Crypto-Related Fraud

crypto investment fraud

Cryptocurrency, often referred to simply as “crypto,” represents a revolution in digital currency and online transactions.

But with increasing scrutiny from regulators and law enforcement, some investors have been unexpectedly thrust into legal battles over alleged crypto investment fraud.

What Is Crypto-Related Fraud?

Cryptocurrency fraud involves deceptive practices that exploit the vulnerabilities of digital currencies and exchanges. As cryptocurrency adoption grows, so does the sophistication and prevalence of crypto investment scams.

Recently, the FBI reported an alarming rise in cryptocurrency investment schemes, with overseas criminals allegedly stealing more than $2 billion in one recent year. Fraudsters typically approach victims through dating apps, social media platforms, or encrypted messages to build rapport. As trust develops, they tout their alleged crypto expertise, luring victims to sham websites. There, victims are urged to invest, only to discover later they cannot access their profits or have no profits at all.

The FBI also reports that cybercriminals are capitalizing on decentralized finance (DeFi) platform vulnerabilities. From January to March 2022, a staggering $1.3 billion in cryptocurrencies were stolen, and a whopping 97 percent came from DeFi platforms.

Common Types of Crypto Fraud

Because crypto is decentralized and digital in nature, investigating crypto fraud can be challenging. Some prevalent types of crypto fraud include the following:

  • Crypto Ponzi Schemes: In crypto Ponzi schemes, investors are promised high returns, but earlier investors get paid using new investors’ funds until the system inevitably collapses.
  • Fake ICOs (Initial Coin Offerings): Scammers create bogus ICOs with attractive promises and, after raising funds, disappear, taking investors’ money with them.
  • Crypto Wallet Phishing Attacks: In these attacks, individuals are deceived into giving out their crypto wallet details. Fraudsters then access and empty these wallets.
  • Crypto Mining Scams: In these scams, fraudsters promise lucrative returns from crypto mining. People invest, but no actual cryptocurrency mining ever takes place.
  • Crypto Recovery Scams: Targeting past fraud victims, scammers offer to recover lost funds for an upfront fee, only to disappear or demand more money.
  • Unregistered Offerings: New cryptocurrency tokens are sold without proper registration, deceiving investors into thinking they’re making legitimate purchases.

Penalties for Crypto Fraud

Crypto fraud is illegal at the federal and state levels. A crypto fraud conviction could have severe penalties, including substantial fines, asset seizure, and prison time, depending on the scale and nature of the offense.

If you are facing crypto fraud accusations or charges in Dallas, a seasoned defense attorney can protect your rights and challenge the evidence against you by:

  • Analyzing the charges against you and identifying weaknesses in the prosecution’s case
  • Working with blockchain forensics experts to investigate digital transactions
  • Reviewing transaction histories to establish patterns that refute fraudulent intent
  • Challenging the admissibility of improperly obtained evidence in court
  • Consulting cybersecurity experts to establish the security of digital wallets and exchanges
  • Negotiating with prosecutors for reduced charges or alternative resolutions
  • Educating the court on the nuances of cryptocurrencies and their underlying technologies
  • Suggesting potential restitution or corrective actions that could mitigate penalties
  • Recommending asset protection strategies to shield legitimate holdings from seizure

Contact Broden & Mickelsen if You Are Facing Crypto Fraud Charges

Facing crypto fraud accusations can be daunting, but remember you’re not alone. With more than 60 years of combined criminal defense experience, Broden & Mickelsen, LLP can offer the comprehensive representation you deserve. We have extensive experience defending clients charged with various state or felony offenses, including white collar crimes. Contact us now to get started with your free consultation.


At Broden & Mickelsen, LLP, we are experienced Dallas criminal defense lawyers are dedicated to providing aggressive and ethical representation to individuals and businesses charged with crimes.