The number of news stories about crypto frauds being busted is increasing, but if you read them closely, you may find that most of the work is being done by investigators and regulators. What are the platforms doing about crypto fraud and why do they often seem passive?
You may notice that, while reading a story about a government agency investigating a crypto trading scheme that took place on a specific platform, a statement by a representative of the crypto exchange will say something to the effect of cooperating with investigations, but nothing about taking direct action against these activities.
You may even hear of cases of a regulated crypto platform flat-out saying there is nothing they can do about their own users being involved in Ponzi schemes.
Part of the reason these crypto platforms seem so passive is the sheer scale of crypto scams, their unwillingness to take action against other users without solid evidence and their lack of resources for tracking down crypto fraud. That is why you need a third party to trace bitcoin transactions on the blockchain and work towards recovering funds.
Broker Complaint Registry will guide you in the fund recovery process. We consult with clients and provide them with strategies and tools such as intelligence reports that can result in successful fund recovery from the blockchain. Talk to us today, and get started with crypto recovery.
A Tale of Two Crypto Exchanges
Two major stories about fraud and crypto exchanges say a lot about what customers can expect if they lose money to an online bitcoin scheme. One of the exchanges is Binance, which is the largest crypto exchange by number of transactions, but is also unregulated and has received numerous complaints from US and UK authorities.
Pakistani authorities are currently investigating Binance in connection with a series of crypto schemes that defrauded users of $100 million. Not only are these schemes operated on the exchange, but there is some suspicion that the exchange itself may be involved in illegal activities.
Although Binance denies any involvement and has tweeted that it intends to cooperate fully with the investigation, many consumers are concerned about using this platform. However, anyone who would have done research into Binance in the past year would see that it has been the subject of investigations and complaints by government authorities in several major countries.
The other side of the crypto coin is Coinbase, which is a regulated crypto exchange, but nonetheless was in the news for its association with crypto theft. Unlike Binance, there was no doubt that Coinbase had no involvement in the hacking of an individual’s account.
However, when an Indiana-based man made a complaint that $7,300 worth of crypto currency was stolen from his account through hacking, Coinbase responded that there was nothing they could do, and suggested that he should have changed his password more frequently.
The victim was irate that, although Coinbase acknowledged that a theft had occurred on their exchange, they did not take action against the suspect, even though they could make money on the unauthorized transaction.
Why Crypto Exchanges Often Do Not Take Action
This seems like a cruel irony, but as can be seen in the Coinbase story, even regulated platforms sometimes will not take action. There are several reasons for this:
- The sheer number of crypto frauds and complaints
- The lack of resources to carry out an investigation themselves
- Concern about false allegations
- Concern about their reputation
- The lack of evidence in a complaint
- Not having the legal backing to freeze an account or release codes or keys
There is no doubt that the number of crypto scams has increased dramatically in the past few years. According to CNBC, crypto scams robbed $681 million from US customers alone in the first half of 2021.
Cryptocurrency exchanges receive more complaints than they can act upon and still be efficient running their business. Out of necessity, they may not act upon complaints unless there is evidence behind them or if they receive a large number of them.
Even if these platforms had time to address every complaint, they may lack the investigative resources to track down funds and uncover identities on the blockchain. These investigations require a significant amount of time and expertise, and crypto exchanges do not have the resources to handle these investigations.
The exchanges may also be concerned about false allegations which can be made out of malice or by a competitor in disguise. The exchange also has its own reputation to worry about and it does not want to alienate users by taking strong action based on a complaint when the information was not accurate. They therefore need evidence before they are going to treat another wallet holder like a suspect.
In addition, they will not freeze accounts or suspected transactions unless the customer has contacted law enforcement or has received a court order. When working directly with law enforcement, a crypto exchange may even be ready to hand over crypto codes or keys, but not before it has reached this phase.
What You Can Do About a Crypto Fraud
The best thing you can do to recover from a crypto fraud is not to go it alone. Seek the counsel of third party experts on tracking down crypto frauds on the blockchain. Broker Complaint Registry professionals will help you through every step of the investigation and will get crypto exchanges to work on your behalf and take action against crypto schemes.
We get results by consulting with clients and creating intelligence reports with evidence about crypto schemes. These reports can influence exchanges to give law enforcement the information they need to catch the criminals behind crypto fraud.
Do You Need Assistance with Crypto Fund Recovery? Broker Complaint Registry Will Help
Contact Broker Complaint Registry experts if you need fund recovery from a cryptocurrency transaction. We deal with a variety of issues, including data theft, broker scams, and crypto complaints. Our team will refer you to experts who have vast experience dealing with regulators, banks, and law enforcement. We will provide advice and can draft an intelligence report to help you resolve the issue.