Crypto Debacle: DEA’s $50,000 Seizure Ends Up In Scammer’s Hands

According to a recent report by Forbes, the US Drug Enforcement Agency (DEA) has inadvertently transferred $50,000 worth of seized cryptocurrency to a hacker, who has amassed hundreds of thousands in Ethereum (ETH) within a few months. 

Earlier this year, the DEA seized approximately $500,000 in Tether, a stablecoin pegged 1:1 to the US dollar, from two Binance accounts suspected of being involved in illegal narcotics transactions. 

The funds were securely stored in DEA-controlled accounts, protected within a Trezor hardware-based wallet at a “highly secure” facility. However, the agency’s vigilance was soon compromised by a scammer who capitalized on a well-known crypto scam.

The Airdrop Crypto Deception

Monitoring the blockchain closely, the scammer identified a prime opportunity when the DEA conducted a test payment of $45.36 in Tether to the United States Marshals Service as part of the standard forfeiture process. 

Seizing the moment, the scammer swiftly established a cryptocurrency address that “mimicked” the Marshals’ account by matching the first five and last four characters. 

Exploiting the common practice of copying and pasting lengthy crypto addresses, the scammer used the “airdrop” method to drop a token into the DEA’s account, making it appear that the payment was made to the Marshals. Consequently, the DEA mistakenly sent over $55,000 to the scammer in a single transaction.

Upon discovering the fraudulent transaction, the Marshals promptly alerted the DEA, initiating a joint investigation with the FBI. 

Per the report, it was revealed that the stolen funds had been converted into Ethereum and transferred to a new wallet. 

While the wallet owner’s identity remains unknown, investigators observed that two Binance accounts had been covering the scammer’s “gas fees,” which are charges for utilizing the computing power of the Ether network.

Agents now rely on Google to provide potential leads through the two Gmail addresses associated with the Binance accounts.

Following The Digital Trail

According to the report, analyses of the scammer’s wallet transactions reveal significant activity. The wallet currently holds nearly $40,000 worth of Ether, with an influx of $425,000 since June. 

Notably, over the past three weeks, a staggering $300,000 has been distributed across seven different wallets, further complicating efforts to trace the funds and apprehend the perpetrator.

The DEA’s accidental loss of seized cryptocurrency underscores the increasing prevalence of crypto scams, often taking advantage of users’ reliance on wallet addresses’ first and last characters. 

While tools like Chainalysis’ Address Screening exist to detect rogue addresses, it remains unclear whether the DEA actively employs such measures in handling crypto asset seizures. 

However, as cybercriminals continue exploiting vulnerabilities in digital systems, agencies must adopt enhanced verification procedures and leverage advanced tools to combat crime and fraud risks. 

The investigation into this high-profile case remains ongoing, hoping to identify and bring the perpetrator to justice while catalyzing improved cybersecurity measures within law enforcement agencies.

Crypto

Featured image from iStock, chart from TradingView.com



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