US authorities track $7.1M in crypto after dismantling international $97M oil investment scam

Seattle-based federal prosecutors have sought the forfeiture of $7.1 million in custodial cryptocurrency value associated with an oil and gas scam between June 2022 and July 2024. The U.S. Attorney’s Office alleged that the larger scheme brought in $97 million from investors by promoting a fake business model involving oil tank storage rentals.

In December 2024, Homeland Security seized the $7.1 million. The prosecutors are now looking to distribute the money to legitimate 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.”

~ U.S. Attorney Teal Luthy Miller

The scam was allegedly international, with the criminals located in Russia and Nigeria turning victims’ cash into crypto and funneling it through domestic exchanges. Acting U.S. Attorney Teal Luthy Miller said that the fraudulent parties created several crypto accounts to mask the transfer of funds, a classic laundering strategy to avoid detection.

Key suspect used Binance for crypto transfers

One person, at least, is said to have assisted money laundering activities by transnational crime groups. Geoffrey Auyeung was indicted and charged in August 2024 with core participation in laundering stolen funds. Court records show that he used the stolen funds to purchase Bitcoin, Ether, USDT, USDC, and moved most of the sums to Binance. At the time of his arrest, $2.3 million was confiscated in his US accounts.

According to the Department of Justice, Auyeung and co-conspirators appealed to be authentic investment managers who would provide huge profits in oil tank leasing activities. Upon raising funds, they shut down communication with investors. So far, prosecutors have uncovered more than $17.9 million in direct losses, although more victims are anticipated to emerge as the investigation process proceeds.

DOJ ramps up crypto fraud enforcement

The Seattle case is part of a broader crackdown by U.S. authorities targeting crypto-related financial crimes. Recent court filings revealed the DOJ seized $2 million in USDT and Binance-based assets linked to Hamas. Investigators traced the funds through a Gaza-based money transfer business known as BuyCash, which allegedly helped finance the group’s activities.

Other fraud cases are also coming into the limelight. Shane Donovan Moore, a former rugby player, was sentenced to two and a half years in federal prison after operating a Ponzi scheme using a crypto mining company as a bogus front. Between 2021 and 2022, Moore defrauded more than 40 investors of almost $900,000 through his firm Quantum Donovan LLC.

In another case, a Denver-based pastor and his wife face 40 criminal charges regarding a crypto-based investment scheme based on faith that robbed people of over $3 million. The indictment cites the ongoing abuse of trust-based networks in seeking crypto funds.

According to FBI data, digital asset fraud is on the rise. Victim losses grew by almost two times, reaching $4 billion in 2023 compared with $2.57 billion in 2022. The number rose to $5.8 billion in 2024.