How We Solved 22 Different Cases with One CryptoTrace Report
Case Study: How We Solved 22 Different Cases with One CryptoTrace Report
This case involved the following MyChargeBack services: preparation of a Cyber Intelligence Report, legal demand letters, a GDPR data access subject request, and coordination with local police
The Basis for the Dispute
Having read so much for so long about how cryptocurrency investments were paying off, R.L. in The Netherlands decided to take the plunge and acquire bitcoin ― ฿8.16 to be precise. When the price of bitcoin began to shoot up in the third quarter of 2020 he began to entertain the possibility of diversifying his newfound profits in other types of investments.
One day he saw an ad for a company that claimed to be a Netherlands-based forex brokerage. The ad promised quick, significant profits and it tempted R.L. to inquire. He soon received a phone call from an articulate representative of the firm who explained the ins and outs of forex trading. That was followed by an online meeting during which the same representative showed R.L. a professional-looking presentation with a seemingly endless number of graphs and statistics that convinced him that the brokerage was not only legitimate but also extremely successful in ensuring investors like him made a lot of money. Even more than they would have been able to do by hanging on to their cryptocurrency.
So ultimately R.L. figured he had nothing to lose if he made the minimal initial investment of €250, which he paid using a credit card. He thought of it as a test. If it paid off, he’d invest more.
At first R.L. saw he had made an impressive profit, but then the market seemingly collapsed. His contact at the brokerage called and told him that he could recoup his loss with a larger deposit, but preferably in bitcoin. And soon after that only in bitcoin. That didn’t sound logical to R.L., since the market he was investing in was supposed to be forex ― foreign currency. What benefit was there in using bitcoin to buy foreign currency rather than euro? But he complied, eventually transferring all his liquid funds to the brokerage. And then, predictably, the market ― or, more accurately, what he was told was the market ― collapsed again.
Ultimately, R.L. had spoken with three different people from the brokerage in question who identified themselves using three different names and three different job titles. But, having a good ear, he recognised that they all had the same voice and became suspicious. So he decided that he had enough and asked to withdraw his earnings. To do that, however, he was told that he would need to make yet another deposit of bitcoin. Exasperated, and assuming he had no choice, he borrowed the equivalent of €50,000 in bitcoin from his father to get a $170,000 refund. And then, instead of refunding him, they asked for €20,000 more, which he also paid. But once again, there was no refund. Left without any resources to buy food, let alone Christmas presents for his family members who loaned him their money, R.L. contacted MyChargeBack.
Strategies and Tactics
Our first order of business was to send a General Data Protection Regulation (GDPR) data access request to the brokerage. GDPR is a European Union regulation that requires merchants, regardless of where they are physically located, to provide EU consumers with all internal files that mention them upon request. The purpose was to pressure the brokerage into voluntarily returning R.L.’s bitcoin, since the penalty for failing to do so could result in a fine of as much as €20 million.
Simultaneously, we obtained from R.L. the addresses, or code, of each bitcoin payment, the precise amounts of each one of them and the dates they were sent. Armed with that critical information, our certified forensic cryptocurrency investigators began tracing the path that those payments took through the blockchain. Within a short time, they pinpointed the controlling exchange ― Binance ― and the exact wallet address . They then compiled all the information they uncovered for R.L. in a Cryptocurrency Intelligence Report, which also contained precise instructions on what to do next.
That next step was for R.L. to file a complaint with the cybercrime unit of his local police in Rotterdam requesting the KYC (Know Your Customer) information of the owner of the wallet into which the bitcoin was deposited. KYC information includes the owner’s name, identification number, address, and telephone number. With that information in hand, the suspect can be tracked down, interrogated and, if the bitcoin is not returned by then, arrested and prosecuted. In addition, he submitted a copy of our report and legal demand letters to be sent to Binance. After contacting its compliance department, the exchange complied with demands for the release of the identity of the controller of the address, which ended up belonging to an individual in Ukraine.
But the story of one victim can sometimes impact on those of others. Using MyChargeBack’s exclusive database of addresses, we discovered that it wasn’t just R.L. who sent bitcoins to this individual, but 21 other victims as well.
The MyChargeBack Difference
MyChargeBack found that R.L.’s bitcoin meandered from exchange to exchange through the blockchain until it arrived at its final stop in Ukraine. We were able to pinpoint the final stop on its journey not only because we employ the latest state-of-the-art cryptocurrency forensic technology, but also because our certified cryptocurrency investigators are trained and tested to accurately interpret the data we uncover.
And the result speaks for itself. It turned out that the same address that received R.L.’s bitcoin also received cryptocurrency sent by 21 other MyChargeBack clients. There is strength in numbers. And that is also the MyChargeBack difference. As an industry leader in its field, MyChargeBack is a likely choice of cryptocurrency investors who require the type of forensic assistance we provide. So, when the Rotterdam police saw proof that 21 other bitcoin investors from around the world have cases that involve the same suspect, it realised that R.L.’s complaint indeed had to be expedited.
At a Glance: MyChargeBack in Netherlands
The case involved ฿8.16 deposited with an unlicensed online forex brokerage
In addition, the bitcoin equivalent of €70,000 was paid to obtain a $170,000 refund, which was never provided
The payments were traced to a wallet at a crypto exchange located in Ukraine that also received cryptocurrency from 21 other MyChargeBack clients
The client’s local police force opened an investigation based on the information that MyChargeBack uncovered
Complaint filed with a law enforcement agency
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