Nikolas Sargeant
On August 5, the Department of Homeland Security announced charges against Michael Lauchlan for running a deceptive crypto asset recovery business called Coin Dispute Network (CDN). Lauchlan, who also used the alias Max Handler, allegedly pocketed fees and extracted additional Ether from customers through false promises and fraudulent blockchain tracing reports.
First Crypto Recovery Scam Takedown in Manhattan
HSI interviewed over 175 CDN customers, none of whom successfully recovered any cryptocurrency through the service. Approximately $14,000 worth of cryptocurrency belonging to CDN users was traced to the CoinEx exchange.
Lauchlan faces charges of grand larceny and scheming to defraud in Manhattan Criminal Court. HSI New York Special Agent in Charge Ivan J. Arvelo stated, "Michael Lauchlan allegedly exploited his customers' lack of experience with the cryptocurrency industry and in turn fleeced them out of thousands of dollars in sham services and stolen assets."
The CDN website was seized by law enforcement in July 2023 after a year-long investigation. Lauchlan was arrested on July 9. Victims had been questioning CDN's legitimacy and reporting losses on Reddit for at least two years.
July Sees $266M in Crypto Hacks
July 2023 witnessed significant losses in the crypto sector, with hackers stealing approximately $266 million through 16 separate breaches. The most notable incident was the July 18 attack on Indian crypto exchange WazirX, accounting for over $230 million of the month's total losses.
Other major victims included Compound Finance ($24 million), Li.Fi ($10 million), Bittensor, and Rho Markets ($8 million each). Hackers often moved stolen funds to the cryptocurrency mixer Tornado Cash to obscure their origin.
The Terra blockchain also fell victim to a hack at the end of July, resulting in a $6 million theft and a temporary halt in operations. The attacker exploited a known vulnerability to steal various tokens and cryptocurrencies.
These incidents highlight the ongoing security challenges in the cryptocurrency industry and the importance of vigilance against both hacks and fraudulent recovery schemes.
