The firm said that with cryptocurrencies rising in popularity among retail investors, more fraudsters were keen on taking advantage of those who are inexperienced in the area, especially through “get-rich-quick” schemes.
Pinsent Masons also expressed concern about the “disproportionately large” percentage of vulnerable investors becoming victims of cryptocurrency fraud.
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“This rising tide of cryptocurrency fraud shows no sign of peaking,” said Hinesh Shah, senior associate forensic accountant and financial crime investigator at Pinsent Masons, in a statement obtained by the Financial Times. “The police are now swamped with reports and cannot place adequate resources on these investigations.”
Shah added that UK civil courts could help track down fraudsters and reclaim stolen funds.
“There is a misconception that cryptocurrencies cannot be traced but the point of blockchain technology is transparency: transactions on the blockchain are traceable,” he said. “Legitimate crypto institutions that want to stay on the right side of regulators and enforcement agencies will cooperate with a UK court order and freeze the stolen assets.”
However, for those who lost small amounts, pursuing class actions together, either against the fraudsters or the financial institution that enabled the cybercrime may be the way to go, according to Jennifer Craven, civil fraud and asset recovery specialist at Pinsent Masons.
“The perception that there is nothing a victim can do to pursue crypto fraudsters is far from accurate,” she said in the statement. “However, pursuing a civil claim is not cheap and if you have been defrauded of one or two thousand pounds the economics wouldn’t stack up.”
Read more: Blockchain: What is it and what does it mean for insurance?
Shah said he expects regulators to put more pressure on cryptocurrency…
