It is not clear exactly what the seizure means in practical terms besides a splash page logo on the company’s website. CDN has said for at least the past 10 days that it is no longer accepting new clients. In a press release, the Manhattan DA’s office said that a criminal investigation is ongoing.
Cryptocurrency recovery companies entice victims of cryptocurrency-fueled scams by saying they can help get stolen crypto back, simply by paying a fee upfront to conduct a cryptocurrency trace. Typically, such companies then write a report detailing the movement of the cryptocurrency transactions, which is theoretically meant to assist law enforcement in recovering stolen funds. Then, if successful, the firm – like CDN – takes a cut of all recovered funds.
But, in a statement, the Manhattan DA’s office said that in practice, CDN “not only kept the fee but extracted additional Ethereum from their customers by making false promises of asset recovery and generated inaccurate blockchain tracing reports to victims.”
Manhattan D.A. Alvin Bragg said that his office has been investigating CDN since November 2022. “We want victims of the Coin Dispute Network – no matter where you are – to come forward as we work to hold these bad actors accountable and prevent future fraud,” he said in a statement.
Coin Dispute Network did not respond to Forbes’ requests for comment. Often, such victims have been exploited by pig butchering, a new type of online con perpetrated by overseas scammers who “fatten” them up – making them believe they have made boatloads of money in cryptocurrency often using manipulated apps and websites – before absconding with their money. Experts say billions of dollars are lost to this type of pernicious scheme each year. In truth, recovering money lost to crypto scams is extremely rare, even when law enforcement becomes involved.
In February, Forbes reported on crypto recovery companies, including CDN, finding that there is little evidence that these services routinely work as advertised. Law enforcement and consumer protection agencies routinely warn against the efficacy of such purported services.
Earlier this year, Max Handler, CDN’s vice president, emailed Forbes to tout his company’s bona fides. “At the end of the day we’re crypto nerds that genuinely like helping people and who hate to see people getting taken advantage of,” he wrote, declining to provide many details about his company and its operations.
Since the Wednesday domain seizure, CDN’s LinkedIn page has made no reference to the legal trouble, and its YouTube page no longer has videos that are publicly available. However, a cached copy of the company website from May 31 states: “we are no longer accepting new clients.” Its Twitter account has not been active since February.