Why Crypto Exchanges Don’t Stop Illegal Schemes

By Evan Spicer
Director of Cryptocurrency Investigations

You may have seen news stories about merchants and crypto exchanges compensating customers if their platform gets hacked. However, if individual accounts are breached by cybercriminals, the story could be quite different. 

One would think a platform would take at least partial responsibility if one of its users swindles another. However, on closer inspection, there is often little these platforms are willing to or may be able to do to help consumers track down crypto schemes. 

However, MyChargeBack professionals provide solutions for people who have lost money to broker schemes and crypto frauds. MyChargeBack assists victims of cryptocurrency schemes to 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. 

Hackers, Schemes and Crypto Platforms

In case, a man from Indiana named Dan Tiberi received a notice from T-Mobile that he changed his password, but he didn’t. It was a hacker that convinced T-mobile to transfer his service to another phone. The hacker then gained access to Tiberi’s Coinbase account and stole $7,300 worth of Ethereum. 

When Tiberi complained to Coinbase, the platform said that although it protects customers against hacks on their platform, they can’t do anything about specific account takeovers. Tiberi felt frustrated by the reply he received from Coinbase, and reported to CBS that Coinbase told him, “Once a transaction has started, they can’t stop it, and they are able to collect funds for that transaction that was completed by the hacker.” 

When Crypto Exchanges Help and When They Don’t

Tiberi’s frustration is shared by many others who have been swindled by crypto schemes on exchanges. The central irony that Tiberi has pointed out is addressed often when customers seek legal action. 

Why should the exchange make money from transactions which they know are fraudulent? Why should anyone but the customer have access to these funds? Ideally, shouldn’t the funds be frozen so no one should benefit from them at least until the matter is investigated? 

Actually, in many cases, suspected funds can be frozen, but often a platform will only do this when there is evidence that the account is held by a suspected fraud and even then, only through a court order. The sad reality is that there are so many illegal crypto schemes that platforms can’t necessarily act upon every complaint. They will usually only take action and freeze accounts when confronted with evidence from third-party experts or law enforcement. 

MyChargeBack professionals often find that crypto exchanges will only freeze accounts when the customers have filed a complaint and can prove that they have approached law enforcement first or have received a judge’s decision. 

Why don’t crypto exchanges take action themselves? One reason, as mentioned above, is the sheer scale of the problem of illegal crypto schemes. The other is that a cryptocurrency platform, in some cases, may not be liable for what occurs in individual accounts, but is liable for losses if their platform, in general, is hacked. That may be the reason they offer compensation in the former case but not the latter. 

How Our Professionals Work With Crypto Exchanges on Behalf of Customers

Although crypto exchanges may not freeze an account or a transaction based on the complaint of an individual customer, they will do so when law enforcement or a third party gets involved. A similar case occurs with bank wire fraud and attempts to freeze accounts or transactions. 

For instance, when a person loses money to a fraudulent party through a bank account, the bank will not simply freeze an account based on a single customer’s complaint. If they did, they would be freezing thousands of accounts based on mere allegations and they would impede their ability to do business and deliver services reliably to their customers. 

People can be the target of sabotage through malice or by competitors. Naturally, platforms will investigate complaints before acting on them, but usually, there isn’t enough time or resources to thoroughly investigate them all. 

Although it may be frustrating feeling that a bank or a crypto exchange is not taking complaints seriously, it can be reassuring to know there are steps customers can take to freeze funds of suspected fraud. The key is acting quickly and knowing who to talk to. 

MyChargeBack consults with our clients and maps out a personalized strategy to track down bitcoin transactions, unmask fraudsters, and involve crypto exchanges and law enforcement. We begin with a consultation during which we gather information about the transaction and will analyze the case and estimate the chances of success. 

If we accept a case, our experts may ask for more information from customers before using a coin tracker or bitcoin block explorer to isolate the individual transaction and account. Once we have located the account, we use specialized software that will go into minute detail into the account’s history, including intermediary accounts money was transferred to and data about them. 

This detailed mapping provides clues that we further examine through cryptocurrency forensic methods through which we can see patterns. With additional evidence and information from our extensive databases, we can narrow down possible suspects and locations. You can then bring this intelligence report to law enforcement and crypto exchanges with a request to freeze accounts and demand a criminal investigation. 

These strategies are more likely to succeed than a simple complaint to a crypto platform that is likely to get lost in the shuffle. There is no need to wait for additional complaints to compel crypto exchanges to take action. You can improve your chances of fund recovery by taking action right away and working with crypto investigation professionals. 

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.