top of page
Picture1.png

Wash Trading and Market Manipulation

  • We investigated suspected fraudulent trading practices by a token issuer on a decentralized crypto exchange, focusing on wash trading in several token pairs to inflate reported volumes. Analysis revealed sophisticated strategies including the creation of thousands of related addresses trading tokens exclusively among themselves, and offsetting trades with reverse token transfers/payments. Comparative analysis of token trading patterns relative to established trusted exchanges and scrutiny of the issuer's social media presence supported the findings of pervasive wash trading accounting for more than 90% of reported trading volume. As a result of the written expert testimony, claims against the client were withdrawn, leading to a settlement.

 

  • Other projects involved rebuttal of claims of manipulation via price supports.

Response to Regulatory Inquiries into ICOs

The outside counsel of an Initial Coin Offering (ICO) issuer engaged expert services to respond to a US Securities and Exchange Commission (SEC) inquiry. The expert reviewed transactional data and blockchain wallet activity to verify investment fund inflows, token distribution to purchasers, transactions between the issuer and affiliated persons, and the accuracy of public disclosures by the issuer. Expert performed wallet ownership attribution, traced cryptocurrency investment funds flow onchain, prepared a report on the ICO ecosystem, reviewed the token safe smart contract code, and matched issued and distributed tokens to investor payments. He also verified public disclosures against blockchain activity.

Picture2.jpg
Picture4.jpg

Security or Not Security?

Experts in economics and computer science were engaged to counter the SEC claims that a cryptocurrency was a security under the 1933 Securities Act. Expert work was performed on behalf of several token issuers including Kik Interactive, Telegram, LBRY, Ripple, and others. Experts analyzed and provided written testimony on non-investment uses of crypto assets, on-chain and off-chain activity, degree of decentralization of wallet holdings, token distribution by investor, blockchain project readiness and use cases, code completeness, econometric studies of material factors of token price, and project funding history. Expert opinion often involved examination of the applicability of Howey Test to specific blockchains and their native assets.

Blockchain Analytics and Asset Tracing

Multiple projects involving:

  • Tracing multiple crypto assets in marital disputes.

  • Tracing cross-chain cryptocurrency transfers via Wormhole bridge as part of investigation into Terra peg defense by Luna Foundation Guard.

  • Tracing crypto sales via OTC broker, centralized exchange and DEX gateway.

  • Wallet labeling and tracing BTC and ETH stolen from a crypto mining company.

  • Tracing transfers between darknet markets and ransomware wallets and several crypto exchanges and P2P platforms. 

  • Assessing volumes of multi-hop transfers between unhosted wallets, DeFi protocols and centralized exchange deposit addresses. 

image.png
Picture3.png

Crypto Disputes and Damages Assessment

  • Assessing damages in crypto cases is complex when including initial token allocation and accumulated staking rewards. Analyzing block rewards, coinbase transactions, staking deposits, and addresses is essential for estimating cumulative rewards, especially in Proof-of-Stake blockchains where these rewards can significantly impact overall damages. We have been retained to evaluate damages in a dispute involving a Proof-of-Stake blockchain company.

  • Damages estimation requires proper valuation discounts for tokens to adjust for restrictive covenants and market illiquidity. 

  • Dispute between a blockchain company and a co-founder

  • Dispute between a crypto mining company and its executive

  • Dispute related to a failure of a crypto bank.

​

Crypto Asset Valuation

  • Valuation of several crypto assets for tax purposes as part of corporate restructuring of a blockchain company providing services on Cardano network.

  • Valuation of a large cryptocurrency estate and expert testimony as part of a dispute with the IRS.  Asset valuation included empirically and econometrically estimated price discount due to (1) token selling restrictions and (2) regulatory risk. We used a novel option theory-based method to quantify the token price discount attributable to the US regulatory and enforcement risk.

image.png

Expert Work in Criminal Crypto Matters

image.png

On behalf of the founder of a cryptocurrency trading platform indicted for  alleged failure to implement proper AML/KYC compliance protocols to prevent darknet market and ransomware wallet cryptocurrency transfers, we were engaged to submit an expert report and to examine:

  • validity of the alleged volume of illicit crypto transfers into and out of the platform​

  • contemporaneous feasibility of implementing robust real-time transaction monitoring and wallet risk scoring  solutions at the time of alleged illicit transfers

  • history of AML/KYC compliance efforts of the founder and his team

  • whether the volume of illicit finance transfers of the platform was significant in comparison to illicit transfers facilitated by much larger crypto exchanges accused of AML/KYC/BSA violations​

bottom of page