DOJ Seeks $5M in Bitcoin Linked to SIM Swapping and Casino Laundering Scheme

TLDR

• DOJ targets $5M in stolen Bitcoin linked to SIM swapping and online gambling fraud.
• Criminals used SIM swapping to access crypto wallets, transferring funds to casinos.
• Blockchain forensics revealed circular transactions between online gambling sites.
• DOJ’s move underscores the growing crackdown on crypto-related money laundering.

The U.S. Department of Justice (DOJ) has filed a civil complaint seeking to seize over $5 million in Bitcoin tied to a scheme involving SIM swapping and online casino money laundering. The stolen funds, taken from victims through SIM swap attacks, were allegedly funneled through cryptocurrency exchanges and online gambling platforms. This case underscores the growing challenge of combating digital asset-related crimes.

SIM Swapping Scheme Exposes Vulnerabilities in Mobile and Crypto Security

SIM swapping is a fraud technique where criminals convince telecom providers to transfer a victim’s phone number to a new SIM card under their control. This allows attackers to intercept authentication codes sent via SMS, enabling them to access sensitive online accounts, including cryptocurrency wallets. The DOJ claims that between October 2022 and March 2023, five individuals across the U.S. fell victim to such attacks. Once the attackers accessed these accounts, they transferred Bitcoin into wallets they controlled.

This method allowed the perpetrators to bypass security measures like two-factor authentication (2FA). With control over the victims’ phone numbers, they could reset account credentials and steal the digital assets. The Bitcoin was then moved between various wallets and deposited into online gambling platforms, obscuring its illicit origin. The DOJ’s investigation found that over $5 million worth of Bitcoin was involved in the case, with the stolen funds eventually being used for transactions on a gambling site, Stake.com.

Use of Online Casinos as Money Laundering Tools

The stolen Bitcoin was used to fund online gambling activities, with funds circulating between accounts on platforms such as Stake.com. This form of laundering often involves circular transactions, which are difficult to trace. Law enforcement detected at least 32 such transactions in a short time frame between March 2023. These transactions consisted of frequent deposits and withdrawals, designed to hide the original source of the funds.

The DOJ’s case sheds light on the role online gambling platforms play in facilitating money laundering. While online casinos offer entertainment, their acceptance of cryptocurrencies makes them attractive to cybercriminals. The relative lack of regulation in the sector compared to traditional financial institutions provides a loophole for illicit activities. As cryptocurrency becomes more integrated into these platforms, regulators and law enforcement agencies are increasingly focusing on cracking down on such illegal activities.

DOJ’s Increasing Focus on Crypto-related Crimes

This action by the DOJ is part of its broader effort to combat digital asset-related financial crimes. Since 2020, the DOJ has pursued numerous cases involving cybercrime and cryptocurrency, successfully charging over 180 individuals and recovering significant amounts of stolen funds. In this case, investigators used blockchain analytics to track the movement of stolen Bitcoin across multiple wallets and identify the laundering process.

Brett D. Skiles, Special Agent in Charge of the FBI’s Miami Field Office, emphasized that this case is part of a larger push against cybercrime networks using digital assets for illicit purposes. According to the FBI, cryptocurrency fraud losses have significantly increased, with 2024 reporting nearly 200,000 victims and over $9 billion in reported losses. The DOJ’s focus on recovering funds from cryptocurrency crimes is expected to increase as digital assets become more widespread.

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