$225M in Scam Crypto Was Seized – Why Victims Still Wait?

Key Takeaways

The case is between seizure and payment

The 225.3 million USDT named in the case is already under U.S. government control. That answers where the assets are, but not who is legally entitled to receive them.

A civil forfeiture complaint filed in June 2025 alleges that the stablecoins were connected to cryptocurrency investment fraud and laundering. The filing initiated a court process; it did not produce a final ruling that assigns the entire pool to victims.

The Wall Street Journal reported that several hundred people have submitted claims, while British Virgin Islands-based gaming company Infiniweb has asserted an ownership interest in the seized assets. That claim has not been resolved. If a court recognizes any part of it, the corresponding assets may be excluded from the amount available for victim compensation.

The Journal reported that a Justice Department attorney said in August 2026 that the parties were approaching a possible settlement. The proposal could involve an administrator and give preference to victims able to connect their losses to identified wallets. Until an agreement is approved or the court rules, however, the potential allocation remains unsettled.

USDT provided an issuer-level freeze route

The recovery was possible partly because USDT is centrally issued. Authorities can work with Tether to restrict transfers involving specified tokens or addresses when the company receives a legally valid request. Bitcoin has no equivalent issuer that can freeze units at the protocol level.

According to the Justice Department’s account of the operation, cooperation from Tether allowed investigators to secure control of the disputed stablecoins. This does not make USDT an enforcement system by itself. It means the token’s issuer-level controls can provide a recovery route that is unavailable for assets managed solely through decentralized network rules.

Similar operational questions arise after other crypto seizures: law enforcement still needs custody procedures, valuation records and a legally authorized route for holding or selling the assets. Recent efforts to formalize that process include Bit2Me’s dedicated crypto-seizure service for police and courts.

Issuer control also creates a chokepoint that can be used against illicit payment networks. The same principle appears in efforts to restrict USDT flows connected to sanctioned Iranian trade routes. Freezing an asset, however, remains separate from proving who should ultimately receive it.

Investigators traced a network, not individual ownership

The complaint identifies approximately 434 suspected victims. Investigators contacted or interviewed 60 of them, and all but one reported losing money to a scam. Their combined reported losses were about $19 million.

Investigators then extended the trace beyond those interviews. They identified more than 1,200 suspected victim transactions originating from 93 deposit addresses. The funds passed through intermediate wallets before reaching 22 accounts within a larger group of 144 accounts at the OKX exchange.

Those 144 accounts processed approximately 263,000 deposits with a combined value of about $2.94 billion, according to the complaint. That number measures transaction activity, not victim losses or money available for repayment. Funds can move through the same accounts repeatedly, causing aggregate turnover to exceed the value of the underlying assets.

The transaction map helps prosecutors argue that the accounts formed part of a laundering network. It does not, on its own, establish legal title to every token in the seized pool. That requires evidence connecting particular losses, claimants and transfers to the property before the court.

LIFO follows value after funds are combined

The complaint says investigators used a Last-In, First-Out method to trace funds through wallets containing multiple deposits. Under LIFO, the first outgoing transfer after a deposit is treated as drawing from the most recent incoming funds, up to the amount of that deposit.

Suppose a wallet already contains $3 million and then receives $100,000 from a suspected victim. If it next sends $150,000, LIFO attributes the first $100,000 of that transfer to the victim’s deposit. Investigators can continue following that amount through later wallets even after it has been combined with other assets.

This is an accounting assumption for reconstructing flows, not proof that the victim retained ownership of the exact tokens that left each wallet. Blockchain records show movement between addresses. Legal ownership depends on additional facts, including control of the addresses, the purpose of each transfer and the rights of other claimants.

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Compensation uses a different evidentiary test

Justice Department rules generally require a person seeking remission to document a specific financial loss directly caused by the relevant crime. The claimant must also disclose compensation already received from insurers or other sources.

The government does not ordinarily require every victim to trace their original funds into the forfeited property. Its Asset Forfeiture Policy Manual also says that tracing a particular victim’s money generally does not give that person priority over victims whose funds cannot be traced.

When the available pool cannot cover all approved losses, the usual approach is a proportional distribution. The broader priority order places valid owners and lienholders first, followed where applicable by certain federal financial regulators and then eligible victims. Administrative costs may be deducted before the balance is distributed.

The settlement route reported in this case could work differently if the parties and court approve case-specific terms favoring traceable claims. Such an agreement would not rewrite the Justice Department’s general remission policy; it would determine how this particular disputed pool is handled.

A successful claim may not match current value

Even an approved claim does not necessarily return the amount a victim would hold if the stolen crypto had remained invested. Justice Department policy normally measures a victim’s loss using the property’s fair-market value at the time of the loss. Foregone interest, potential investment gains and expenses incurred while pursuing recovery are generally excluded.

Crypto volatility makes that rule consequential. A person who lost tokens before a major rally may receive compensation based on their earlier dollar value, while a later decline can leave the forfeited pool worth less than it was when seized.

The Justice Department says its victim-compensation program has returned more than $13 billion since 2000, but large cases still require individual claims to be reviewed. The OneCoin compensation process, for example, made more than $40 million available and appointed an administrator to evaluate petitions filed before a formal deadline.

Victims in the USDT case therefore need more than a blockchain address that appears in the government’s tracing analysis. They must document their own loss and satisfy whichever process the court ultimately approves.

Potential victims need transaction records

The Justice Department has directed people who believe they were affected to file a report through the FBI’s Internet Crime Complaint Center and include the code BT06182025. Filing a report preserves information for investigators but does not guarantee that a claim will be approved.

The FBI’s guidance for cryptocurrency investment-fraud victims asks for records that can connect the claimant, payment and recipient. Useful evidence includes:

Records should be preserved even if an exchange account has been closed or a fraudulent platform has disappeared. Bank statements, screenshots and exported chat histories may help reconstruct transfers when a website can no longer be accessed.

Victims should also be cautious about anyone charging an upfront fee to secure payment from the seizure. The Justice Department and administrators handling remission claims do not charge victims to submit a petition. Requests for additional crypto, taxes or “release fees” are common signs of a recovery scam.

Early reporting can prevent additional losses

The FBI recorded $7.2 billion in reported U.S. losses from cryptocurrency investment fraud in 2025. The figure reflects complaints received by the agency and is not a complete measure of fraud, since many victims do not report their losses.

Through Operation Level Up, the FBI said it had notified 8,103 potential victims by December 2025. About 77% did not know they were being defrauded when contacted, and the agency estimated that its warnings prevented approximately $511.5 million in further losses.

Fast reporting can give investigators more usable information about active wallets, exchange accounts and communication channels. It cannot ensure recovery, but delay may give operators additional time to move funds through services or assets where freezing them becomes more difficult.

Victims still wait because the case has moved from blockchain tracing to legal allocation. The court must resolve competing ownership claims before the Justice Department can verify eligible losses and determine how the seized USDT will be divided.

This article is for informational purposes only and does not constitute legal or financial advice.

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