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What are the potential remedies for cryptocurrency scams?

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The Advertising Standard Authority (ASA) sent an enforcement notice to more than 50 UK firms in March, warning of the rising problem of misleading promotions enticing people to buy cryptocurrencies. Social media influencers and affiliate marketing campaigns are also covered by the notification.

During the previous twelve months, fraudsters have exploited the largely unregulated sector, which has been rife with crypto-related wrongdoing. The Financial Conduct Authority (FCA) has received 6,372 warnings about possible cryptocurrency frauds in the last year, according to The Times. The FCA has also tightened regulations for crypto-asset advertisements.

Scammers are increasingly using innovative advertising and new technologies to capture an audience and dupe investors; with some frauds involving millions of pounds. It can be difficult to recognize a scam because of the sophisticated nature of the websites and tactics used. Cold calls, promises of guaranteed returns on investment, and a lack of precise terms and conditions might all be potential warning signs.

There are certain steps you can take to try and protect yourself and your funds if you have been a victim of fraud or are concerned about an advertisement relating to crypto assets.  If you believe that you have been the victim of a scam, then there are options available to you in the civil courts.

How to report crypto fraud?

If you have seen an online advert that you believe to be a scam you can report it directly to the ASA. Further, depending on the platform, you may want to report it to them too, such as Facebook or LinkedIn.

How to recover stolen cryptocurrency?

You should seek legal advice and try to recover the money if you have already made the decision to invest and are concerned that money has been squandered. In certain situations, the asset’s recovery is conceivable.

Crypto assets are considered property by the courts. Therefore, the court can seize crypto assets under a Proprietary Injunction Order as a Propriety interest is a legal interest which attached to property. These alongside Worldwide Freezing Injunctions have been granted against Persons Unknown. Further, the courts can assist in identifying fraudsters by issuing Bankers Trust Orders against exchanges.

Our courts are really attempting to help those who have been victims of crypto fraud recover their money. Previously the courts have allowed papers to be served through social media platforms such as WhatsApp, with the read symbol sufficient proof as a read receipt. Should exchanges oppose the Bankers Trust Orders then the directors might find themselves in contempt of court.

What is a Bankers Trust Order?

A Bankers Trust order is a third-party disclosure order that can require a financial institution to disclose details and documents. A Bankers Trust Order was used in the unreported case of Ion Science Ltd and Duncan Johns v Persons Unknown, Binance Holding Limited and Payward Limited. In this case the court ordered Binance and Kraken cryptocurrency exchanges to disclose the identities of the fraudsters.

What is a Proprietary Injunction Order?

A Proprietary Injunction order is an injunction where the court prevents the defendant from dealing with assets that the claimant has claimed proprietary rights over.

What is a Worldwide Freezing Order?

A Worldwide Freezing Order is an injunction that attempts to restrain a party from disposing, using, or dealing with assets. It is normally sought to freeze the assets until the court can decide at hearing what should happen. Due to the restrictive nature of this order, the claimant must show that there is a real risk and provide strong evidence that the party holding the assets will attempt to unreasonably dispose of them before a Judgement can be made.

Oracle collaborate with experts in fraud investigations and top counsel to  provide legal advice when there has been a scam. We also offer guidance on advertising ethics and the applicable legal framework. Call 020 3051 5060 or email us at [email protected] to get in touch with our expert team.

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