Crypto-Fraud – Recovering your coins

In recent years cryptocurrency trading has become fashionable for retail investors, owed to the relative ease of accessing the market and the stories of ordinary people making a fortune from small sums of money. This has been further fuelled amidst the chaos of the Covid-19 pandemic and the popularity of such stocks continues to rise.

In February 2021, the value of Bitcoin reached a record high of almost $50,000 per coin. Unlike regular stocks, there aren’t assets or balance sheets behind the crypto stocks and value is determined solely by the demand of the market, which makes the stocks inherently risky and the market volatile. This is part of the reason why trading in crypto-currency is now regulated by the Financial Conduct Authority (FCA) – commercial trading without authorisation is a criminal offence punishable by imprisonment. 

Fraudsters have traditionally targeted the market because retail traders can be more easily coerced by fraudulent activities. Security Magazine reported that in 2020 alone, fraudsters stole roughly $1.9 billion worth of crypto assets! 

A prime example of such fraudulent activities came to light earlier this month. The FCA issued a warning that they are aware of a fraudulent outfit operating under the pretence of a FCA approved company, by copying a legitimate reference number of a FCA authorised firm. The fraudsters operated under the name ‘The Block Chain Recovery Association’ and are issuing ‘phishing’ emails to try to obtain traders’ confidential information which can result in access to their crypto wallets. 

Whilst it may all seem doom and gloom, there is light at the end of the tunnel. Recently, the FCA has recovered £676,000 in losses for victims of an unauthorised deposit–taking scheme in crypto assets and forex trading. However, the authorities will not always pursue all lines of enquiry. 

In the event you are the victim of crypto fraud, we recommend you take the following steps immediately: 

1. Inform the trading platform of the fraud 
2. Inform your crypto-wallet provider of the fraud 
3. Inform the police; and 
4. Where the authorities will not pursue the matter, instruct a private prosecutor. 

Our asset recovery team, along with specialist investigators, will take the following steps to recover your assets: 

1. Collate evidence with a view to understanding how the fraud occurred, including the extent to which any party was negligent 
2. Assess damages 
3. Identify offenders; and  
4. Recover assets