In a landmark move for crypto security, Coinbase has teamed up with the U.S. Secret Service (USSS) to recover approximately $225 million in stolen Tether (USDT), marking one of the largest crackdowns on crypto scams to date. This operation targeted the notorious “pig butchering” scams, a type of fraud where scammers build trust with victims—often under the guise of romance or business—before convincing them to invest in fake crypto projects. Once the funds are transferred, the scammers disappear, leaving victims with significant losses .
How the Scam Worked
Pig butchering scams have become a top priority for U.S. law enforcement. Scammers typically approach individuals online, gradually gaining their confidence. Over time, they persuade victims to invest in fraudulent crypto schemes, only to vanish once the money is sent. In late 2023, Tether froze 39 wallets linked to these scams, helping authorities trace the stolen funds .
Coinbase’s Role and the Recovery Process
Coinbase played a pivotal role by collaborating with the USSS to track the stolen crypto on-chain and identify affected users. Their investigation uncovered 130 users who collectively lost over $2 million. The USSS ultimately seized $225 million in stolen USDT, which Tether then burned on-chain. To ensure restitution, Tether reissued the same amount of stablecoins, which will be distributed to verified victims .
Restitution and Next Steps
The FBI has initiated a restitution process for victims. Those affected must provide transaction histories from Coinbase or other exchanges to prove their losses. This coordinated effort highlights the growing sophistication of both crypto scams and the tools used to combat them, reinforcing the importance of vigilance and robust security measures in the digital asset space .
Why This Matters for Crypto Users
This case underscores the risks of social engineering in crypto and the critical role of exchanges and law enforcement in protecting users. As scams evolve, so do the strategies to fight them, making collaboration between platforms like Coinbase and agencies such as the USSS essential for safeguarding the ecosystem.
