Key Points
- Michael Lauchlan, a Las Vegas resident, has been charged with operating a fraudulent cryptocurrency asset recovery business called Coin Dispute Network (CDN). CDN allegedly stole from customers seeking to recover lost crypto assets.
- The investigation marks the first time a cryptocurrency recovery site has been taken down by the Manhattan District Attorney’s Office, highlighting the growing focus on combating fraud in the crypto industry.
On August 5, 2024, the Department of Homeland Security announced that a Homeland Security Investigations (HSI) New York task force investigation has resulted in charges against Michael Lauchlan for operating a sham cryptocurrency asset recovery business. Lauchlan, a Las Vegas resident, is accused of stealing from Coin Dispute Network (CDN) customers, which claimed to offer services such as blockchain analysis, tracing, and recovery of lost cryptocurrency in exchange for fees.
According to the investigation, between July 2022 and June 2023, CDN operated through CoinDisputeNetwork.com, offering various services related to cryptocurrency recovery. Lauchlan, using the alias “Max Handler,” posed as CDN’s vice president and chief recovery officer. To gain potential clients ‘ trust, he allegedly populated the company’s website with falsified news articles and fictional testimonials.
The scheme involved clients paying an initial consultation fee in Ethereum to speak with a “recovery analyst.” Lauchlan would then falsely claim to know where clients’ cryptocurrency had been moved and promise to successfully recover it in exchange for an additional fee, also payable in Ethereum. He allegedly sent clients emails with false information and documentation purporting to show company activity throughout the process.
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 investigation revealed that more than 175 CDN customers were interviewed, and none were able to recover any cryptocurrency using the service. Through blockchain analysis, investigators identified approximately $14,000 of cryptocurrency belonging to CDN users transferred to CoinEx, a cryptocurrency exchange.
Lauchlan has been charged in a Manhattan Criminal Court Complaint with grand larceny in the third and fourth degrees and two counts of scheme to defraud in the first degree. In June 2023, the Manhattan District Attorney’s Office seized CDN’s domain, marking a significant step in combating cryptocurrency-related fraud.
Manhattan District Attorney Alvin L. Bragg, Jr. commented on the case: “This complaint alleges a cutting-edge approach to a crime as old as time. 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.”
The investigation was conducted by HSI’s Document and Benefit Fraud Task Force, a specialized investigative group comprising personnel from various state, local, and federal agencies. The task force focuses on detecting, deterring, and disrupting organizations and individuals involved in multiple documents, identity, and benefit fraud schemes.
Lauchlan was arrested on July 31, 2024, at Harry Reid International Airport in Las Vegas, with assistance from HSI’s Las Vegas Field Office and U.S. Customs and Border Protection.
This case highlights the ongoing challenges in the cryptocurrency industry and the importance of remaining vigilant against potential scams. The Manhattan District Attorney’s Office encourages anyone who believes Coin Dispute Network may have scammed them to contact them at 212-335-9600.
As cryptocurrency-related crimes evolve, law enforcement agencies adapt their strategies to combat these emerging threats and protect consumers in the digital asset space.
