FBI Cracks Down on Illegal Cryptocurrency Cash Flows

The Federal Bureau of Investigation is aggressively and rapidly ramping up efforts to combat the illegal use of cryptocurrencies in a wide range of criminal activities. A recent FBI seizure notice dated August 21 detailed multiple seizures of a total of 195 pieces of major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) across multiple states and jurisdictions.

Confiscation is a legal process that allows the government to take away ownership of property involved in a crime, ensuring that criminals cannot make a profit. The FBI used this process 195 times specifically to confiscate virtual currency, demonstrating extensive tracking of cryptocurrencies. These virtual currencies have often been seized along with cash, vehicles, weapons, drugs and other contraband in cases brought under laws covering drug proceeds, fraud, money laundering and more.

Specifically, the FBI conducted at least 39 virtual currency seizures in California, 35 in Florida, 25 in Texas, 20 in New York and 19 in Virginia. Cryptocurrency varieties have included Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Cardano (ADA), Polkadot (DOT) and others, demonstrating complex traceability across various blockchain platforms.

The amounts of cryptocurrencies seized in each case varied widely, from 0.0005 Bitcoin worth just $11.40 to more than 100,000 Tether worth $110,572. The total dollar cost of seizing the virtual currency in each case ranged from a few hundred dollars to $469,076 per case. The frequent confiscation of cryptocurrencies along with drugs, cash, weapons and other contraband signals the integration of cryptocurrencies into existing criminal ecosystems as an alternative payment mechanism that is considered anonymous and untraceable.

In 2015, the FBI formed a dedicated cryptocurrency tracing unit, allowing agents to track the flow of cryptocurrencies related to drugs, fraud, weapons, extortion and many other crimes through the blockchain. FBI Director Christopher Wray stated in 2021 that monitoring and combating the illegal use of cryptocurrencies is a top priority for the agency. The 195 virtual currency seizures mentioned in the August notice speak to the FBI's ability to track and confiscate crypto funds.

The wide geographic coverage demonstrates a coordinated effort between FBI field offices, federal prosecutors, and cryptocurrency exchanges. While confiscations are part of illegal cryptocurrencies, they are becoming more frequent as bitcoin and other digital assets gain traction. According to the 2022 FBI Crime Report, cryptocurrency fraud complaints are up 65% compared to 2021.