In a major victory for victims of cryptocurrency fraud, Manchester police have returned £4m to victims of an Ethereum Ponzi scheme. So far, 23 victims have been compensated out of the 127 who were affected, but the first step is promising and demonstrates that UK police are meeting challenges posed by once-elusive forms of cyber crime.
The Greater Manchester Police (GMP) seized £16 million in Ethereum following an intensive investigation of a local man and woman, aged 23 and 25, suspected of running a Ponzi scheme that targeted people in the UK, USA, Europe, Hong Kong, China, and Australia. They promised investors that their savings would grow if they sent them money in Ethereum, the second largest cryptocurrency after bitcoin.
During raids, the GMP discovered a USB stick containing £7 million in Ethereum and an additional £9 million in a Cryptograph safety deposit box. Fortunately for police, the code for the safety deposit box was close by and they were able to access the stolen funds immediately.
After initially locating 23 people and returning their funds, the GMP is engaged in an ongoing effort to return the remaining £12 million to 96 additional individuals.
Are the Police Catching Up with Crypto Schemes?
The importance of this story is that it marks a promising trend towards catching those responsible for crypto schemes, gaining access to stolen funds and returning them to their rightful owners.
Although the GMP benefitted from a stroke of luck when they found the code close to the safety deposit box and a USB stick during a raid, this is not likely to be an isolated incident, but is an indication of the growing success of crypto investigations.
Over the last five years, 12 out of 48 UK police forces have seized £322 million in stolen cryptocurrency. Although this may represent a small figure compared to the total amount of cryptocurrency lost to online frauds, it is a significant improvement from a time in the not so distant past when theft on the blockchain was rarely dealt with by police.
To ensure their forces are prepared to track down crypto criminals, the GMP are taking steps to recruit civilians with technical expertise to assist law enforcement with crime fighting on the blockchain.
The main challenge lies in legal hurdles that can limit the UK police’s power to seize stolen cryptocurrency. There are legal questions as to whether cryptocurrency falls under the same category as fiat currency, which law enforcement is allowed to take in the context of an investigation if the funds have been used for suspicious purposes, as outlined in the Proceeds of Crime Act 2002.
Since cryptocurrency has yet to be regulated or treated in the same category as fiat currency, there are some limits to police authority in the UK to take hold of suspicious funds.
How Crypto Investigation Experts Can Help
While legal controversies continue, there is no doubt that the GMP and other police forces in the UK are making great strides in combating cryptocurrency fraud. The use of civilian experts and crypto investigators is a strategy that is effective against cyber crime.
MyChargeBack frequently lends its crypto trace expertise to the authorities and provides intelligence reports that can assist law enforcement in tracking down cryptocurrency fraud.
If you have lost money to a cryptocurrency scheme, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have developed working relationships with law enforcement agencies worldwide, have extensive knowledge of the dynamics of crypto recovery and can improve your prospects of getting your funds back.