Reports of cryptocurrency fraud are now becoming increasingly common and we have noticed a considerable shift in clients who wish to pursue civil law remedies in an effort to swiftly recover their funds rather than relying on the law enforcement authorities (Police, FCA, SFO) to launch a criminal investigation.
In a previous article posted on this website, we outlined for those who have been defrauded of their assets the relative merits of pursuing civil and criminal remedies. The link to that article can be found here.
Kangs Solicitors has been representing individuals and businesses in relation to cryptoasset and cryptocurrency litigation issues for a considerable amount of time and we have built a detailed database of Exchange Providers and Wallet Providers who regularly feature in such disputes.
We have a long history of being highly recognised by the leading law directories, the Legal 500 and Chambers & Partners, for our work in relation to financial fraud.
The current edition of the Legal 500 (2021 edition) recognises that:
‘Kangs provide a dedicated, professional and tactically astute team’.
Our team is led by Hamraj Kang an award-winning solicitor who has been ranked as a ‘star individual’ for five consecutive years by Chambers & Partners for his work in fraud investigations and prosecutions.
For an initial no obligation discussion, please call our Team at any of our offices detailed below:
Hamraj Kang discusses below some recent issues that we have come across in relation to cryptocurrency fraud litigation.
Legitimacy of Cryptocurrency | Kangs Crypto Fraud Solicitors
It is easy to see why investors are attracted to cryptocurrency as an asset class and as an investment product when there are wide spread media reports extolling the virtues of such investments.
The fact that a number of cryptocurrency Exchange Providers have floated on some of the world’s largest stock exchanges provides the cryptocurrency sector as a whole with considerable credibility.
Such validation for cryptocurrencies, including Bitcoin and Ethereum, has recently been provided by the floatation of Coinbase on the Nasdaq in the United States.
Coinbase is an Exchange Provider which predominantly earns its revenue from trades in Bitcoin and Ethereum. The floatation valued Coinbase at $75.9 billion which immediately ranked it amongst the one hundred and fifty most valuable public companies in the USA.
The floatation of Coinbase is seen by many, including previously sceptical investors, as the credibility boost that the crypto-financial sector required. It represents the strongest badge of legitimacy for cryptocurrencies to date.
Another attraction for investors is the recent exponential increase in value of cryptocurrencies such as Bitcoin, which although volatile, appear to be still rising in value.
With many commentators convinced that cryptocurrencies are here to stay and will become more mainstream over time, with traditional banks adopting their use, demand for such cryptocurrencies is fuelled.
In the light of the above, it is readily understandable why investors are flocking to invest in cryptocurrencies resulting in Exchange Providers conducting brisk business. Coinbase reported a nine-fold increase in sales in the first quarter of this year to an estimated $1.8 billion.
When The Investment Goes Wrong | Civil Fraud Solicitors
At Kangs, we do not have any reason to become involved in the legitimate investments placed through reputable Exchange Providers to the satisfaction of the investor.
The ‘investments’ that we have considerable experience of usually involve an element of fraud where the investor has lost all or a significant part of ‘such ‘investment’ and seeks legal redress for the return of the ‘invested’ funds.
So, what are the most common examples of fraudulent activity in the crypto-financial sector?
Recent Fraudulent Activity | Bitcoin Fraud Solicitors
One of the most audacious and high value frauds involving Bitcoin centres on the mysterious Benjamin Reynolds.
Benjamin Reynolds was the director of a UK company called Control-Finance and in 2017 he launched a social media campaign advertising for investors in Bitcoin. The adverts offered investors significant daily returns on their Bitcoin investment.
Many thousands of worldwide investors invested at least 22,190.542 Bitcoin valued at $143 million (2017 valuation) with Control-Finance on the promise that their Bitcoin deposits would be traded in virtual currency markets providing very substantial returns.
In fact, no trading ever took place and no profits were returned to investors. In September 2017 Control-Finance closed its social media accounts and in October 2017 Reynolds promised to return the Bitcoin deposits to investors, but never did.
It was originally believed that Reynolds was from Manchester but, despite attempts to trace him, he has not been tracked down. It appears that much of the digital trail has been deliberately removed and there are now doubts as to whether he actually even existed.
On 2 March 2021, the Commodity Futures Trading Commission obtained a Judgment in Default against Reynolds in his absence at the US District Court for the Southern District of New York. The Judgment orders Reynolds to pay around $143 million in restitution to defrauded investors and a civil penalty of $429 million.
What Action Can Be Taken Against Reynolds? | Kangs Solicitors
As the USA authorities accept that they are still unable to locate Reynolds what options do they have?
Although Reynolds appears to have vanished, the USA authorities can enforce the court Judgment against any assets held by Reynolds and seek assistance from the UK authorities to freeze assets belonging to him in the UK.
Our Experience In Cryptocurrency Frauds | Kangs Solicitors
Aside from the headline grabbing frauds outlined above, we are representing clients who have lost funds ranging from thirty thousand to many millions of pounds.
In our experience, some of the common features we encounter where investors have been defrauded include:
- initial promises of high returns,
- slick social media campaigns designed to entice investors,
- initial returns paid out to investors to encourage further increased investment,
- following the investment of large sums, the Exchange Provider alleges that there is a problem accessing or liquidating the invested funds,
- request for a large ‘administration fee’ in order to secure the release of the funds, which in reality is another vehicle to defraud the investor of further monies,
- despite numerous promises, no funds are returned to the investor and communication eventually cease,
- investors duped into providing fraudsters access to their Exchange Provider account which results in the cryptocurrencies being moved without the investor’s knowledge.
Remedies Available To Defrauded Investors | Freezing Orders
In some cases, where we have the details of the Exchange Providers, we can initiate action against them to trace the missing assets by using procedures such as Norwich Pharmacal Orders and Bankers Trust Orders.
Our Experience | Why Choose Kangs Solicitors?
The team at Kangs Solicitors has:
- represented clients in financial investigations in courts throughout England and Wales for over twenty years,
- been recognised as a national leader in financial fraud investigations by both the Legal 500 and Chambers & Partner,
- lawyers who are recognised experts in the field of financial fraud investigations,
- the ability to advise clients in relation to both criminal and civil law remedies,
- access to the finest barristers and QCs in the country to guarantee the best possible representation for our clients.
How to Contact Us | Kangs Solicitors
We aim to work proactively with our clients in an effort to secure an early favourable resolution to the problems with which they are confronted.
Hamraj Kang leads an award-winning team of solicitors nationally reputed for its excellence in fraud related work.
We welcome new enquiries by telephone or email.
Our team of lawyers is available to meet at our offices in London, Birmingham or Manchester or, alternatively, we are happy to arrange an initial no obligation meeting via telephone or video conferencing.
For initial enquires please contact: