A man who operated a purported crypto asset recovery business has been arrested and is now facing criminal charges for allegedly defrauding dozens of people.
In a statement, Manhattan District Attorney Alvin L. Bragg, Jr. says that Michael Lauchlan has been charged with stealing from customers of Coin Dispute Network (CDN), which claimed it can trace and recover crypto assets for a fee.
Lauchlan, who used the alias “Max Handler” and presented himself as the Vice President and Chief Recovery Officer of CDN, allegedly posted fake news articles and testimonials on CDN’s website to gain the trust of potential clients.
According to court documents and statements from victims, clients initially pay a consultation fee in Ethereum (ETH) to speak with a supposed recovery analyst.
Lauchlan would then make false claims that he knew where the crypto assets were moved and sent clients falsified blockchain tracing reports.
Lauchlan then promised customers that he could recover their assets for an additional fee, but none of the 175 CDN customers that were interviewed were able to recover any cryptocurrency.
The investigation revealed that about $14,000 worth of the crypto assets belonging to CDN users were transferred to crypto exchange CoinEx, but a seizure order enabled the DA office to transfer the funds to an address that it controls.
Says Bragg,
“By manipulating customers with false promises and pocketing a fee, Michael Lauchlan allegedly engaged in a scheme that defrauded dozens of people and stole from at least three New Yorkers. This investigation is ongoing. If you believe you may have been scammed by Coin Dispute Network, please call us at 212-335-9600.”
The CDN website was taken down in June 2023 and now displays a notice alerting potential victims about the site’s seizure.
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