A Homeland Security Investigations (HSI) task force investigation into a scam crypto recovery operation has led to charges against a Las Vegas man. On August 5, the Department of Homeland Security reported that an investigation by the New York task force had led to charges against Michael Lauchlan, who ran a scam crypto asset recovery operation.
False promises and theft
Lauchlan’s company, Coin Dispute Network (CDN), claimed to offer services such as blockchain analysis, tracing, and recovery of lost cryptocurrency in exchange for fees. However, instead of recovering the promised assets, Lauchlan kept the fees for himself and in some cases raked in additional Ethereum from customers using false promises and falsified blockchain tracing reports.
Research and results
The HSI team reported that over 175 CDN customers were interviewed and no one was able to recover cryptocurrency using the service. Additionally, approximately $14,000/€12,800 worth of cryptocurrency belonging to CDN users was traced to the cryptocurrency exchange CoinEx.
The case marks the first time a crypto recovery site has been taken offline by the Manhattan District Attorney’s Office, the HSI said. Lauchlan, a Las Vegas resident, has been charged in Manhattan Criminal Court with grand larceny and two counts of fraud.
Response from HSI
HSI New York Special Agent in Charge Ivan J. Arvelo noted: “Michael Lauchlan allegedly took advantage of his clients’ lack of experience with the cryptocurrency industry and then bilked them of thousands of dollars in bogus services and stolen assets.”
Law enforcement seized the CDN website in July 2023 after a year-long investigation, and Lauchlan, who used the name Max Handler, was arrested on July 9.
Long history of scams
The scam lasted for at least two years, according to Reddit posts from victims questioning the CDN’s legitimacy and reporting losses. In November 2022, the U.S. Federal Trade Commission issued a warning about crypto recovery services after a surge in scams following the collapse of FTX.
Ironically, in March 2023, CDN launched a database for users to report online scams. In July 2024, Cointelegraph interviewed several real white hat hackers trying to recover crypto assets for victims of losses.
Source: https://newsbit.nl/man-uit-las-vegas-aangeklaagd-voor-nep-crypto-recuperatieoperatie/
