rapid transfers, chain hopping between blockchains, and peel chains to break transaction trails. The funds passed through 144 accounts on the OKX exchange, which facilitated roughly 263,000 transactions worth $3 billion between November 2022 and November 2023. Two intermediary address groups and two consolidation addresses moved over $1.1 billion, ultimately funneling $259.6 million to the seized addresses. Blockchain analysis, using tools like open-source explorers and the Last-In-First-Out tracing method, allowed investigators to map these transactions, despite the scammers’ efforts to hide their tracks.

The operation began in November 2023 after OKX and Tether flagged suspicious activity involving $250 million in USDT. A planned raid on a Manila-based call center, ITECHNO Specialist Inc., prompted scammers to move funds, leading the Secret Service to request Tether freeze the 225 million USDT. On May 1, 2025, a U.S. Magistrate Judge issued a seizure warrant, formalizing the action. The DOJ complaint also dismissed claims to the funds by two law firms, including one linked to a company accused of human trafficking, reinforcing suspicions about the money’s illicit nature.

This seizure highlights the dual-edged nature of cryptocurrencies, where the transparency of blockchains can aid law enforcement, but their global reach and technical complexity can also enable fraud. The use of stablecoins like Tether (USDT), favored for its dollar peg, and Ethereum’s smart contracts facilitated the scams, while OKX’s centralized exchange allowed launderers to obscure funds, however only temporarily, as centralized exchanges as opposed to decentralized exchanges (DEX) are subject to administrative freezing and oversight, where a DEX doesn't have that. Also, the use of stablecoins is inherently a poor choice as stablecoins like USDT and USDC have built in freezing protections written into the protocols for stablecoin issuers to freeze funds at will.