How to recover bitcoin or cryptocurrency from scammers and fraudsters

Posted onNovember 20, 2023
Matthew Purcell

Crypto fraud, thefts and scams are rising exponentially. Scammers around the world took home a record $14 billion in cryptocurrency in 2021, thanks in large part to the rise of DeFi.

Losses from crypto-related crime rose 79% in 2022 and cryptocurrency theft increased 516% from 2020, to $3.2 billion worth of cryptocurrency.

A common misconception is that bitcoin, or other cryptocurrency is impossible to trace and recover. This isn’t true, but the process can be complex and these sophisticated scammers will not make it easy.

Our expert fraud solicitors – who are used to recovering stolen assets from across the globe – can simplify the process and work with you to recover as much as possible.

Before speaking to a solicitor, these points may help:

1. Take stock and do not beat yourself up. Our fraud clients range from amateur investors, to professionally qualified traders. No matter how careful or experienced you are, these fraudsters are experts at luring you in.
2. Stay calm and do not lose your cool with the scammers. If you make threats, or refer to getting legal advice, the scammers may take steps to cover their tracks.
3. Sadly, you may not be able to rely on law enforcement. Certainly in England, law enforcement agencies may be slow to respond, if they respond at all. In our experience, only the biggest scams or thefts attract their attention. But don’t panic – the law can help.
4. Take a read of the case of LMN v Bitflyer Holdings Inc [Please add this link by highlighting the whole case name] https://www.bailii.org/ew/cases/EWHC/Comm/2022/2954.html
5. The above, helpful case, provides a helpful overview of the courts willingness to help victims by compelling exchanges to provide information as to the identify of scammers.

In terms of the process and how our litigation solicitors can help, we set out the tried and tested process that we often follow with clients:

1. We collate all the evidence. Proving fraud in England requires a careful review of the documents – emails, contracts, instant messages, web-site pages so we can see exactly what was promised or said and what was false.
2. We provide you with robust advice. We will tell you how much it will cost you and how much we hope you will recover. We will tell you how long it will take and be clear as to the commercial risk v reward.
3. We then need to start tracing your stolen crypto currency. This will often involve instructing an expert crypto-tracing agency.
4. At the same time, we attempt to compel the exchanges that hosted or transferred the crypto asset to provide us with documentation that helps us identify the identity and location of the scammers.
5. If the exchanges do not volunteer the information, we will apply to the court for an order compelling them to provide what we need.
6. Once we have the information we need, we may be able to apply to the court to freeze the bitcoin, to prevent the scammers from moving it or liquidating it. We may also be able to freeze other assets belonging to the scammers.
7. It is at the above point that we often see the fraudsters attempting to come to some sort of negotiated settlement. A freezing order causes untold difficulty to an individual and the scammer will know that the net is closing in on them.
8. If no settlement is forthcoming, we will proceed to issue a claim at court which will again put more pressure on the scammers and again, may prompt settlement.
9. We will then guide you through the litigation process, using our knowledge, experience and strategic skill to continue applying pressure and seeking an early settlement wherever possible.

Our litigation and fraud solicitors have helped to recover millions and are instructed in some of the largest and most complex cases of fraud: we know what to look for and how to make scammers lives uncomfortable. We have also defended individuals (wrongly) accused of substantial international frauds – so we see both sides and can advise clients completely.

With clients across Europe, the Middle East, Asia and the United States, we offer a commercially sound service, where losses exceed £300,000. Matthew Purcell, our litigation and fraud partner leads an expert team and is always happy to have an initial conversation with prospective clients. Email him at [email protected].