Civil Forfeiture Could Aid Recovery of More Than $12 Million in USDT in Alleged Investment Fraud, DOJ Files

• U.S. prosecutors filed a civil forfeiture seeking over $12 million in USDT tied to a spoofed trading platform.

• Victims were lured via unsolicited texts and directed to a fake exchange, then blocked from withdrawing funds.

• Civil forfeiture actions — including a recent $225M USDT case — demonstrate coordination between prosecutors, issuers, and blockchain investigators.

Primary keyword: civil forfeiture crypto — Learn how U.S. prosecutors freeze USDT in fraud cases and what victims can expect; read for steps to recover funds.

What is civil forfeiture in crypto investigations?

Civil forfeiture in crypto investigations is a legal mechanism prosecutors use to seize cryptocurrency assets believed to be proceeds of crime without first obtaining a criminal conviction. It enables authorities to freeze and recover tokens like USDT quickly, disrupting laundering channels and facilitating victim restitution.

How did prosecutors trace the $12 million in USDT?

Federal prosecutors in Albany traced wallet balances connected to a spoofed trading platform and off-platform deposit flows, according to a Justice Department statement. The complaint identifies wallets used by the fake site ShakepayEX and documents how victims were directed to send USDT off-exchange, then blocked from withdrawing funds.

Key facts: prosecutors allege losses exceeded $10 million; the forfeiture complaint targets more than $12 million in USDT; investigators referenced findings from the FBI and a statement from the U.S. Attorney’s Office for the Northern District of New York (NDNY).

Why are authorities using civil forfeiture more often in stablecoin cases?

Authorities view civil forfeiture as an effective tool because stablecoins like USDT are programmable and held on transparent ledgers, allowing faster tracing and coordination with issuers. The Department of Justice previously pursued a civil forfeiture targeting $225 million in USDT tied to so-called “pig butchering” scams, demonstrating scale and precedent.

Experts, including Ari Redbord, global head of policy at blockchain intelligence firm TRM Labs, say civil forfeiture both disrupts illicit activity and enables restitution to victims even when criminal arrests are difficult in non-cooperative jurisdictions.

Frequently Asked Questions

How did victims lose funds in the $12M USDT case?

Ten Mandarin-speaking victims were contacted via unsolicited text messages and directed to a spoofed site called ShakepayEX. Deposits were made in USDT, then victims were blocked from withdrawing by false fees and additional demands, resulting in over $10 million in alleged losses.

What precedents show forfeiture can work for stablecoins?

In June, the Department of Justice pursued civil forfeiture actions involving $225 million in USDT tied to fraud, signaling precedent for large-scale stablecoin seizures and coordination among prosecutors, investigators, and blockchain firms.

Key Takeaways

• Civil forfeiture is central: Prosecutors increasingly use forfeiture to freeze and recover stablecoins tied to scams.
• Coordination matters: Successful freezes rely on cooperation between DOJ, the FBI, blockchain intelligence firms, and token issuers.
• Victim restitution is possible: Forfeiture actions can result in assets being returned to victims when courts approve matches and distribution plans.

Conclusion

U.S. civil forfeiture actions against cryptocurrency, including the recent filing seeking more than $12 million in USDT, show how legal tools can disrupt investment fraud and support victim recovery. Continued coordination among prosecutors, the FBI, blockchain intelligence providers (e.g., TRM Labs), and issuers will shape future outcomes. Follow COINOTAG for updates and guidance on rights and next steps for affected victims.