NEW YORK (1010 WINS/WCBS 880) – A man was charged with stealing from customers of his fake cryptocurrency asset recovery website, which claimed it could trace and recover cryptocurrency, prosecutors announced on Thursday.
Michael Lauchlan allegedly stole from customers of Coin Dispute Network (CDN) by not only keeping the initial fee but also extracting additional Ethereum from at least three customers through false promises of asset recovery and creating fake blockchain tracing reports, Manhattan District Attorney Alvin Bragg said.
In June 2023, CDN's domain was seized, marking the first time it was taken down by the DA's office.
“This complaint alleges a cutting-edge approach to a crime as old as time,” Bragg said. “By manipulating customers with false promises and pocketing a fee, Michael Lauchlan allegedly engaged in a scheme that defrauded dozens of people and stole from at least three New Yorkers.”
According to court documents, between July 2022 and June 2023, CDN offered services like blockchain analysis, tracing, investigative reports, help with disputing and recovering transactions, and monitoring and tracking funds. To gain client trust, Lauchlan allegedly filled CDN's website with fake news articles and testimonials.
Lauchlan, allegedly using the fake name "Max Handler," pretended to be CDN's vice president and chief recovery officer. Clients paid in Ethereum to speak with a "recovery analyst." Lauchlan then allegedly lied about knowing where clients' cryptocurrency had been moved and promised to recover it for an additional fee, also in Ethereum, sending them fake emails and documents.
The D.A.'s office has talked to more than 175 CDN customers, none of whom recovered any cryptocurrency using CDN. The office found about $14,000 of cryptocurrency belonging to CDN users that was transferred to CoinEx, a cryptocurrency exchange. Investigators then seized these funds and transferred them to addresses under its control for the investigation.
An investigation is ongoing.
Lauchlan is charged with grand larceny and two counts of scheme to defraud.