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Forensic Analysis for Cryptocurrency and Blockchain Fraud

Cryptocurrency and Blockchain Fraud

Written By

Capsicum Group

Fraud in cryptocurrency is widespread and significant. Investment scams can be run through legitimate on-line investment sites. These legitimate sites can at times funnel assets to sites which are known to be fraudulent. The perpetrators of these bad acts are sometimes single individuals and other times organizations with many scammers. They often are initiated from overseas, but can also be US based. Fake investments, investment managers, and traders are frequently involved – but so are legitimate companies and individuals who are often unknowingly brought into these scams.
Blockchain and Cryptocurrency forensics analyzes, tracks, and interprets the theft, transactions occurring on the blockchain, and the digital platforms utilized in cryptocurrency fraud. Analysis can be performed on the publicly available data from the Blockchain ledger to track the flow of funds and to determine if the wallets involved in the scam are legitimate or not.  

Capsicum works to recover cryptocurrency funds (Bitcoin, Ethereum, and others) missing due to theft, fraud or scam. While cryptocurrency may not always be recoverable due to limited extradition laws and poor cooperation with international law enforcement – Capsicum’s forensic investigators help to uncover who the perpetrators are, locate their whereabouts, determine crypto movements, and often assist in seizing as well as recovering stolen monies.

To recover lost currency and preserve evidence for possible litigation, Capsicum has developed methodologies and reports that show the flow and whereabouts of currency. Through the course of the investigation, we then determine the role and intent of the parties involved. Lastly this information has and can been used by our investigators as well as by law enforcement (including the FBI) to recover funds.

One of the most significant types of cryptocurrency fraud is called a Romance Scam The FBI estimates that $1 Billion USD in losses were incurred in 2021 due to Romance frauds and that they are the seventh most commonly reported scam. Sha Zhu Pan Scams (Pig Butchering Scams) are the main way victims lose funds in romance-related frauds. Romance scammers typically impersonate someone while trying to gain their victims affection and trust. Often Romance scammers will send money or show significant returns on investments for their victims to further the relationship. In the end, the bad actor tries to get the victim to send more money for investment scams, fake exchange, or other related purchases and donations.
Remember, speak with your investment advisors, accountants, or legal advisor before making significant investments, purchases and donations. Ask lots of questions, take your time, speak with on-line and face-to-face references. If it seems to good to be true, that’s right it probably is.

About Capsicum Group:

Capsicum was founded in 2000 within the law firm of Pepper Hamilton, LLP (now Troutman Pepper Hamilton Sanders LLP). Charged with providing technology consulting to our clients, we soon realized that the need to understand, collect, forensically analyze, and testify about digital data went far beyond our initial vision; we began our journey as general technologists, but quickly became specialists in Digital Forensics, eDiscovery and Cybersecurity.

Our areas of expertise evolved and expanded into complex digital forensic investigations including audio, video, black-box, automotive, as well as electronic discovery, paper discovery, data recovery, and cybersecurity – security testing, regulatory compliance, incident response & retainers, data breach, ransomware response, cyber defense. In 2002, Capsicum became an independent consulting company that focuses on these core services and remains independent and focused on our customers. Employing high-caliber experts with a unique understanding of data, technology, and the law, we support clients that need technological insights to help manage difficult technical, legal, and regulatory situations. Capsicum is located in Philadelphia, PA; New York, NY; Fort Lauderdale, FL; Dallas, TX; and Los Angeles, CA.