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Cryptocurrency crime

Digital currencies have resulted in new and evolving law. If you find yourself in a position where you are being investigated or prosecuted due to your personal or business use of cryptocurrencies, including Bitcoin, it is vital that you seek legal advice immediately. Our specialist team of criminal defence solicitors at Stephensons are available to provide you with tailored, expert legal advice and the representation you require. 

Call us on 0161 696 6188 or fill in our online enquiry form and we will be in contact with you as soon as possible.

What is cryptocurrency? 

Cryptocurrency is digital money, where there is no physical coin or note as it is all online and it is stored within your digital wallet. The first and perhaps most well-known cryptocurrency is Bitcoin, which launched in 2009. In recent years there have been a surge in the use of cryptocurrencies, and towards the end of 2017, Bitcoin’s market cap exceeded $100 billion making it worth more than a number of US companies, including eBay. 

 Other examples of cryptocurrencies include Ethereum, Chainlink, Cardano, Cosmos and Litecoin

Cryptocurrency crime

The main criminal offences relating to cryptocurrency are fraud and money laundering. As the usage of legitimate cryptocurrency is increasing, the amount of crypto crime has in fact been reducing. In 2020, crypto crime reduced by 57% in 2020 compared to 2019. 

In 2020, $3.5 billion worth of bitcoin was sent from criminally associated bitcoin addresses relating to the dark market, ransomware actors, hackers and fraudsters. This bitcoin will need to be laundered, meaning it will be included in an exchange where it can then be converted into other currency (like Sterling) and transferred to a bank. 

Cryptocurrency scams 

The nature of scams that are being reported involve claimants who have been told to pay with cryptocurrency, due to the fact there is less protection for these payments in comparison to payments made using the British pound. If you make a purchase on your debit or credit card, there are legal protections designed to protect your rights and help you retrieve your money. Crypto transactions are not afforded the same level of protection, especially as the transactions and accounts are not easily connected to real-world identities. 

 As crypto is still relatively new and the future success of it is still being debated and assessed, this is a prime time for scammers to benefit by persuading people to invest in a product that they don’t understand and entice them to entrust a large amount of money with them. This is often conducted through social media and cold calls. The scams may ask you to sign up to an investment website and enter personal details such as your credit card details and drivers licence in order for you to open a trading account. Once you have parted with your money, it is common for the website to be deactivated resulting in the claimant losing their money, personal details being used for further crime and the suspect being uncontactable. 

Crypto is very volatile and the price of it can drastically change hour by hour. Like with any investment, your money will be at risk.

The key red flags to look out for in relation to cryptocurrency scams include: 

  • Guarantees that you will make money
  • Promises of big pay-outs that will double your money in a short time
  • Promises of free money in British pounds or cryptocurrency
  • Making large claims about the success of their company which are not clear 

Mining

All Bitcoin transactions from the last ten minutes are bundled together into a “transaction block”. Bitcoin “miners” get transaction blocks from a shared log, then by using specialised computer equipment, they race to verify the transaction by solving a puzzle. The winning miner is awarded 25 newly created bitcoins. 

Cryptojacking 

This is where scammers have used the claimant’s computer or smartphone’s processing power in order to mine for crypto for their own benefit, without the claimant’s permission. Scammers aim to entice you to view a website, and by simply viewing the website attaches a harmful code onto your device, meaning they are able to access your device without you being aware. 

There are several indicators that this has happened to your device, which include your device being slower than usual, burning through your battery power quickly and device crashes. 

Basic ways to protect yourself against attacks such as this is by using antivirus software, not installing software from apps you do not trust and not clicking links or websites you are not sure of.

Cryptocurrency- 2019 v 2020 

CipherTrace’s 2020 Cryptocurrency Crime and Anti-Money Laundering Report has shown $1.9 billion was totalled through major crypto thefts, hacks and frauds, making it the second-highest value in crypto crimes ever recorded, following a value of $4.5 billion in 2019.

The average value involved in this type of crime was 160% higher in 2019 than in 2020. This figure does indicate that there is growing maturity surrounding cryptocurrency as systems have been hardened and more precautions have been taken to mitigate inside and outside threats. 

HMRC’s response to cryptocurrency

HMRC has made their stance very clear in relation to cryptocurrency. Using crypto is not a way for people to avoid paying tax that would ordinarily be due had the transaction be made in currency such as the British pound. VAT, income tax, corporation tax and capital gains tax will still apply. HMRC appreciates that as crypto becomes more popular, the risk of money laundering and non-compliance with HMRC’s tax regulations, as well as the FCA’s financial regulations, becomes more increased.  

 What should I do if I’ve been accused of a cryptocurrency crime? 

Being faced with allegations of cryptocurrency related offences is a very serious matter and can be a very distressing time. This is due to the potential consequences offences such as fraud and money laundering can bring, as well as the damage it can cause to your or your business’ reputation. As the laws and regulations surrounding cryptocurrency continue to change, along with more people attempting to get involved and benefit legitimately from the use of cryptocurrencies, it is understandable that genuine mistakes may be made. 

Here at Stephensons we understand how crucial it is to guide you through any investigative process you may be facing, and provide representation in order to defend your case in the best possible way if you are at risk of prosecution. If you do require our assistance please do not hesitate to contact us on 0161 696 6188 request a call back or complete an enquiry form.

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