Successful Collaboration Recovers Life Savings for Victim of Crypto Fraud
The following case study outlines how an elderly victim was able to recoup his lost assets in a crypto fraud…
In a groundbreaking case, a unique collaboration between police, legal experts, and cryptocurrency exchanges enabled the recovery of life savings stolen from a vulnerable elderly victim. Demonstrating the power of strategic partnerships, this case highlights the transformative potential of innovative legal and investigative approaches in tackling the complex issue of crypto-asset scams. Through a combination of tenacity and teamwork, those involved achieved what most victims of such sophisticated fraud can only hope for; the return of their stolen assets!
Sixty Years of Life Savings Stolen
In 2021, a retired, older man (Mr X), began considering investing in cryptocurrency. He undertook some research and opened accounts with well-known exchanges Binance and Kraken and began to invest in Bitcoin. Following a search for details on how to transfer cryptocurrency between the exchanges, Mr X began receiving telephone calls from a person (Rolf) who purported to be employed by Blockchain.com, to assist cryptocurrency investors to transfer their assets between the exchanges.
A typical Scenario in Crypto Scams
Rolf managed to convince Mr X to set up a temporary Coinbase.com account within which to make deposits. He bombarded Mr X with telephone and video calls assuring Mr X of the security of the transactions and forcefully persuaded Mr X to transfer funds from his current accounts through a Coinbase account. Mr X, was at the time, caring for his wife, who was suffering with dementia, who then died. Sadly, the fraudsters even had the temerity to call him on the day of the funeral to persuade him to invest more into the false investment platform.
Mr X was in a state of grief following the death of his wife of almost 50 years. He was at his most vulnerable and was led to believe he was transferring cryptocurrency to an account he controlled. In November 2021 Rolf convinced Mr X to change his phone number, stating that it was a more secure means of contacting him; rather it was a further method of manipulation.
Concerned Rolf was not as genuine as he had initially thought, in December 2021 Mr X decided that he no longer wanted to invest further funds and wanted to withdraw the funds in his Binance account. Rolf told Mr X he would hear from a Transactor at Blockchain.com to assist with the withdrawal. He then began receiving calls from three other individuals, all purporting to be working for blockchain or Binance.com and pressuring Mr X to make further investments or to pay substantial fees/taxes to withdraw his funds.
Several tactics were used by these individuals to persuade Mr X that his investments were genuine and protected and that the tax payments were required. In total, he invested over £300k: this amounted to his life savings, saved up over 60 years’ hard work in agriculture.
Police Take the Lead
The matter was reported to his regional Police force in April 2022. An investigation by the Police concluded that the funds were not in the control of Mr X, this was indeed a crypto fraud, and his assets had been stolen from him
Using Chainalysis, the Police were able to trace 5.8 BTC of Mr X’s stolen funds through two unknown wallets into a wallet address at Binance. The account was then frozen. Disclosure was obtained from Binance which demonstrated that the account belonged to an Israeli national.
The Police contacted the account owner, to request the return of the funds. Sadly, there was no cooperation from the individual, and although recovery attempts were made pursuant to Part 5 of the Proceeds of Crime Act 2002 (POCA), they were unable to seize the assets using police powers.
Turning to a Private Prosecution
While the Police investigation revealed assets to recover, the fraudster had obfuscated the trail of funds through different wallets using DNS domains.
Given the difficulties in recovery, and the historic record of success in collaboration between public and private sector, Mr X was therefore passed to Edmonds Marshall McMahon (EMM) to pursue recovery of his assets.
EMM have experience tracing and freezing crypto wallets and have secured orders in other cases against suspected fraudsters over large amounts of frozen crypto.
Thanks to our expertise in crypto scams and the scrupulous work of our investigation and legal teams, we were able to bypass the costly step of obtaining Freezing Orders, which saved significant legal expenses.
In very short order, EMM were able to trace and substantiate a valid claim to the assets and recover them, despite what are now typical assertions from the alleged fraudster that he was a bona fide trader.
Recovery of the crypto assets
To achieve the recover of the assets, EMM worked with Binance to obtain the necessary release documentation. We understand that in the meantime the Spanish and German authorities also had claims on some of the funds frozen but were unable to mobilise as effectively as the joint public/private sector partnership which occurred in this jurisdiction.
EMM recovered the cryptocurrency, converted, and returned it to Mr X.
Setting a Precedent for Future Cases
Many people are not aware of their right to privately prosecute, and those who do know the option exists, need to be fully informed and helped, with expert guidance throughout the process. This crypto fraud case represents the enormous potential for cooperative efforts among law enforcement, legal professionals, and the cryptocurrency industry, in our shared drive to recover stolen crypto assets. Such successful collaborations are often rare. However, with experience, tenacity and innovation, we’re confident that this model could serve countless other crypto-fraud victims in similar predicaments.
This case was led by Partner Ashley Fairbrother and Senior Associate Fani Gamon of Edmonds Marshall McMahon.
