U.S. authorities have filed a civil forfeiture action seeking to recover more than $2.1 million in Tether that investigators say represents proceeds of a cryptocurrency investment fraud scheme, underscoring the growing use of blockchain tracing and stablecoin freezes to disrupt so-called “pig butchering” operations.
According to a civil forfeiture complaint filed by the U.S. Department of Justice, the government is seeking to seize 2,117,677.97 USDT held in an Ethereum wallet. Prosecutors allege the cryptocurrency constitutes proceeds of wire fraud and money laundering linked to an international investment scam that targeted multiple victims through fake cryptocurrency trading platforms.
Unlike a criminal prosecution, the lawsuit is an in rem civil forfeiture action, meaning the government is pursuing the cryptocurrency itself rather than charging a specific individual. If the court ultimately orders the assets forfeited, the funds may be used to compensate victims after competing ownership claims have been resolved.
Victims Were Groomed Before Being Directed to Fake Investment Platforms
According to investigators, the fraud followed the pattern commonly associated with “pig butchering” scams. Criminals initially contacted victims through dating applications, WhatsApp, social media platforms and fraudulent job offers before gradually building trust over weeks or months.
Once a relationship had been established, victims were persuaded to transfer money to what appeared to be legitimate cryptocurrency investment platforms promising attractive and often guaranteed returns. The platforms displayed fabricated account balances and fictional profits designed to convince victims that their investments were performing successfully.
Rather than encouraging withdrawals, however, the scammers used those apparent profits to persuade victims to deposit even more money.
When investors eventually attempted to withdraw their funds, they were informed they first needed to pay additional taxes, verification fees, account activation charges or anti-money laundering deposits before the release of their assets. Those payments were simply another stage of the fraud.
Because the investment platforms were entirely fictitious and the cryptocurrency had already been transferred through wallets controlled by the criminal network, no withdrawals were ever processed.
This escalating cycle is one of the defining characteristics of pig butchering scams. Victims are not only persuaded to increase their original investment but are repeatedly pressured to make further payments after attempting to recover their money.
Blockchain Analysis Traced the Funds
The complaint alleges that members of the fraud network attempted to conceal the origin of the stolen cryptocurrency by moving funds through multiple Ethereum wallets before consolidating them into the wallet targeted by the forfeiture action.
Despite those efforts, investigators were able to trace the movement of the digital assets using blockchain analysis. The investigation ultimately linked the wallet containing approximately $2.12 million in USDT to proceeds generated by the investment fraud scheme.
Because the assets consisted of Tether tokens, authorities worked with stablecoin issuer Tether to freeze the cryptocurrency before seeking its forfeiture through the courts.
The case highlights one of the significant differences between stablecoins and many other cryptocurrencies. Although transactions remain publicly visible on the blockchain, issuers such as Tether retain the technical ability to freeze tokens associated with sanctions, theft, fraud or law enforcement investigations. That capability has increasingly become part of international efforts to recover assets linked to crypto-enabled financial crime.
Civil Forfeiture Has Become a Key Tool Against Pig Butchering Scams
The latest complaint follows a growing number of civil forfeiture actions filed by U.S. prosecutors targeting cryptocurrency linked to online investment fraud.
Rather than waiting for the identification and prosecution of overseas criminal organisations, prosecutors have increasingly used civil forfeiture to restrain cryptocurrency located in identifiable wallets whenever blockchain analysis can establish probable cause that the assets represent criminal proceeds.
Many of these investigations involve transnational criminal networks operating from Southeast Asia, where organised fraud groups run large-scale scam compounds targeting victims around the world through romance scams, fake investment opportunities and fraudulent employment offers.
Although forfeiture actions do not necessarily identify those responsible for the fraud, they can preserve assets that might otherwise disappear through additional laundering transactions or be converted into other digital assets.
Crypto Investment Fraud Continues to Grow
The complaint also reflects the continued rise in cryptocurrency investment fraud.
According to FBI data cited by the Justice Department in similar enforcement actions, Americans reported approximately $5.8 billion in losses from cryptocurrency investment fraud during 2024, making it one of the largest sources of financial losses among internet-enabled crimes.
Industry research has also pointed to increasing attacks against cryptocurrency infrastructure. TRM Labs reported that crypto platforms experienced more than 200 hacking incidents during the first half of 2026, with decentralised finance protocols accounting for a significant share of those attacks.
While hacking and investment fraud involve different criminal methods, both continue to drive substantial losses across the digital asset ecosystem and remain major enforcement priorities for regulators and law enforcement agencies.
The government’s complaint contains allegations only, and the forfeiture action must proceed through the courts before ownership of the seized USDT can be permanently transferred to the United States. Any parties claiming an interest in the cryptocurrency will have an opportunity to contest the forfeiture during the proceedings.