NEW YORK — A Homeland Security Investigations (HSI) New York task force investigation resulted in 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, as alleged, Lauchlan and the company not only kept the fee but extracted additional Ethereum cryptocurrency from at least three customers by making false promises of asset recovery and creating false blockchain tracing reports.
Lauchlan, a Las Vegas resident, is charged in a Manhattan Criminal Court Complaint with grand larceny in the third and fourth degrees and two counts of scheme to defraud in the first degree. In June 2023, the Manhattan District Attorney’s Office seized CDN’s domain, marking the first time a cryptocurrency recovery site 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. Lauchlan’s July 31 arrest was announced by HSI New York Special Agent in Charge Ivan J. Arvelo and Manhattan District Attorney Alvin L. Bragg, Jr.
“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.”
Law enforcement seized CDN’s domain in June 2023.
According to the investigation, 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, special agents and investigators have spoken with more than 175 CDN customers — none of whom were able to recover any cryptocurrency using CDN. Through blockchain analysis, investigators identified approximately $14,000 of cryptocurrency belonging to CDN users that was transferred to CoinEx, a cryptocurrency exchange.
Arvelo thanked HSI’s Las Vegas Field Office and U.S. Customs and Border Protection for the invaluable assistance Lauchlan’s arrest at Harry Reid International Airport in Las Vegas July 9.
“This complaint alleges a cutting-edge approach to a crime as old as time,” said 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.”
HSI’s investigation was conducted by its Document and Benefit Fraud Task Force, a specialized investigative group comprising personnel from various state, local and federal agencies with expertise in detecting, deterring and disrupting organizations and individuals involved in various types of document, identity and benefit fraud schemes.
Anyone who believes that they have been victimized by this defendant is encouraged to contact the HSI Tip Line by calling 877-4-HSI-TIP.