Cryptocurrency Investigations & Disputes
Our team is led by our Senior Partner, Hamraj Kang, a nationally recognised leader in the field of financial fraud investigations.
We appreciate that an investigation by an enforcement agency can cause significant disruption to a business and its senior management. We work to minimise the risk of reputational damage and provide practical cost-effective solutions for our corporate and individual clients.
Kangs has expert teams of civil lawyers and criminal fraud solicitors experienced in dealing with both civil and criminal issues that arise in the use, storage, ownership, transfer, investment and trading of cryptocurrencies and crypto assets.
We are here to assist you with these issues and our team of expert crypto asset solicitors can be contacted for confidential and discrete advice.
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Our experienced crypto lawyers take a proactive approach to crypto assets investigations and any ensuing civil or criminal proceedings.
We are able to field a team of expert cryptocurrency solicitors to assist you.
We have longstanding relationships with the leading barristers and Kings Counsel (KC) in the country in this specialist area of law.
The CRIMINAL LAW areas we can assist you with include:
- Investigations by any enforcement agency such as the FCA, HMRC and the SFO
- Immediate representation and attendance at any Dawn Raid and execution of a search warrant to ensure the investigators do not exceed their powers of search and seizure
- Advice on challenging the basis and legality of a search warrant
- Liaising and negotiating with the enforcement agency on your behalf
- Representation at interviews and meetings with the enforcement agency
- Representation in any ensuing criminal proceedings such as a prosecution for serious fraud, money laundering or regulatory breaches
The CIVIL LAW areas we can assist you with include:
- Advice and assistance in relation to FCA regulations and compliance
- Civil action to trace and recover funds invested innocently in crypto assets due to fraud
- Contractual disputes involving crypto assets, exchange providers and wallet providers
- Assistance with HMRC investigations and tax treatment of cryptocurrencies
- Insolvency issues arising from crypto assets and cryptocurrency
The European Union’s 5th Money Laundering Directive (5MLD) came into force in January 2020 and defined a cryptocurrency as follows:
‘a digital representation of value that can be digitally transferred, stored or traded and is accepted…as a medium of exchange’.
Cryptocurrency, Bitcoin and other Crypto Assets
There are many hundreds of different types of cryptocurrencies and crypto assets, with Bitcoin being the most recognised.
A key feature is there is no centralised bank or nation state regulating a cryptocurrency. All transactions are conducted without such regulation.
A cryptocurrency is used in a variety of ways:
- A means of exchange, enabling goods and services to be paid for
- A payment platform
- A store of value and investment
- A sophisticated financial instrument, such as cryptocurrency derivatives
The underlying technology is blockchain which creates a unique one line ledger for each transaction made using the cryptocurrency.
The ledger can be accessed from anywhere in the world with multiple copies being available at any one time. All copies are automatically updated simultaneously. This is what makes the blockchain technology different to a traditional ledger.
The blockchain technology does not rely on a centralised server. The information is encrypted, stored and protected to the level that cyber-attacks are considered unlikely to be successful.
The lack of regulation of the multi-billion dollars crypto assets market has led to concerns that the virtual currencies are being favoured by criminals to conduct their business.
Areas of concern that have been highlighted include:
- The block chain technology enables the anonymous and borderless nature of transactions resulting in money laundering on a large scale
- The lack of ‘Know Your Client’ and ‘Due Diligence’ checks conducted by many cryptocurrency exchange providers attracts professional money launderers
- Criminals targeting innocent investors drawn to cryptocurrencies for the potentially large rewards from currency appreciation
- ‘Boiler room’ type operations offering Initial Coin Offerings (‘ICOs’) which prove to not exist at all or, if they do exist, prove to be worthless
- Theft of cryptocurrencies from personal wallets and from exchange providers as a result of cyber-attacks
In January 2020, the EU’s 5MLD came into force in an effort to tackle the increasing levels of worldwide money laundering, terrorist financing and corruption.
It is estimated that £80-100 billion of laundered funds passes through the UK’s financial system each year with a detection rate lower than 1%.
It is widely acknowledged that the rise in digital currencies has significantly contributed to this problem.
As a result, the 5MLD has focused on bringing changes to the cryptocurrency sector to bring it into line in many respects with the traditional financial and professional services sectors.
As a result of the 5MLD, both cryptocurrency exchange providers and custodian wallet providers are classed as ‘obliged entities’ which means they will have to adhere to the same Anti-Money Laundering regulations as traditional financial and professional service providers.
A cryptocurrency exchange provider is a business that exchanges a virtual crypto asset into money or to other virtual assets.
A custodian wallet provider stores and administers the virtual crypto assets on behalf of the beneficial owner/customer.
In reality both exchange providers and wallet providers will need to:
- Conduct ‘Know Your Client’ Checks on their customers
- Conduct ‘Due Diligence’ Checks on customers
- Submit Suspicious Activity Reports (SARs) to the NCA as and when appropriate
- Register with the FCA within a certain time limit or lose the right to remain in business
- Provide on demand data sharing with law enforcement agencies which means customers names and addresses will need to be disclosed
As a result of the above regulations, the transactions will no longer be anonymous for customers.
The expert lawyers at Kangs are available to assist you. We can arrange initial consultations in person, by video call or telephone.
Please contact one of our experts listed below or contact us at:
