D.A. Bragg Announces Charges Against Man Who Used Scam Crypto Recovery Website To Steal From Hopeful Customers

D.A.'s Office Seized Website in June 2023

Manhattan District Attorney Alvin L. Bragg, Jr., today announced charges against MICHAEL LAUCHLAN, for stealing from customers of Coin Dispute Network ("CDN"), his sham cryptocurrency asset recovery business, which claimed it could trace and recover cryptocurrency in exchange for a fee. Instead, LAUCHLAN and the company not only kept the fee but extracted additional Ethereum from at least 3 customers by making false promises of asset recovery and creating false blockchain tracing reports. LAUCHLAN is charged in a Manhattan Criminal Court Complaint with Grand Larceny in the Third and Fourth Degree, and two counts of Scheme to Defraud in the First Degree.[1]

In June 2023, the D.A.'s Office seized CDN's domain, marking the first time a cryptocurrency recovery site, which have increased in popularity in recent years, has been taken down by the Manhattan District Attorney's Office. The website now displays a notice alerting potential victims about the site's seizure pursuant to a court order.

"This complaint alleges a cutting-edge approach to a crime as old as time," said District Attorney Bragg. "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. This investigation is ongoing. If you believe you may have been scammed by Coin Dispute Network, please call us at 212-335-9600."

"Michael Lauchlan allegedly exploited his customers' lack of experience with the cryptocurrency industry and in turn fleeced them out of thousands of dollars in sham services and stolen assets. Today, his alleged false promises and shady business dealings have caught up with him," said HSI New York Special Agent in Charge Ivan J. Arvelo. "I commend HSI New York's Document and Benefit Fraud Task Force and the Manhattan District Attorney's Office for their tremendous collaboration in confronting this emerging issue directly."

According to court documents and statements made on the record in court, between July 2022 and June 2023, CDN, operating through coindisputenetwork.com, offered blockchain analysis and tracing; investigative reports; assistance disputing and recovering transactions; and monitoring and tracking funds to perform stop-recovery attempts.

LAUCHLAN, using the alias "Max Handler," purported to be CDN's Vice President and Chief Recovery Officer. He populated CDN's website with falsified news articles and fictional testimonials to gain potential clients' trust. Clients first paid an initial consultation fee in Ethereum to speak with a "recovery analyst." LAUCHLAN then falsely claimed to know where clients' cryptocurrency had been moved and promised to successfully recover it in exchange for an additional fee, also payable in Ethereum, sending clients emails with false information and documentation purporting to show company activity throughout.

Since launching the investigation, the D.A.'s Office has spoken with more than 175 CDN customers - none of whom were able to recover any cryptocurrency using CDN. Through blockchain analysis, the Office identified approximately $14,000 of cryptocurrency belonging to CDN users that was transferred to CoinEx, a cryptocurrency exchange. In Spring 2024, the D.A.'s Office executed a seizure order and the funds were transferred to addresses in its control for the pendency of the investigation.

Assistant D.A. Virginia Nguyen (Deputy Chief of the Cybercrime and Identity Theft Bureau) is handling the prosecution of this case under the supervision of Assistant D.A. Jeremy Glickman (Chief of the Cybercrime and Identity Theft Bureau) and Executive Assistant D.A. Jodie Kane (Chief of the Investigation Division). Cryptocurrency Analyst James Miller and Senior Rackets Investigators Patrick Ludlow and Thomas Mullin, working under the supervision of Greg Dunlavey, are assisting with the case. The High Technology Analysis Unit provided invaluable support. Former Assistant D.A. David Ginensky, former Cryptocurrency Analyst Kelly Kenny, former Senior Rackets Investigator Ethan Zubkoff also assisted with the investigation.

The District Attorney's Office thanked the New York and Las Vegas Field Offices of Homeland Security Investigations, and Customs and Border Protection for the invaluable assistance in the arrest of LAUCHLAN at Harry Reid International Airport in Las Vegas Nevada on July 9, 2024.

Defendant Information

MICHAEL LAUCHLAN

Las Vegas, Nevada

Charges:

• Grand Larceny in the Third Degree, a class D felony, one count
• Grand Larceny in the Fourth Degree, a class E felony, two counts
• Scheme to Defraud in the First Degree, a class E felony, two counts

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[1] The charges contained in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.

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