The U.S. moves to freeze $26.4 million in cryptocurrency scam funds, but it’s unclear whether victims will get their money back yet.

Author: CryptoSlate

Compiled by: Deep Tide TechFlow

Deep Tide Intro: The U.S. Department of Justice announced the recovery of $26.4 million from five cases, with total frozen funds exceeding $800 million. But “recovery” and “victims receiving the money” are two different things—no forfeiture has been ruled by the court yet, the suspects’ identities are unclear, and there is no compensation timeline. How much of this money will ultimately reach victims remains unknown.

On July 21, U.S. prosecutors filed five civil forfeiture lawsuits related to five separate international fraud investigations, seeking forfeiture of about $26.4 million in cryptocurrency.

Investigators can freeze alleged criminal proceeds before identifying the alleged mastermind, and then seek forfeiture while continuing to trace the suspects; the final forfeiture and victim compensation will be decided later.

The Office of the U.S. Attorney for the District of Columbia said one of the investigations tracked transactions involving more than 270 alleged victims related to fraudulent investment platforms. Another case involved more than 200 pig-butchering scam victims, along with hundreds of intermediary addresses used to mix funds.

The Department of Justice said that across all five cases, the money launderers were primarily located in Southeast Asia, and the related IP addresses were in China, Malaysia, and Cambodia.

From freeze to payout

The purpose of the freeze is to prevent identified cryptocurrency from being transferred. Civil forfeiture lawsuits initiate the next legal step, asking the court to transfer property ownership to the government.

The Department of Justice said civil judicial forfeiture targets property and does not require a criminal conviction. However, prosecutors must prove the connection between the property and criminal activity with a preponderance of evidence. Therefore, filing a lawsuit does not mean forfeiture is completed or any criminal liability of any person is established.

The Department of Justice described these five forfeiture cases as part of more than $800 million that the task force is seeking to recover.

The task force project page (updated on June 18) reported different figures: $832.8 million worth of cryptocurrency was frozen. These numbers use different terminology and dates, so they are not directly comparable, nor do they reflect victim payout figures. They show that the assets reported as recovered or frozen by the Department of Justice have reached hundreds of millions of dollars, but the final disposition remains unresolved.

Recovering funds does not automatically put the money back into victims’ hands. Eligible victims may later receive the forfeited assets through the Department of Justice’s remission or restoration process, which can also direct funds to the court for compensation.

The July 21 announcement did not provide allocation amounts, a list of eligible claimants, or a timeline for these five cases. What remains unresolved is: whether the court approves the forfeiture, who the investigators ultimately confirm as the identity of the suspects, and how much of the cryptocurrency involved will finally reach victims.