‘The ingenuity of fraudsters is limitless’ - quartet of law firms unveil network to help police cryptoassets

Osborne Clarke, RPC, Stewarts and Rahman Ravelli team up with barristers, forensic accountants and asset recovery specialists
Portrait photographs of Vijay Rathour (left) and Sam Goodman

Vijay Rathour (left) and Sam Goodman

Four UK law firms have teamed up to help develop the legal framework for crypto dispute resolution and asset recovery.

Osborne Clarke, RPC, Stewarts and Rahman Ravelli are founding members of the Crypto Fraud and Asset Recovery network (CFAAR), alongside barristers from Twenty Essex and Essex Court Chambers and forensic accountants and asset recovery specialists Grant Thornton and Asset Reality.

The network’s mission is to create ‘an inclusive community that will host regular meetings, seminars, roundtables, conferences and social events’ in order to develop and share best practice. It also sets out to provide ‘an authoritative and independent voice in crypto-related judicial and regulatory reviews and consultations’. An in-person launch event in London is planned for October.

The network’s participants have developed experience in crypto-related disputes, drawn from investigations, disputes and asset tracing and recovery work.

“The ingenuity of fraudsters to extract value from victims is limitless,” said Grant Thornton partner Vijay Rathour, who maintained that the high value placed on technical innovation around cryptoasset secrecy “challenges society to find effective solutions for [their] recovery”.

Barrister Sam Goodman, at Twenty Essex, added that there had already been “a surge of increasingly complex issues requiring more technical expertise and practical guidance”.

Globally, pressure is growing to improve the regulation of the digital asset market, which reached a major landmark in April when cryptocurrency exchange platform Coinbase listed on Nasdaq at a valuation of roughly $85bn.

Last week, SEC chairman Gary Gensler likened the cryptocurrency market to the Wild West and pledged to deploy the SEC’s existing powers to regulate it as tightly as possible while also calling on lawmakers to give him greater powers to protect investors from “fraud, scams and abuse”.

In November 2019, a legal taskforce set up by the UK government published a legal statement that set out to clarify key issues including ownership and transfer of crypto assets and whether they should be treated as a property or goods. 

The statement was referred to in a landmark New Zealand judgment last year, in a dispute that arose following the collapse of the New Zealand cryptocurrency trading exchange Cryptopia, which determined that cryptocurrencies were ‘property’ and capable of being held on trust.

“The commerciality and adaptability of English common law make it ideal for resolving the complex and fundamental legal issues that arise in crypto disputes,” said Stewarts partner Marc Jones. 

However, he warned that disputes are not easy, as “the underlying technology is fiendishly difficult, rapidly changing and demands specialist expertise to support any legal effort”. 

The network’s launch was welcomed by Lord Collins of Mapesbury, a former UK Supreme Court justice and Herbert Smith Freehills partner, who said he feared London’s status as a leading financial centre made it vulnerable to crypto fraud.

“Where there is innovation, criminals are not far behind,” he warned. “The latest example is crypto fraud. Criminal enforcement is not a sufficient remedy for victims. The professions have to arm themselves to help clients who have been the victims of fraudsters who offer unbelievable returns in fake offerings, or who create false cryptoassets and false exchanges, and then hide the proceeds of crime through complex webs."

Last week, West Realm Shire Services, which owns US cryptocurrency exchange FTX.US, hired Sullivan Cromwell partner Ryne Miller. Law firms are also ramping up their crypto expertise in anticipation of growing regulatory oversight. In June, K&L Gates hired a duo of crypto lawyers – Andrew Hinkes and Justin Wales – from Carlton Fields to boost the firm’s US fintech practice in Miami and Los Angeles.

Those wanting to register their interest in becoming a member of CFAAR are invited to join its LinkedIn group.


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