What Are the Rights of Victims When Crypto Frauds Are Uncovered?

By Evan Spicer

Director of Cryptocurrency Investigations


Anyone following the news will notice that headlines report a rise in the number of cryptocurrency crimes. Authorities are becoming more adept at identifying potential culprits, carrying out extensive investigations, and in some cases, bringing those behind these frauds to justice. But what about the victims? 

In the case of V Global, a cryptocurrency multi-level marketing scheme based in South Korea, victims balked at the prospect that the criminals behind it could serve as little as three years in prison for defrauding customers and demanded that maximum sentences be imposed. The call for stiff punishment is often the case when stolen funds are hard to trace and victims despair of fund recovery. 

However, in some cases, funds can be traced and returned to customers, but it is often not the amount that they originally invested. Other victims go through legal avenues to ask for compensation from the crypto exchange. Others still may attempt to negotiate with fraudsters to get their money back rather than going through official channels. 

What is the best solution for victims of crypto schemes? That may well depend on the individuals involved and what they would like to see happen. There is no doubt, however, that almost everyone who has been the target of cyber fraud would like to get their money back. While this can never be guaranteed and the likelihood of compensation depends on the dynamics of each case, professionals who are experts at tracking crypto transactions can help. 

MyChargeBack assists victims of cryptocurrency crimes track down their funds on the blockchain. We offer a variety of services, including consultation, case analysis and we also create intelligence reports that will give law enforcement and crypto exchanges the full picture and will help them pursue your case. 

The Problem with the V Group Case

The V Group pretended to be a cryptocurrency trading platform, and like any multi-level marketing (MLM) scheme, it encouraged customers to recruit others. However, many of the estimated 52,000 V Group users complained that they were not able to withdraw their cryptocurrency. 

A total of 14 V Group executives are standing trial in Seoul, but a group representing the victims claim that number should be closer to 40. In addition, the victims object to the light three-year sentence each must face if they are found guilty. 

“The platform is not making any effort to return victims’ investment money, which they acquired through unfair means,” the victims said in a joint statement. “They should be handed the maximum sentence available by the court. The judge should issue the sentence accordingly.”

It is estimated that VGroup robbed investors of the equivalent of a total of $2 billion U.S. dollars, although investigators have managed to freeze just $214 million in company assets. This is only a fraction of the total estimated losses, therefore, and it could be all that will be available in compensation to  the victims unless the investigators succeed in recovering more of the stolen funds. 

Judging from the victims’ statements, it appears the desire for a longer sentence is emotional compensation for the fact that each one may receive only a fraction of the money invested.

Rights and Regulations

It seems like common sense that anyone who has been the target of fraud should get their money back. However, this is not always possible, given how often money is laundered and the challenge of tracking funds down. 

This is one reason it is advisable to work only with a regulated broker or a licensed cryptocurrency platform. Regulators can take actions that make customer fund recovery more likely. For instance, when a customer complains to a regulator, they can insist that the disputed funds be frozen until the investigation is complete. If the customer is fortunate, this will be the total amount that they initially paid and invested. 

The problem with unregulated financial services is there is no regulator to pay special attention to a customer’s complaint. Although government regulators may try to work on behalf of individuals, the sheer number of cases and complaints can make the chances of restoring funds to customers remote. That is why many investors choose to also work with a third-party service, like MyChargeBack to track down funds. 

Punishment of Offenders

As is seen in the VGroup case, victims can make a compelling case that those responsible for fraud should be brought to justice promptly and serve appropriate sentences. This may seem to offer some justice for victims, but it doesn’t solve the problem of the missing funds. 

Negotiating with Exchanges

The opposite scenario from VGroup involves an attempt to work through non-official channels to deal with the crypto exchange or the suspected crypto criminals directly. It can be a challenge to track them down, but once this has been done, the person who has lost their money may decide to negotiate with them to get their money back. 

Although this has been successful on occasion, it virtually never happens if the customer attempts to address the issue alone. It can be successful only when independent experts track the funds. Because of fear of exposure, or in the case of the platform, concern over the adverse effect to its reputation, they may decide to refund investors if they think they have the backing of professionals who know how to make things difficult for the fraudsters.

What About Compensation?

Court in various countries are finding ways to compensate victims for losses to crypto schemes. This may be necessary if actual funds can’t be recovered promptly. Currently, the courts are quite willing to require crypto platforms to freeze specific accounts and provide information about the identities of people who hold specific wallets if evidence points to them as a suspect. 

The Likelihood of Fund Recovery from Crypto Schemes

More people are recovering their funds from crypto schemes with the help of professionals skilled in forensic methods and can investigate blockchain transactions. This is the best course of action to track down crypto schemes and to improve your chances of retrieving your money. 

MyChargeBack Will Help You Find Your Funds on the Blockchain

If you have lost money to a cryptocurrency scheme, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have extensive knowledge and working relationships with regulators and more than 450 law enforcement agencies around the world, as well as the solutions that can improve your prospects of getting your cryptocurrency back.