NY authorities announce charges related to ‘sham’ crypto recovery firm

Manhattan District Attorney Alvin Bragg announced criminal charges against an individual for using a “sham cryptocurrency asset recovery business” to defraud customers.

In an Aug. 1 notice, the New York Country District Attorney’s office said it had charged Michael Lauchlan with three counts of grand larceny and two counts of scheme to defraud for his role in stealing from Coin Dispute Network users. According to the DA, the “sham” platform claimed to be able to trace and recover lost crypto assets, but instead, it bilked customers out of fees and stole Ether (ETH) from at least three users.

“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,” said Homeland Security Investigations New York Special Agent in Charge Ivan Arvelo.

Coin Dispute Network offered blockchain analysis and tracing and assistance in recovering crypto transactions between July 2022 and June 2023. Bragg’s office seized the firm’s website in June 2023. Authorities arrested Lauchlan, who also goes by the alias Max Handler, in Las Vegas on July 9. 

The New York County DA seized roughly $14,000 in user funds transferred to CoinEx by Coin Dispute Network. According to the complaint, more than 175 people were affected by alleged false claims from Coin Dispute Network being able to recover lost crypto.

Federal and state authorities in New York have taken several actions against crypto firms operating outside regulatory guidelines and individuals allegedly associated with illicit practices. Former FTX CEO Sam Bankman-Fried was charged, tried, convicted and sentenced in a New York courtroom. New York Attorney General Letitia James has also filed lawsuits for residents who lost money to certain crypto firms.