Cryptocurrency remains a risky business for investors, even experienced investors can still be vulnerable to fraud.
In this recent case, Rosenblatt’s Tom Spiller acted for an investor in cryptocurrency who had unwittingly fallen foul of a highly sophisticated and plausible Ponzi scheme.
The investor was promised that, in return for the deposit of Bitcoin for a fixed period of time, they would be paid interest in Bitcoin. Unfortunately, there was no intention by the scammers to deliver on their promises. When investors sought to withdraw their Bitcoin they were told that they could only withdraw funds in another, much less valuable cryptocurrency.
Based on analysis of the Bitcoin blockchain it appears that around $70m in Bitcoin was taken from a significant number of investors. Rosenblatt were greatly assisted in their investigation by first-in-class crypto investigation firm TRM Labs, who published their detailed findings on their investigations blog. Armed with the heavyweight blockchain analysis provided by TRM, Rosenblatt went on to engage with the in-house legal teams of several household name crypto-exchanges and met with varying degrees of cooperation.
Crypto-exchanges remain largely unregulated. Convincing them to freeze client accounts and to conduct internal investigations requires specialist insight, relationships and experience. It is the hope that by continuing to showcase sophisticated scams such as this one, investors in cryptocurrency will be better placed to protect themselves by obtaining advice and exercising vigilance when making investment decisions.
Rosenblatt can help
Rosenblatt has a wealth of experience in the world of cryptocurrency. Please contact Tom Spiller at tom.spiller@rosenblatt-law.co.uk.
Author
Tom Spiller, Senior Associate
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