Manhattan DA Charges Man for Fake Crypto Recovery Scheme

Key Takeaways

• The New York County DA had seized around $14,000 in user funds transferred to CoinEx by Coin Dispute Network.
• Reportedly, the complaint states that over 175 people were misled by CDN’s false claims.

Manhattan District Attorney Alvin Bragg has charged Michael Lauchlan for running a fake cryptocurrency asset recovery business that defrauded customers. Lauchlan allegedly used Coin Dispute Network (CDN) to steal from clients, promising to trace and recover their lost cryptocurrency.

Prosecutors announced Thursday that Lauchlan took initial fees and then extorted additional Ethereum from at least three customers. He did this by falsely claiming he could recover their assets and creating fake blockchain tracing reports.

“This complaint alleges a cutting-edge approach to a crime as old as time,” said Bragg. “By manipulating customers with false promises and pocketing a fee, Michael Lauchlan allegedly engaged in a scheme that defrauded dozens of people and stole from at least three New Yorkers.”

Between July 2022 and June 2023, CDN offered services like blockchain analysis, tracing, investigative reports, and transaction recovery. Lauchlan, using the alias “Max Handler,” posed as CDN’s vice president and chief recovery officer. Clients paid in Ethereum to consult with a “recovery analyst.”

Lauchlan then falsely claimed to know where their cryptocurrency had gone and promised to recover it for an additional fee, sending fake emails and documents to support his claims.

As per the official statement, the New York County DA had seized around $14,000 in user funds transferred to CoinEx by Coin Dispute Network.

In June 2023, the DA’s office seized CDN’s domain, the first time it had done so. Lauchlan was arrested in Las Vegas on July 9. The complaint states that over 175 people were misled by CDN’s false claims.

“This scheme targeted vulnerable individuals seeking to recover their lost assets, exploiting their trust and desperation,” Bragg said.