The U.S. Department of Justice is cracking down on SIM card swapping fraud nationwide, targeting $5 million in stolen Bitcoin.

The U.S. Department of Justice (DOJ) announced that it has launched a nationwide operation, filing civil forfeiture lawsuits against criminal groups that use SIM card swapping technology to steal Crypto Assets, targeting the seizure of Bitcoin worth over $5 million. Investigations show that these funds ultimately flowed into the online casino Stake and are involved in multiple interstate internet fraud cases.

Background: Interstate Fraud Targeting High-Value Digital Assets

U.S. Attorney Jeanine Ferris Pirro, along with Assistant Attorney General Matthew R. Galeotti of the Criminal Division and FBI Special Agent Brett D. Skiles from the Miami Field Office, announced the operation.

According to DOJ documents, the involved Bitcoins can be traced back to the period from October 29, 2022, to March 21, 2023, in which the wallets of five victims were hacked.

Criminal Method: SIM Card Swap + Two-Factor Authentication Interception

Surveys show that criminals use SIM card swapping attacks to persuade telecom companies to transfer the victim's phone number to a new SIM card under their control, thereby intercepting the two-factor authentication code (2FA).

After gaining control, the attacker impersonates the victim to log into the Crypto Assets exchange and wallet, transferring funds into multiple intermediary wallets, then consolidating them into a main wallet, ultimately providing funds for the Stake account.

Money Laundering Model: Circular Trading Conceals Source of Funds

The prosecution alleges that the individuals involved used "circular trading" to repeatedly transfer Bitcoin to conceal the source of the funds.

Between March 20 and March 22, 2023, the Stake account and its associated wallets conducted at least 32 suspicious transactions, consistent with typical Crypto Assets money laundering patterns.

Industry Risks: SIM Card Swapping as a High-Frequency Threat in the Crypto Assets Realm

SIM card swapping has become a recurring threat in the encryption industry:

June 2024: Two users of a large CEX lost funds due to SIM card swap attacks, with hackers stealing assets through phishing SMS and API permission.

October 2023: Friend Tech users lost approximately $400,000 due to SIM card swap fraud, prompting the platform to add two-factor authentication.

The FBI pointed out that between 2023 and 2024, losses from Crypto Assets fraud increased by 66%, with total losses in 2024 exceeding 9.3 billion USD, of which 5.8 billion USD is related to fraudulent investment schemes.

The Ministry of Justice continues to strengthen the crackdown on encryption crimes

This action is a continuation of the DOJ's efforts to combat transnational encryption crime networks. Recent actions include:

Seized 225.3 million USDT related to "pig butchering" scams (the largest Tether seizure case in history).

Seized 2.4 million dollars in Bitcoin related to the Chaos ransomware group.

Regarding the Uranium Finance hacking incident, 31 million dollars were seized.

The U.S. Department of the Treasury simultaneously imposed sanctions on 19 entities involved in Myanmar and Cambodia, accusing them of perpetrating encryption fraud through forced labor, with the amount involved exceeding 10 billion dollars.

Conclusion

The actions taken by the U.S. Department of Justice against SIM card swapping fraud highlight the security vulnerabilities in the Crypto Assets space and the complexities of transnational crime. As fraud techniques become increasingly sophisticated, investors need to strengthen their account security measures, while regulatory and law enforcement agencies are intensifying efforts to combat high-value fraud and money laundering activities utilizing digital assets.