As a specialized attorney in crypto-fraud cases, I increasingly see complex, cross-border cases where traditional legal means fail. A recent case illustrates how creative legal thinking and the flexibility of the Dutch legal system can lead to effective solutions for victims of international fraud.
Traditional boiler room fraud using cryptocurrency as means of payment
In this case, victims from he UK, my clients, were targeted by a sophisticated boiler room fraud. The scammers, believed to be operating out of Poland, used a Dutch intermediary (a so called “money mule”) to receive stolen funds through regular bank transfers. The money was then transferred to Kraken, a well-known internationally active cryptoexchange, which serves the Dutch market through entities in Ireland and the United Kingdom.
This international construction created several legal obstacles:
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Jurisdiction over multiple countries
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Involvement of a foreign cryptoexchange
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Rapid money laundering of assets via cryptocurrency
Pseudo-conservatory attachment
The core challenge was to freeze crypto assets at Kraken, similar to a conservatory attachment of a bank account. However, Dutch law does not explicitly provide for attachment of crypto assets at foreign exchanges. To bridge this gap, we previously developed a creative approach: the pseudo-conservatory attachment via an ex parte order. This had always been applied in prior cases in cases where we found the exchange through blockchaintracing. This case did not require blockchaintracimng. We first went into summary proceedings against the fraudster’s bank, ABNAMRO, to force access to the bank statements. That way we discovered that the funds had been paid through to a British bank account in the name of Payward Ltd. That’s the part of the large, internationally operating cryptoexchange Kraken that processes “fiat money” (regular bank payments) from customers in Europe, the deposits and withdrawals of the customers. Then you also know that the “money mule” converted the loot into crypto currency through Kraken’s platform.
Ex parte order measure: an exceptional step
An ex parte order is a powerful legal tool used only in exceptional cases. Normally, the legal principle of adversarial proceedings requires a judge to decide only after both parties have had an opportunity to explain their positions. With an ex parte measure, the judge deviates from this because of urgency and the risk of assets disappearing. This allows for quick action, crucial in crypto fraud where assets can be moved in seconds.
Guarantee of due process
To protect the rights of the parties involved, a hearing will follow shortly after the ex parte judgment where the cryptoexchange can still present its defense. This ensures that all parties are heard and that the measure can be adjusted if necessary.
Legal system is able to respond appropriately
This case demonstrates that, thanks to the flexible nature of summary proceedings, the Dutch legal system can effectively deal with new forms of cross-border cryptofraud. Through innovative use of existing legal instruments, we can act quickly to protect victims’ interests even when traditional legal frameworks fall short.For victims of crypto fraud, this approach offers hope. It shows that despite the complexity of international digital fraud, there are legal avenues to secure stolen assets and hold fraudsters accountable.
Read the ruling here.
