- Homeland Security Investigations charges Las Vegas resident with running a fraudulent crypto recovery service.
- Over 175 customers reported being unable to recover any cryptocurrency despite paying fees for recovery services.
- The fraudulent operation, Coin Dispute Network, allegedly deceived customers and misappropriated funds.
The Department of Homeland Security has charged a Las Vegas man, Michael Lauchlan, with orchestrating a fraudulent cryptocurrency recovery operation. This operation, known as Coin Dispute Network (CDN), allegedly deceived customers under the guise of providing blockchain analysis and cryptocurrency recovery services.
Exploiting the Uninformed
Lauchlan’s operation purportedly offered customers a chance to reclaim lost cryptocurrencies through advanced blockchain techniques. However, Homeland Security Investigations (HSI) found that not only did these services fail to deliver any recovered assets, but Lauchlan also siphoned off the fees and at times, additional Ether under false pretenses. According to HSI’s findings, none of the 175 interviewed CDN customers managed to recover their digital assets through the service.
The investigation further revealed that approximately $14,000 in cryptocurrency from CDN customers ended up on the CoinEx crypto exchange. This discovery was instrumental in advancing the legal actions against Lauchlan.
Legal Repercussions and Public Deception
The Manhattan District Attorney’s Office has taken significant action against Lauchlan, marking the first instance of a crypto recovery site being legally dismantled by the office. Charged with grand larceny and two counts of scheme to defraud, Lauchlan’s fraudulent activities have led to his arrest and the seizure of the CDN website.
Special agent in charge at HSI New York, Ivan J. Arvelo, emphasized the predatory nature of the scheme, highlighting how Lauchlan capitalized on his customers’ lack of familiarity with the cryptocurrency sector to commit theft. The arrest occurred on July 9, following a detailed year-long investigation.
Community and Legal Response
The legal action against CDN comes amid growing concerns over crypto recovery scams, which have proliferated following major crypto market upheavals, such as the FTX collapse. Authorities and consumer protection agencies, including the US Federal Trade Commission, have issued warnings to the public regarding the rise of such deceptive services.
In a somewhat ironic turn of events, CDN had launched a database earlier this year that claimed to help users report online scams. This development, alongside the continuous efforts of legitimate cybersecurity professionals in the field, underscores the complex landscape of crypto asset recovery and the need for vigilance against fraudulent schemes.
