The United States government has filed a civil forfeiture lawsuit seeking to seize approximately $2.117 million in USDT held in a single Ethereum wallet, alleging the funds represent proceeds from a sophisticated pig-butchering cryptocurrency scam.
The action, brought in the U.S. District Court for the District of Columbia under case number 26-2644, targets the assets themselves rather than any individual defendants.
According to the verified complaint, the wallet at address 0xf322…5e97e currently holds 2,117,677.97 USDT. Authorities claim these stablecoins are linked to an investment fraud scheme that defrauded at least 13 victims.
The lawsuit requests a warrant for the “arrest” of the digital assets, a procedural step that would allow the government to freeze and ultimately forfeit the funds even though they remain under the custody of Tether, a foreign entity.
Details of the Alleged Scheme and Investigation
The underlying operation follows the classic pattern of pig-butchering scams, also known as crypto investment fraud. Victims were typically contacted via WhatsApp and directed to polished but entirely fabricated trading platforms. These platforms displayed false profits to build trust and encourage larger deposits. Once victims transferred USDT, and in some cases cash, the operators assumed full control of the funds and began laundering them through a series of blockchain maneuvers.
Investigators from the U.S. Secret Service, the FBI, and the Memphis Virtual Currency Task Force reconstructed the money trail. Using blockchain analysis, they followed funds from the 13 identified victims across 76 intermediate addresses.
The scammers employed rapid wallet hopping, splitting of balances, and later consolidation to obscure the origin of the money. Despite these efforts, a significant portion of the proceeds, over $2.1 million, settled in the targeted Ethereum address, where it remained at the time the complaint was filed.
The complaint notes that the scheme appears based in Southeast Asia, consistent with many large-scale pig-butchering networks that have proliferated in recent years. Victims often reported being shown steadily rising account balances that never materialised when they attempted withdrawals, only to face additional demands for “taxes,” “fees,” or “verification” payments.
The In Rem Forfeiture Process
This case exemplifies the growing use of civil in rem forfeiture in cryptocurrency enforcement. Unlike traditional criminal prosecutions that target people, an in rem action treats the property itself as the defendant. The government must demonstrate probable cause that the assets constitute proceeds of specified unlawful activity, primarily wire fraud under federal law.
If a judge finds the showing sufficient, a warrant for arrest in rem can be issued. This effectively brings the digital assets within the court’s jurisdiction and enables their seizure. Because the USDT is controlled by Tether, cooperation from the stablecoin issuer would be required to freeze or transfer the tokens. A successful forfeiture would condemn the funds to the United States, after which they could potentially be returned to victims or deposited into government accounts.
The Crypto Times reached out to Tether for comments but had not received a response at the time of publication.
The filing underscores how law enforcement has adapted to the transparent nature of public blockchains. While scammers rely on the speed and pseudonymity of crypto transfers, the permanent ledger allows investigators to reverse-engineer complex transaction graphs months or years after the initial fraud. In this instance, the combination of victim reports and on-chain tracing produced a clear path from the original deposits to the final consolidation wallet.
The complaint, publicly available through court records, provides detailed tracing charts and victim loss figures. One portion of the documented proceeds directly attributable to the 13 victims totals more than $587,000 still residing in the subject address, with the remainder of the $2.1 million balance also alleged to stem from related fraudulent activity.
As pig-butchering schemes continue to generate billions in reported losses annually, cases like this illustrate both the scale of the problem and the tools available to recover stolen value. The outcome of the forfeiture proceeding will depend on whether the government can maintain its probable cause showing and successfully coordinate with Tether.
For now, the lawsuit marks another instance of U.S. authorities using civil asset forfeiture to pursue cryptocurrency linked to transnational fraud without first identifying or apprehending the individuals behind the operation.
Also read: China Detains 16 Suspects Over Crypto Money Laundering Network
