By Detective Scott Simons
It was just another routine day at the office, reviewing reports and exchanging thoughts with fellow detectives about our latest investigations. Then, on September 10, 2024, I opened an email from a neighboring police department that would kick off one of the most critical and high-stakes cases I’ve ever worked on.
The email was from a detective scheduled to attend a cryptocurrency course I’d be teaching in a couple of weeks. His message wasn’t a casual introduction or request for a course outline. Instead, it was a call for help. He had just received a report from a victim who had been scammed out of $551,000 over the course of two months. The case was about to become a race against time — a race I couldn’t afford to lose.
How a $551K crypto scam unfolded
The victim’s story was one I had heard many times before, and it fit the pattern of a classic pig butchering scam, though it never becomes any less heartbreaking. It all started with what seemed like innocent social media messages. The scammer didn’t immediately ask for money. Instead, they gained the victim’s trust by offering investment advice that led to actual profits in a legitimate, non-cryptocurrency account. Little by little, the victim became more comfortable, believing that the scammer had their best interests at heart.
That’s when the scammer introduced the victim to a “new and promising” cryptocurrency token. It was the next big thing, and they made sure the victim knew what they were missing out on. The victim sent two small test transactions to the scammer, and they went through smoothly. Confident that they were making smart financial moves, the victim transferred over $551,000 in the form of USD Coin (USDC) in 15 separate transactions. Each time, the scammer showed them fake screenshots of an investment account growing in value.
It wasn’t until the victim tried to withdraw funds that the nightmare started. Suddenly, there were excuses, delays and finally, the demand for an exorbitant tax payment before any withdrawal could happen. The victim realized they had been duped.
Tracing $551K in stolen crypto: A detective’s challenge
When I first reviewed the case, I knew that the clock was ticking. Crypto scammers are notorious for quickly moving funds through multiple addresses, often making them untraceable within days. I began by analyzing the victim’s transaction records, starting with the basics: their Coinbase records and the blockchain addresses where the funds had been sent.
What I discovered was a tangled web. The scammer had transferred the USDC through three separate addresses, using traditional money-laundering techniques to commingle the stolen funds with other assets — likely from more victims. These steps are designed to confuse investigators, creating layers of complexity that make it nearly impossible to track the flow of money.
But that didn’t deter me. I knew I needed a powerful blockchain analytics tool to help me untangle this mess. Using Merkle Science’s Tracker tool, I traced the USDC as it moved from address to address. Three hops later, the funds from all original 15 victim transactions landed in a single address that held a staggering $4.6 million in USDC, USDT and Ethereum.
This was a breakthrough. Not only had I found the victim’s money, but I had also uncovered evidence of other victims. It was clear that this scam was much larger than the initial $551,000.
Uncovering a transnational crypto fraud network
As I continued my investigation, I reached out to a network of cryptocurrency investigators and shared databases. It wasn’t long before I identified several other victims tied to the same address. One had lost $1.8 million, while another had been scammed out of $300,000 but was too embarrassed to report it to the police.
With every new victim I found, the magnitude of the scam became clearer. This was no small-time criminal operation. It was an organized transnational scheme, designed to drain millions of dollars from unsuspecting investors. But even with this wealth of information, I knew there was still a significant hurdle ahead: seizing the stolen funds.
The race to seize stolen cryptocurrency funds
Securing a seizure warrant for cryptocurrency isn’t as straightforward as you might think. While the blockchain provides a transparent record of transactions, convincing a judge and prosecutor of the need to freeze digital assets can be a challenge, especially when they’re unfamiliar with the technology.
In this case, I knew time was of the essence. Every day the funds remained in that wallet was another day they could be moved or laundered. The legal process can sometimes be slow, but we managed to act quickly, securing a seizure warrant before the money could disappear into the depths of the blockchain.
Working with federal agencies — whose names I won’t mention for confidentiality reasons — we executed the seizure. A total of 812,526 USDC was frozen and transferred into law enforcement’s control. These funds, along with other assets, would soon be returned to the victims.
Challenges in investigating cryptocurrency scams
I wish I could say that this case is the norm. Unfortunately, it’s not. Many victims of cryptocurrency scams never see their money again, simply because law enforcement doesn’t have the tools or training to handle these cases effectively. In this instance, it was a combination of timing, technology, and experience that allowed us to recover such a significant sum.
It’s a hard truth, but many law enforcement officers are still playing catch-up when it comes to crypto. In my case, tools like Merkle Science’s Tracker were critical in following the blockchain trail. But just as important was the ability to act quickly and build a strong case for prosecutors and judges, who are often skeptical about the complexities of crypto.
The future of fighting crypto crime
As cryptocurrencies become more ingrained in our financial systems, so too will crypto crime. It’s not going away. In fact, it’s evolving, and law enforcement must evolve with it. More training, better tools, and faster responses are essential if we want to combat these crimes effectively.
The success of this case was a victory, but it’s just one in a sea of thousands of unresolved crypto scams. I can only hope that as more law enforcement agencies adopt the right tools and training, we’ll see more stories like this one — stories where the victims get their money back and the criminals are held accountable.
But until then, I’ll keep doing what I do best: following the trail, one transaction at a time.
About the author
Scott Simons is a detective with the Greenfield (Wisconsin) Police Department where he has been employed for over 22 years, a member of the Midwest Cryptocurrency Task Force, Triage team leader of Operation Shamrock (a public and private sector cryptocurrency collaboration), and owner of Criterion Training Solutions teaching law enforcement, prosecutors and financial investigators. Scott has worked drug and money laundering investigations for 19 years of his law enforcement career which includes being assigned to the Greenfield Police Special Operations Unit and 10 years as a federally deputized Task Force Agent with the Drug Enforcement Administration (DEA). During his tenure with the DEA, he focused on significant money laundering and cyber investigations domestically and overseas resulting in the seizure of illicit assets in excess of $20 millio, to include millions of dollars in cryptocurrency. Scott has presented various cyber investigative topics at conferences, DEA Headquarters for federal agents, and to foreign law enforcement on behalf of the U.S. Department of State. Scott is a judicially recognized drug trafficking subject matter expert and holds multiple cryptocurrency certifications.