What Does Crypto Fraud Look Like?

28 Dec 2022, 14 mins ago

Crypto fraud has been continually on the rise since 2020. If you have been a victim of crypto fraud, what can you do?

The Rise of Crypto Fraud

The Financial Times  have recently revealed that cases of crypto-related fraud reported to Action Fraud had more than doubled (to £190m) last year compared to 2020. Additionally, by the end of August 2022, losses were 25 per cent higher than in the same period in 2021.

There is a number of reasons for this. Criminals have adapted techniques from other areas of white-collar crime to target potential victims, and the surge in the buying and selling of crypto currency is reflected by a surge in fraudulent opportunists. Aggravated by the demand for health-related products such as medication and PPE, the Covid-19 pandemic brought about a rise in crypto fraud, as scammers would play on this to extract payment in cryptocurrencies. With the cost of living crisis looming, it is likely that cases will continue to rise. However, there has been a number of high profile wins against crypto criminals and the UK courts are developing precedent from these rulings.

What Does Crypto Fraud Look Like?

Crypto Fraud can be extremely convincing and scammers will often use the names of well-known brands or individuals on social media to make their scams appear genuine.

Depending on the circumstances, there are various avenues to explore when it comes to pursuing a potential crypto fraud. These avenues include the matter being investigated and pursued through law enforcement, pursuing the matter by way of a private prosecution, or pursuing the matter by way of civil proceedings. Any of these avenues can be complemented by introduction of compliant cryptoasset tracing measures.

It is important to act quickly. Consider reporting the alleged fraud to ActionFraud that provide a comprehensive reporting process and further detailed information on reporting.

There are additional steps you can take which will potentially assist the investigation of any allegation of crypto fraud. Reporting to law enforcement might not necessarily result in an investigation of the alleged fraud as agencies will apply various considerations before deciding whether to take the matter further. It is therefore important to consider steps that you can also take yourself to assist with any subsequent investigation.

In this regard one of the options is to consider additional assistance through instructing a specialist private firm to investigate. These firms should conduct a compliance investigation which can be used to assist further action through law enforcement, or alternatively, it can be used in civil proceedings or a criminal private prosecution, if appropriate.

In addition, specialist firms bring the benefits of being able to utilise specialist tools to track fund flows and gather evidence in a format that should also be admissible in any subsequent proceedings. In theory, the blockchain (where all crypto transactions are recorded) is a transparent record; therefore, it should technically be possible to try and trace all transactions and thus evidence the trails of any purported fraudulent activity.

Finally, it is worth ensuring that any investigation is assisted by expert legal advice. Gherson Solicitors bring combined expertise from a criminal, civil and regulatory perspective, underpinned by a firm understanding in cryptoassets and blockchain technology.

Increased reports of crypto (including NFT0 fraud and scams – More from Gherson)

The team have previously written a blog entitled “What to do if you think that you have been victim to a crypto fraud or scam?” This followed an earlier blog entitled “What can you do to try and help avoid a crypto fraud of scam?

The team have also written a blog about what to do if your NFT has been stolen – “My NFT has been stolen – what can I do?

Reports of crypto frauds and scams remain on the increase. A recent article by Cyber reports how around £1 million-worth of cryptocurrency scams are being reported by Santander UK customers each month. This article quoted Thomas Cattee, Solicitor in Gherson’s criminal litigation, investigations and regulatory department.

Criminal investigations and litigation

Gherson’s solicitors criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law underpinned with a firm understanding of digital assets and blockchain technology. As such, the team is able to provide expert strategic advice to anyone wanting to investigate and pursue a potential theft of crypto assets.

The team is also able to provide advice to anyone facing investigation in relation to any allegation of criminality involving cryptoassets.

Regulation and compliance

In these constantly changing times, firms that deal with cryptoassets themselves or have exposure to such firms, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations.

How Gherson can assist

Gherson’s white-collar crime and regulatory team are able to provide advice and assistance with AML and sanctions compliance, including in situations involving cryptoassets

Additionally, the team has recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. Furthermore, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.

Please do not hesitate to contact us for further advice, send us an e-mail, or, alternatively, follow us on TwitterFacebook, or LinkedIn to stay up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2022