Kansas crypto company defrauded in crypto scam gets funds recovered
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The U.S. Attorney’s Office in Kansas seized back money siphoned from a cryptocurrency business that had been diverted from a Kansan in an apparent email scam, court records say.
A special investigator with the Federal Bureau of Investigation’s Kansas City Division wrote in an affidavit that a Kansas-based employee of Bizantine Capital Multistrategy Fund, a crypto-based investment company, was deceived into sending $1.2 million worth of the cryptocurrencies Bitcoin and Ether.
The affidavit alleges that then-Leawood resident March Zheng, who worked remotely for Bizantine, received an email that appeared to be from a known customer but was later discovered to be a slightly altered email address being used by a third party.
Zheng traded the cryptocurrencies for “stable coins,” crypto that matches the value of the U.S. dollar, and deposited them into a digital wallet. But when confirming the transfer to the actual client, Zheng learned that the wallet belonged to someone else, the affidavit says.
The FBI traced the transaction through public blockchains, online ledgers that record cryptocurrency transactions, and requests for information from cryptocurrency businesses to locate the funds.
The cryptocurrencies were transferred to at least three different digital wallets and exchanged between several different cryptocurrencies, the affidavit says.
The FBI sent a seizure warrant to the company maintaining the final destination of funds, Tether, which froze the assets and allowed the transfer of just over $1 million to a government-controlled wallet.
There are still missing funds, and the FBI said they suspect the contents of three other cryptocurrency wallets contain fraudulently obtained property and are also subject to seizure.
Cryptocurrencies have been difficult to wrangle back in the past, due to the decentralized, unregulated and multinational nature of the crypto trading. But law enforcement has been getting more adept at countering crypto scams.
Last September, the Kansas Attorney General’s Office recovered money from a Nigerian crypto scammer, calling it “one of the state’s first successful civil actions against an international internet scammer.”