Crypto Scam Recovery case: €11,300 Recovered Through Blockchain Analysis
A client from Lithuania contacted Veritas Advisory Group after losing €11,300 in a cryptocurrency scam. The scheme did not begin with a direct offer to invest, but with an online acquaintance.
The client began communicating with a woman on a dating website. Over the course of their conversations, she described her own positive investment experience and recommended a platform that, according to her, had enabled her to generate successful returns.
Because the recommendation came from someone with whom the client had already developed a relationship of trust, he registered on the suggested investment platform and began transferring funds.
In total, he transferred approximately €11,300 through several cryptocurrency transactions in USDT. Three different cryptocurrency addresses were used to receive the funds.
The problems began when the client attempted to withdraw his funds. Representatives of the platform started creating obstacles to the withdrawal, after which the client suspected fraud and contacted Veritas Advisory Group.
Blockchain Analysis and Crypto Tracing
Because the client sought assistance relatively quickly and retained confirmation of all transactions, the specialists at Veritas Advisory Group were able to begin blockchain analysis promptly and reconstruct the movement of the digital assets.
The first task was to identify every address to which the client had transferred funds. The analysis showed that three cryptocurrency addresses had been used. The specialists then carried out further crypto tracing to follow the movement of assets between connected wallets.
During the investigation, the team reconstructed the transaction chain and identified a link between part of the fund flow and the cryptocurrency exchange Kraken.
For cryptocurrency scam recovery, this was significant. When funds reach the infrastructure of a centralized cryptocurrency exchange, it may become possible to document links between specific blockchain transactions and a service that has customer identification procedures and established channels for cooperation with law enforcement authorities.
“Speed is often critical in cryptocurrency cases. In this matter, the client had retained confirmation of every transaction and contacted us shortly after the withdrawal problems arose. This allowed us to begin crypto tracing quickly, identify connected addresses, and reconstruct the subsequent movement of the assets,” – Nicholas K., a lawyer at one of Veritas Advisory Group’s partner firms.
Cooperation with the Exchange and Law Enforcement Authorities
After completing the initial analysis, Veritas Advisory Group prepared an evidence package containing information about the transactions, wallet addresses, circumstances of the fraud, and movement of the digital assets.
As part of the crypto fraud recovery process, Veritas Advisory Group specialists communicated with Kraken and with the competent law enforcement authorities in Germany and Malta.
The work required coordination between several parties and took approximately six months. A significant factor was that the client had retained a complete set of transaction confirmations, correspondence, and other materials that made it possible to document the connection between the transfers and the fraudulent scheme.
As a result of the work, the client recovered the full amount of €11,300.
This case demonstrates that efforts to recover stolen crypto do not end with identifying the first address to which funds were transferred. Fraudsters may use multiple wallets and intermediary transactions, so effective crypto scam recovery requires reconstruction of the full asset trail and identification of points where the funds interacted with regulated cryptocurrency services.
Crypto Due Diligence: Checks Before Transferring Funds
Blockchain analysis can be used not only after funds have already been lost. A significant number of risk indicators can be identified before an investment is made.
Veritas Advisory Group provides crypto due diligence services designed to conduct a comprehensive review of a cryptocurrency platform, investment project, or other blockchain-based structure before significant funds are transferred.
Such a review may include analysis of the history of connected wallets and the movement of digital assets, verification of the project’s corporate structure, beneficial owners, and regulatory status, review of the whitepaper and stated investment terms, and, where necessary, analysis of smart contracts.
Experience with crypto tracing shows that many indicators of increased risk can be identified before an investment is made. If a platform conceals corporate information, provides questionable licensing information, uses opaque fund-transfer structures, or directs an investor to unrelated cryptocurrency addresses, these circumstances warrant additional due diligence.
Crypto due diligence can therefore be used as a preventive tool, allowing an investor to assess the counterparty and the structure of a proposed transaction before transferring funds.
If you believe you have been a victim of cryptocurrency fraud, or if you would like to conduct crypto due diligence on an investment project before transferring funds, please contact Veritas Advisory Group for a preliminary assessment of your situation.
