Federal investigators have moved to seize nearly $870,000 in cryptocurrency assets tied to an elaborate confidence scam operation that defrauded victims across multiple states, including a Hawaii resident who lost $1.3 million. The Justice Department filed a civil forfeiture complaint targeting $868,247 in Tether cryptocurrency, marking the latest federal response to crypto-enabled fraud schemes.
The investigation began in late 2022 when the FBI Honolulu Division Cyber Squad opened a case after a Hawaii resident reported losing $1.3 million to the LME Crypto Group. The sophisticated operation masqueraded as the London Metal Exchange while running cryptocurrency investment fraud schemes targeting victims in the District of Columbia, Texas, Illinois, and Florida, as reported by WJLA News.
Modern Romance Scam Tactics
The scammers employed what law enforcement calls "confidence scams" or "pig butchering" schemes, beginning with seemingly misdirected text messages to gain victims' trust. According to the Justice Department, perpetrators would gain victims' affection or trust before recommending cryptocurrency investments while touting their own supposed success.
One victim in Washington, D.C., reported losing $30,000 to the FBI's Internet Crime Complaint Center in December 2023, believing the investment would "earn big profits in a short amount of time." WJLA News reported the victim invested cryptocurrency in "an app called LME."
The operation's sophistication extended to fake investment platforms that mimicked legitimate trading sites. Perpetrators would help victims open cryptocurrency accounts on U.S.-based exchanges before instructing them to transfer assets to fraudulent platforms that displayed fabricated returns to encourage further investment.
National Cryptocurrency Fraud Crisis
The Hawaii-connected case emerges amid surging cryptocurrency fraud nationwide. FBI data shows cryptocurrency fraud losses totaled over $5.6 billion in 2023, representing a 45% increase from 2022. The situation worsened dramatically in 2024, with reported losses exceeding $16 billion—a 33% increase from the previous year, as per a report by FBI.
As noted by Cointelegraph, the FBI received more than 140,000 cryptocurrency-related complaints in 2024, resulting in approximately $9.3 billion in losses. While individuals aged 30-49 filed the most cryptocurrency investment fraud complaints, victims over 60 reported the highest losses, exceeding $1.24 billion.
Federal Response and Recovery Efforts
The FBI Honolulu Field Office is investigating the case with support from the FBI's Virtual Assets Unit, a specialized team formed in February 2022 to centralize cryptocurrency expertise. The Justice Department acknowledged Tether for its assistance in effectuating the asset transfer, highlighting growing cooperation between federal authorities and cryptocurrency companies in asset recovery efforts.
The prosecution involves Assistant U.S. Attorneys Kevin Rosenberg and Rick Blaylock Jr. from the District of Columbia, along with trial attorneys from the Computer Crime and Intellectual Property Section and Consumer Protection Branch. Asset forfeiture serves multiple purposes: punishing criminal activity, deterring future crimes, and potentially recovering assets to compensate victims.
The FBI encourages anyone who believes they are a victim of cybercrime—including cryptocurrency scams, romance scams, and investment scams—to contact the FBI's Internet Crime Complaint Center at ic3.gov.
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