Edmonds Marshall McMahon (EMM) successfully recovered approximately US$3.15 million on behalf of a client, who was the victim of a sophisticated cryptocurrency investment fraud operated through a purported digital asset / crypto exchange platform, in offshore jurisdiction.
The matter was led by Partners Ashley Fairbrother and Kate McMahon, Special Counsel, Richard Doble, supported by EMM’s wider specialist civil fraud and asset recovery team, and led by counsel, Hefin Rees KC of 3VB and Helen Pugh of Outer Temple Chambers.
Our client transferred millions of pounds of digital assets, to what they believed to be a legitimate crypto exchange platform. Despite successful early withdrawals, she soon became concerned by repeated and escalating demands for anti-money laundering (AML) documentation whenever she sought to withdraw further funds. Although she complied with each request, the exchange continued to expand its compliance demands while refusing to honour withdrawal requests.
The pattern bore many of the hallmarks of an “exit scam’, prompting concerns that the platform was operating fraudulently and leading the client to instruct EMM to investigate and pursue recovery action.
Upon instruction, EMM rapidly deployed its integrated expertise, similar to that used by the Serious Fraud Office under the Roskill principles, enabling specialist investigators, experts and solicitors working alongside dedicated in house investigators, blockchain investigators, to investigate, trace and pursue recovery in a coordinated and efficient manner.
- The tracing exercise identified at least nine cryptocurrency exchanges through which the assets had been routed and revealed a sophisticated cross-border structure involving layered transactions, offshore corporate entities, fabricated liquidity representations and extensive online reputation manipulation.
- The OSINT investigation uncovered evidence suggesting that the platform was operating as an unregulated digital asset business through a corporate structure based in SVG. The investigation further revealed evidence of misleading online marketing practices, including the purchase of positive Trustpilot reviews, AI generated images purporting to be employees of the exchange, artificial amplification of social media credibility through bot activity and false representations concerning relationships with major cryptocurrency exchanges.
- EMM’s forensic accounting investigation uncovered evidence consistent with the operation of a Ponzi-style investment scheme, dependent upon the continual recruitment of new investor capital rather than any sustainable underlying business model. The team’s analysis indicated that investor funds were being circulated in a manner suggestive of earlier investors being paid from capital contributed by newer participants, rather than from genuine investment gains or trading activity.
Instructed on a Monday, EMM devised and implemented an urgent cross-border cryptocurrency investment fraud and asset recovery strategy. Within four days, the team had investigated the scheme, coordinated local counsel across multiple jurisdictions, obtained expert evidence and commenced proceedings. By 10pm on Friday, EMM had secured worldwide freezing relief, proprietary injunctions and disclosure orders to trace, preserve and recover the misappropriated digital assets.
Alongside the court proceedings, EMM engaged extensively with exchanges, regulators and law enforcement authorities across several jurisdictions world-wide. Through constructive correspondence and cooperation with various exchanges, the team secured voluntary assistance and account freezes pending formal court orders. In other jurisdictions, EMM worked closely with local counsel, where necessary, to prepare applications for reflective relief to recognise and enforce the SVG court orders.
The combination of forensic tracing, urgent injunctive relief and coordinated international enforcement ultimately resulted in the recovery of the entirety of the client’s losses, having invested millions of pounds of digital assets. Additionally, in addition to the return of the misappropriated assets, EMM secured recovery of the client’s legal costs and additional compensation through a negotiated loss of opportunity claim reflecting the period during which the client was unable to deploy the capital.
Ashley Fairbrother, Partner at EMM, commented:
“Crypto-assets can cross borders in seconds, so a recovery strategy must move at comparable speed. We were instructed on Monday and, by 10 pm on Friday, had secured worldwide freezing, proprietary and disclosure relief. The eventual recovery of the client’s entire loss, together with costs and additional compensation, demonstrates that even highly sophisticated cross-border crypto fraud can be met with an effective legal and forensic response”.
EMM is frequently instructed in high-stakes complex cryptocurrency investment fraud investigations, cross-border asset tracing and international recovery proceedings involving digital assets and emerging technologies.
You can read about EMM’s current work assisting victims of the $110million Coldcard exploit here: The Coldcard Exploit: Two Routes to Recovery for Victims
Richard Doble & Ashley Fairbrother
Our Expertise