DOJ pursues $5m in Bitcoin tied to SIM swap fraud and laundering scheme

DOJ prosecutors trace a path of stolen Bitcoin from hijacked phones through a complex web of wallets, culminating in a series of circular transactions at an online casino designed to mask the illicit funds’ origins.

According to a September 9 press release by the U.S. Attorney’s Office, District of Columbia, the Department of Justice has initiated a civil forfeiture action targeting a specific cryptocurrency wallet containing 117 BTC.

The complaint alleges the funds are the proceeds of a series of SIM swap attacks that targeted five victims between October 2022 and March 2023. U.S. Attorney Jeanine Ferris Pirro stated that after the initial thefts, the perpetrators moved the Bitcoin through a maze of digital wallets before consolidating the entire $5 million haul into a single address that funded an account at the online casino Stake.com.

How the SIM swap scheme unfolded and the DOJ’s response

DOJ investigators say the perpetrators used SIM swap attacks to bypass standard security measures and gain control of victims’ mobile numbers. With the stolen numbers, they intercepted two-factor authentication codes that allowed them to log in to the victims’ crypto wallets and transfer assets into accounts under their control.

The Justice Department explained that the perpetrators attempted to obscure the origin of the funds by repeatedly cycling the bitcoin through deposits and withdrawals at the casino.

 “Many of these transactions were circular in that they eventually returned funds to their original source, and consistent with money laundering utilized to “clean” proceeds of criminal activity,” the statement read.

The laundering pattern, prosecutors say, made it appear as though the funds were legitimate business activity rather than proceeds of theft. This high-profile case is being prosecuted by Trial Attorneys Jessica Peck and Gaelin Bernstein of the Justice Department’s Computer Crime and Intellectual Property Section (CCIPS), alongside Assistant U.S. Attorneys for the District of Columbia.