Secret Service Plans Global Expansion of Anti-Crypto Crime Effort

The U.S. Secret Service is reportedly expanding its cryptocurrency crime prevention efforts.

That’s according to a Saturday (July 5) Bloomberg News report focusing on the agency’s Global Investigative Operations Center (GIOC), which specializes in digital financial crimes. In the last decade, sources told Bloomberg, the center has seized close to $400 million in digital assets.

Most of those seized funds, the report added, are in a single cold-storage wallet, making the Secret Service — better known for guarding the president — one of the largest crypto custodians in the world.

According to the report, the operation is overseen by Kali Smith, a lawyer who directs the Secret Service’s cryptocurrency strategy, and whose team has held training workshops for law enforcement in more than 60 countries.

The agency focuses on jurisdictions where criminals take advantage of a lack of oversight or residency-for-sale programs, and offers the training for free.

“Sometimes after just a weeklong training, they can be like, ‘Wow, we didn’t even realize that this is occurring in our country,’” said Smith.

The report noted that fraud connected to digital currencies are now behind the bulk of U.S. internet-crime losses. Americans reported $9.3 billion in crypto-related scams last year, a 66% increase over the year before, per FBI data.

Bloomberg also pointed out that these schemes have led to real-life violence. For example, a pair of investors in New York were charged with kidnapping and torturing a longtime friend inside a townhouse to access his digital wallet.

To recover stolen funds, the report added, the Secret Service has turned to industry players such as Coinbase and Tether, with one of the biggest recoveries involved $225 million in Tether’s USDT stablecoin, tied to romance-investment scams.

The news comes a little more than a week after the Financial Action Task Force (FATF), a global organization targeting money laundering and other financial crimes, warned that the increasing adoption of stablecoins and other virtual assets (VAs) “could amplify illicit finance risks.”

The use of stablecoins by North Korean agents, terrorist financiers, drug traffickers and other bad actors has risen in the last year, and “most on-chain illicit activity now involves stablecoins,” FATF said in a press release outlining findings from a report on the global implementation of anti-money laundering and counterterrorist financing (AML/CFT) in the VAs and virtual asset service provider (VASPs) space.

Spotlighting other emerging risks in this space, the FATF said that just 3.8% of the $1.46 billion stolen by North Korea in a hack of cryptocurrency exchange Bybit has been recovered and that there has been a “significant uptick” in the use of VAs in financial crime.