The U.S. Justice Department’s effort to forfeit 225,364,961 USDT linked to alleged crypto investment fraud highlights a point that is often lost when large recoveries are announced: frozen or seized assets are not the same as money returned to victims.

The civil forfeiture complaint, filed on June 18, 2025 in federal court in Washington, targets tokens that prosecutors say were tied to fraud and money laundering involving more than 430 suspected victims. But even with the assets already under government control, ownership disputes, tracing questions and forfeiture rules still stand between a seizure and any eventual payout.

How the case developed

The DOJ’s complaint followed an earlier freeze in November 2023. Tether said at the time that it voluntarily froze about $225 million in USDT after an investigation involving OKX and U.S. authorities, acting on a request from the Secret Service.

According to the complaint, investigators first identified 93 deposit addresses used by suspected victims. Those wallets received more than $62 million, and authorities said they identified about 434 suspected victims while interviewing roughly 60 of them.

Investigators then traced transfers through intermediary wallets and 144 OKX accounts. Using a last-in, first-out tracing method, they linked known victim funds to 22 accounts in the wider network. A federal magistrate judge issued a seizure warrant on or about May 1, 2025, and by the time the DOJ filed its complaint, the U.S. Marshals Service was already holding the USDT.

Why seizure is only one legal step

A freeze can stop assets from moving and a seizure can place them under federal control, but neither step decides who ultimately owns them. In this case, the government brought a civil in rem action, meaning the property itself is treated as the defendant rather than a person or company.

To complete forfeiture, the government must show by a preponderance of the evidence that the property is subject to forfeiture because of its alleged connection to criminal activity. Other parties can also enter the case and assert their own legal interests.

That is why a seizure does not automatically become restitution. Victims may later seek compensation through the Justice Department’s remission process, but they can also try to establish that they hold an ownership interest in specific assets before any distribution occurs.

Competing claims are still unresolved

The dispute over who has rights to the recovered crypto remained unsettled as of September 2026. An August 6 court filing said the government, Infiniweb Technology and two claimant groups representing alleged victims had reached an agreement in principle on a settlement.

That filing did not mean repayment had started. No final public order had set out how the recovered assets would be divided, and the overall allocation had not been fully resolved.

A separate challenge came from Nivedita “Nivie” Kaul, who filed a verified claim in March 2026. She asserted an interest in Wallet 0x82e, identified in the DOJ complaint as Token Group G and associated with about 87.46 million USDT. Kaul said her efforts to recover assets from a 2022 scam led to proceedings in Turkey, where a criminal court allegedly ordered the seizure of that wallet in August 2023, before the U.S. seizure warrant. The U.S. government disputes her position, including whether her losses can be traced to the defendant property and what weight the Turkish proceedings should carry in the U.S. case.

What determines whether victims get paid

Even if forfeiture is completed, victims do not automatically receive a share of the seized crypto. Under DOJ remission rules, a claimant generally must prove a specific financial loss directly caused by the offense behind the forfeiture and support that claim with evidence.

Those rules also require that the claimant did not knowingly participate in the offense, has not already been fully compensated and has no other reasonably available source of recovery. The recognized loss may also differ sharply from what a victim expects, because federal rules generally use the fair market value of the property at the time of the loss rather than any later increase in value.

Interest, legal fees and other recovery-related expenses are generally not included in recognized pecuniary loss. And if approved claims exceed the available forfeited property, distributions are generally made on a pro rata basis. The next confirmed step in the case is still a court-approved resolution of the competing claims, which would determine what assets, if any, can move on to a remission or distribution stage.

Source: Coin Edition