Fraudulent Crypto Assets Returned with No Known Defendants

The prevalence of cryptocurrency investment and financial fraud poses significant hardships to victims, who are often unable to recover their defrauded assets even after the case is resolved. Taiwan’s Criminal Investigation Bureau (CIB), the Judicial Reform Foundation (JRF), and blockchain-based financial institution XREX have partnered to successfully crack down on cryptocurrency fraud cases, marking a landmark legal milestone in Taiwan’s judicial history.

XREX’s Anti-Money Laundering (AML) and Information Security Department uses advanced blockchain intelligence tools and on-chain tracking technology to demonstrate illicit financial flows and the owners of cryptocurrency assets, even when there are no identifiable suspects or defendants, thereby complying with Taiwanese law. I applied. An enforcement agency that returns fraudulent Ethereum (ETH) to victims.

The peculiarities of this survey are as follows.

• Attackers phished Taiwanese victims while they were using the decentralized wallet MetaMask, resulting in ETH being stolen from their wallets. Since MetaMask is a self-managed and decentralized wallet, there was no customer service to assist victims.

• There is a high possibility that the perpetrator belongs to an overseas criminal organization. Taiwanese law enforcement did not know the identity of the perpetrator when processing this case. Therefore, the prosecution had no suspects.

• The attackers moved the stolen cryptocurrency assets to accounts on OKX, an exchange operating outside Taiwanese jurisdiction.

• Multiple parties worked together to seize and return nearly all of the illicit assets to the victims.

The victim, Mr. Wan, was a professional trader and was active in the cryptocurrency community.

“I never expected that a group of scammers would steal my cryptocurrency assets by phishing and sending me a web page containing malware, pretending to be a ‘media interview’ from Forbes,” Wan said. All this under the guise of writing information on a website,” Wan said. “I would like to thank CIB, JRF’s advocate Miffy Chen, XREX, OKX and SlowMist for their help and support. My case served as a cautionary tale and “We hope this will reassure law enforcement that fraud cases involving decentralized wallets outside our jurisdiction can be addressed and resolved.”

The attackers phished Wan while he was using his Metamask wallet to access Friend.tech, a decentralized social platform on the Base blockchain network. The attackers stole the wallet and transferred the stolen funds to OKX. After becoming aware of his scam, Mr. Wan immediately shared his experience on social media and caught the attention of the Web3 community. Within 6 hours, SlowMist contacted OKX and intercepted the stolen ETH. OKX’s compliance policy states that it can only enforce temporary seizures of 72 hours, during which time Taiwan’s law enforcement agencies must intervene.

On-chain analysis traced the linked assets to the attacker’s wallet and then to OKX.

JRF’s Miffy Chen organized and edited documents detailing the flow of cryptocurrency, helped victims file reports, and worked with CIB and prosecutors to apply to the court for a confiscation decree.

But if there is no defendant in the case, how can the funds be legally returned to the victims?

To resolve procedural issues with the law, law enforcement agencies sought the intervention of a professional and neutral third party. XREX, an international cryptocurrency exchange, played a key role in confirming Mr. Wan’s ownership of the compromised wallet and re-verifying the details of the cryptocurrency flows. XREX’s Security and AML team used TRM Labs and SlowMist’s MistTrack to cross-analyze blockchain asset flows and identify fund flows to submit a complete cryptocurrency flow report with reliable evidence.

“This incident requires mutual trust among multiple agencies to respond quickly and effectively,” Chen said. This proves that stolen assets can be tracked and recovered even if criminals transfer them to offshore exchanges. This case is a great encouragement to all law enforcement agencies and professionals involved. “I hope that this unprecedented case will not be just luck, but will serve as an important reference for future cases,” he said.

Detective Hsieh Rui Xuan of CIB’s 6th Investigation Division, who was in charge of the case, said: “Fraud organizations are expanding their reach globally through new technologies such as the Internet and blockchain technology. This has become a serious social problem in Taiwan. “While Taiwan’s ability to combat overseas crime remains limited, confiscating and returning fraud proceeds has important implications for victims.”

He added that law enforcement continues to strengthen its cryptocurrency tracking technology, but this must be done within existing regulatory constraints.

“This case serves as an important foundation for promoting collaboration between law enforcement and blockchain, legal and cybersecurity experts to not only remotely seize cryptocurrency assets, but also prevent the misuse of blockchain technology for fraudulent activities,” Hsieh said. “I hope this happens,” he said. .

Shunhuang, Chief Security Officer and General Manager of XREX, has over 15 years of international experience in cybersecurity and possesses globally recognized offensive and defensive capabilities. “This collaboration with law enforcement highlights how much more difficult it is to launder money through transparent and open blockchain networks. All transactions are permanently recorded on-chain and cannot be tampered with or deleted,” he said. “The goal is to do this effectively and use blockchain tracking and analysis tools. We believe XREX is already a leader in this field and can become a trusted partner for law enforcement agencies.”

XREX integrates best-in-class blockchain analytics technologies and monitoring tools, including: TRM Labs, a portfolio company of JPMorgan, Mastercard’s CipherTrace, Chainalytic, and MistTrack. XREX continues to fulfill its corporate social responsibility by providing free support for investigations to analyze illicit currency flows, expose fraud schemes, and prepare forensic reports.

XREX is also the first Taiwanese company to be audited by the British Standards Institution. Attainment The latest version of ISO/IEC 27001:2022 Information Security Management System certification. XREX Taiwan is listed on the Financial Supervisory Commission. List This is the percentage of virtual asset service providers that have completed an anti-money laundering compliance statement.

Sun Huang said, “All cryptocurrency users should be vigilant and verify carefully. If you have been a victim of fraud, you should take immediate action, such as moving your assets to a new wallet, reporting as soon as possible, and preserving evidence.” . All of this helps reduce losses. Be careful to avoid follow-up scams that target victims and claim to help them recover their assets. Always seek assistance from qualified operators and law enforcement.

XREX co-founded by internationally renowned cybersecurity experts Wayne HwangIt is Taiwan’s first cryptocurrency company. get Received in-principle approval for a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). complete Anti-money laundering statement submitted to the Financial Supervisory Commission. Its predecessor, security software startup Armorize, specializes in vulnerability analysis and advanced persistent threat (APT) network attacks.

About XREX

XREX A blockchain-based financial institution that partners with banks, regulators and users to redefine banking together. We provide enterprise-grade banking services to small and medium-sized businesses (SMBs) operating in or trading in emerging markets and beginner-friendly financial services to individuals around the world.

Founded in 2018, it operates globally under several licenses. XREX We offer a full suite of services including digital asset storage, wallets, cross-border payments, fiat-to-crypto conversion, cryptocurrency exchange, asset management, and fiat on/off ramp.

Sharing the social responsibility of financial inclusion, XREX leverages blockchain technology to enhance financial participation, access and education.