Syed Rahman details the case
The United States’ Department of Justice (DOJ) is seeking the forfeiture of $7.1 million in cryptocurrency that is connected to an oil and gas investment fraud.
The US Attorney’s Office for the Western District of Washington announced the civil action to forfeit the crypto, which was seized as part of an investigation into an oil and gas storage fraud scheme.
The fraud scheme, which operated for at least two years until August 2024, saw victims lose an estimated $97 million after being persuaded to send their money to what were said to be escrow accounts that would be involved in investment in oil tank storage in either Rotterdam, in the Netherlands, or Houston, Texas.
The victims sent money to accounts linked to Sea Forest International, Apex Oil and Gas Trading, Navigator Energy Logistics, Terminal Energy International Escrow Service, Energo Horizons Logistics, Legacy Energy Logistics Transport Group and Green Tree Gateway. But once the money had been sent, the victims received no further information and no response from the fraudsters.
Accounts
The money paid by those who fell for the fraud was then moved through a variety of financial and cryptocurrency accounts. Those carrying out the fraud used cryptocurrencies such as Bitcoin, Tether, USD Coin and Ether. The assets were passed through at least 19 different cryptocurrency accounts. Most of these assets were then placed with the exchange, Binance.
Investigators traced the cryptocurrency to Russian and Nigerian IP addresses. Some of these were known to be carrying out money laundering for multinational criminal organisations.
The US government intends to distribute the forfeited cryptocurrency - plus a further $2.3 million that had already been seized from a US-based co-conspirator - to those victims of the fraud that have been identified.
Acting US Attorney Teal Luthy Miller said: “The co-schemers in this fraud moved their ill-gotten gain through various cryptocurrency accounts to try to launder the money stolen from victims.
“Federal investigators and prosecutors in our office moved as quickly as possible to trace and seize the cryptocurrency so that some of the losses can be returned to victims.”
Sophisticated
While cryptocurrency has always been popular with those looking to carry out fraudulent activities, this case shows how sophisticated these practices are becoming. The utilisation of 19 different crypto accounts created a web that is then difficult to untangle - not only for the purposes of initiating the claim, but also when it comes to the enforcement of an order after a successful outcome.
For the authorities, the civil action taken reflected the main concern of the victims of this fraud, which was recovering the funds they had lost. The DOJ is well equipped and experienced enough to utilise interim measures such as freezing orders over a large number of identified accounts.
Doing this promptly is essential in order to maximise the chances of overcoming the challenges of such a case. And third parties – such as exchange platforms - that have unknowingly participated in fraudulent transactions need to see the importance of cooperating with any interim measures brought against them, rather than becoming defensive when civil proceedings arise.
