Introduction
Cryptocurrency investment fraud is one of the fastest-growing types of financial crime. When a client approached Lex Firm Global after losing over $200,000 in a blockchain project that had disappeared overnight, we knew we were dealing with an exit scam — a fake crypto startup that collects investor funds and vanishes. What followed was a legal battle spanning multiple exchanges, jurisdictions, and wallets. In the end, our legal and forensic efforts resulted in the recovery of $1.1 million for multiple victims.
The Scam: A Promising Crypto, A Vanishing Act
The scam was cleverly packaged. The project claimed to be building a decentralized arbitrage platform that could generate consistent profits across multiple exchanges. Investors were shown a slick website, technical whitepapers, a roadmap full of buzzwords, and even a live dashboard that simulated growth.
But none of it was real.
Shortly after raising over $5 million in seed investment through USDT, ETH, and BTC transfers, the developers began closing down channels, deleting social media accounts, and disabling user dashboards. Wallets that previously received investor funds began transferring crypto through mixers and exchanges in an effort to obfuscate the trail.
Lex Firm Global Steps In
When our client reached out, we launched a full-scale investigation. Through partnerships with blockchain forensics experts, we were able to:
- Trace wallet transactions using Chainalysis and other forensic tools
- Link transfers to known scam wallet clusters
- Identify exchange accounts used to convert assets into fiat
We issued preservation notices to crypto exchanges, preventing further withdrawals from suspect accounts. We also filed civil actions to seize assets that had already been liquidated.
Ultimately, through a coordinated effort involving subpoenas, international counsel, and cybercrime reporting channels, we successfully recovered $1.1 million distributed among 13 investors.
Legal Strategy
Our legal team brought forward charges that included:
- Securities Fraud
- Wire Fraud
- Sale of Unregistered Securities
- Financial Misrepresentation
We also submitted key information to federal agencies including the SEC, FBI, and Interpol, which have since opened broader investigations.