I am Chris Groshong from CoinStructive Inc. I help track stolen crypto and assist Law Enforcement for scam victims. AMA

It's there really a way to get some money back? Or is your business just another scam?

I mean if the crypto scammers got the money in China/India/North Korea, even with the exact address of the scammers, your local police department can't really do anything about it.

And in most places they don't even bother, unless they got some new guy who's hopes and dreams were not crushed yet and wants to impress the boss. But either way, no way to get your money back.

Or is there?

-It's there really a way to get some money back? Or is your business just another scam?
Yes there's a way for people to get their money back sometimes. It's not guaranteed that anyone will ever get a recovery of assets that they've had stolen or that they've had hacked or given away to scammers. There are, however, opportunities to track and trace assets to places where they can be recovered with the help of law enforcement.
I mean if the crypto scammers got the money in China/India/North Korea, even with the exact address of the scammers, your local police department can't really do anything about it.
Just because local police doesn't have the ability to go overseas doesn't mean they can't help. many times local law enforcement helps put together enough information that makes it easier for federal law enforcement to pick up the case. many of these foreign actors are part of organized crime and there are many many victims involved. eventually these types of situations are going to lead to a criminal Enterprise which is being investigated by federal agencies. so a recovery may not occur right away but should a bust happen several years down the road and your case is part of the bigger investigation you should receive restitution
And in most places they don't even bother, unless they got some new guy who's hopes and dreams were not crushed yet and wants to impress the boss. But either way, no way to get your money back.
I understand your frustration and it sounds like you've worked with local law enforcement in the past. yes it does seem to be that the Old Guard is less likely to help than a fresh new recruit however we're seeing more and more local law enforcement learning about how to proceed with these cases. In fact I had a officer from Quakertown Pennsylvania subpoena Binance and receive a successful response.
Or is there?
so to clarify there are two ways to get your money back one is initially through asset seizure at an exchange or a subpinoble entity or somewhere down the road, could be 2 years or more, you could receive restitution from the bust of a big investigation

Thank you for your answer.

To clarify, the only way you could get anything back, would be if the scammers have assets in the country they scammed ( or somewhere where your local law enforcement has jurisdiction), which is not the case 99%+ of the time...

In Canada for example, they have a list of people that got scammed, but they do not do any investigation or any enforcement.

If at any one point sometime happens to arrest one of the scammers, and this national database has your name on it, you might receive a percentage back, if you can prove that that specific scammer scammed you.

I work in IT, and I helped a few people track down crypto scammers, and legally there's more chances to get your money back by buying a lottery ticket than from the scammers. (Illegally on the other hand, if you have the money, there are a few ways)

Not true. It is very possible to recover assets in a foreign jurisdiction. The problem is that law enforcement(LE) doesn't want to recover your assets bc they don't get anything out of it and they're not incentivized. Instead, they want to put someone in jail.

Putting someone in jail actually is a tax burden, costs the community more money and doesn't mean the victim will be made whole. In this particular case, putting some in jail is counterproductive to stopping crime. A new person will step up to take their place and the crime organization will continue to operate.

Our criminal justice system is broken in many ways, but that is for a different discussion.

I think you really, really need to speak with a lawyer so they can explain some fundamental misunderstandings you have about jurisdictional requirements in international financial prosecution

What misunderstanding do I have? Please point it out? Are you an attorney? Have you worked with LE in foreign jurisdictions? Do you know procedures for working in foreign jurisdictions? Do you know what an MLAT is?

I am an attorney, I work in financial crime and I have worked in international courts.

Have you worked with US law enforcement on extradition?

What misunderstanding did/do I have? Please help make it more clear for me.

You may be misunderstanding that my intent was not to pursue the criminal in their local jurisdiction, it's for US law enforcement to work with the local law enforcement to get criminals sent to the US for trial.

This does happen, I know LE that have done it.

If you say I really need to talk to an attorney and you are one, then are you offering to chat with me?

Crypto seems to be just another unregulated opportunity for grifters to get their cut.

Is there anything fundamentally different this time around, compared to other schemes in the last 100 years?

There is a benefit not yet fully realized on what cryptocurrency really offers people. It's the first time in the history of humankind that two parties have been able to universally transact without the need of a third party. It also solves the double spend problem or what's also known as digital duplicity. I think of music, where I can make a copy of a MP3 and send it to a million people. You don't want that happening with money/value.

Bitcoin itself is backed by the most computationally powerful computer network humans have ever built. There’s something to be said for all that security.

I feel like this take lives in a vacuum.

Crypto is a complex technology that requires a relatively high level of computer proficiency to use directly. Because of this, basically since its inception, third parties have inserted themselves to make things easier for the end user. At this point, basically 100% of people who deal with crypto do so through a third party, often a VC-funded startup with much less regulatory oversight than the established monolithic financial industry.

As well, even the nature of crypto itself — every transaction being a permanent addition to a ledger — I'd argue is less secure than traditional assets. You can be sure that your funds are in the hands of the receiving address, but that's not inherently secure. In fact, it means fraud, hacks, and simple mistakes are set in stone and can only be undone through access to the receiving wallet, if it even exists.

This is not even to mention that, because crypto's value is entirely beholden to speculation, it is simply too volatile to be used as a currency in everyday life, and even at its most stable is still vulnerable to mismanagement by those same third parties that allow the general populace to participate.

The financial system we have is certainly not perfect, there's no doubt about that. But the crypto space has essentially just recreated the traditional financial system we already have, just with extra steps and fewer protections for the end users. All this, supported by a small country's worth of power fueling purposely wasteful brute forcing of random math problems in order to ensure that the money it made up isn't spent twice. Is it worth it to be using the most powerful single computer network to prop this up? I'd say no, it very much isn't.

That's what I love about this industry. The differing of opinions and our ability to have to rational conversations about it.
I'd very much argue that all of the effort is worth it. Sometimes it's easy to get lost in the moment or even the past. However, if you can see into the future, you'll realize we aren't recreating the current financial system, we're creating an alternative. It's not meant to replace the current system for most.

We still have a long way to go, but I'm here for the long haul.

You both failed to address my comment and also confirmed my concerns.

Crypto is just another emerging market, which provides opportunities for exploitation by bad actors.

Crypto is great in theory, but I'm practice it's just another unregulated currency. Worse, it attracts bad actors who think they can exploit it to make a quick buck. Not saying OP is one, but it it a legit problem that anyone in this space should be concerned with.

Sorry you feel your comment wasn't addressed. I answered the best I could. If you care to ask in another way I'd be happy to try to respond.
It feels like you're bent on viewing only the negative side of crypto. I can show you the benefits, but I can't make you believe in them.

Crypto is not for everyone, but for some of us, the risk is worth it. DYOR. Verify, don't trust.

Wouldn't it be easier to track the crypto which hasn't been stolen? Much less of that.

The process is exactly the same. It doesn’t matter if the crypto is stolen, hacked, or given to scammers, the blockchain always keeps a record.

Hey Everyone, Getting to everyone's answers. There are some techinical issues with the questions and the reply button.

You hiring? If not, do you know any similar entities that are? I am very interested in this field

We're always interested in talking to people who are motivated to join this field. You should reach out directly through DMs or on the website.

Do you have a professional relationship with chainalysis?

I have both professional and personal relationship with Chainalysis and their executive team.

You've been lurking on reddit for nearly a decade, according to your username.

Have you seen anything crazy or informative on reddit that helped you with your job?

WOW, has it really been 10 yrs. Back then this was one of the only places people were talking about bitcoin. Yes, I’ve learned quite a bit from reddit and its users. For one the psychology of the scammers and the typologies of the scams has helped me and my team quickly identify when someone is a victim even if they are in denial.

Other than money laundering, what do you view as the best use-case for cryptocurrencies?

How much stolen crypto have you personally helped people recover?

All money is susceptible to money laundering. So I don’t think it’s a use-case at all. It’s a byproduct of its nature. The best use case is for people to have an alternative to their state inflationary currency. This is specific to BTC.

A lot of the other cryptos are trying to do something specific. So know what the use case is for the blockchain you are using and why the assets on the blockchain are of value. They may not be.

We’ve recovered 100’s of thousands of dollars for victims.

100,000 ? That's it?

100's = Many Hundreds.

That's it. lol. How much have you helped people get back?

Bitcoin and all the rest really feel like it’s become an MLM do you agree or is it a viable form of unregulated currency?

I can see your comparison of Bitcoin to an MLM and I too originally thought this way. Once I realized you couldn’t turn it off and it was secured through voluntary actions using complex mathematics, I knew there was going to be innovation.

I wouldn’t say it’s unregulated. Ask the Bitcoin of America folks if it isn’t regulated, lol.

I know we’re here to talk about investigations and fraud related to cryptocurrency, but I am also a Chief Compliance Officer and help crypto startups acquire Money Transmitter Licenses (MTLs). So the crypto industry is definitely regulated, it’s just that the regulations are not clear, they differ from state to state (if they even exist at all), and there is not harmonized regulation at the Federal level. The confusion and inconsistency is what really drives that narrative if anything.

How do you learn to read all the transaction ? Any links ?

I highly recommend trying out https://breadcrumbs.app - It's free to demo

Try to follow some of your own transactions

If you really want to get into doing investigations or blockchain forensics i suggest taking a training course from any of the blockchain forensics companies.

I was the victim of a phishing scam on my Coinbase account. That’s what I get for multitasking, I suppose. What can I do to help my local police department?

This is a great Question, thank you for asking.

One of the biggest issues we see at the local police department level is a lack of understanding on how to approach a crypto case.

They're very much prepared to do traditional financial fraud investigation work. They even have templates on what questions to ask on a subpoena to a bank, but they don't know what kind of questions to ask the Crypto Exchange.

The biggest problem we see between victims and the local police is the terminology and the language used in describing the situation. Most victims and law enforcement end up talking past each other because they don't understand exactly 100% what they're talking about. This is no fault of anyone's, this is just the result of a new industry.

When we work with victims directly, we always schedule time to talk to the local police department on their behalf to explain the investigative report that we're delivering to them. That really helps them understand where we're coming from, where the victim is coming from, and how to proceed. For you, the best thing would be to compile all the information you have in a clear and followable path so that you can "tell the story", so the speak.

How common is cryptocurrency theft in the world?

Well, globally I don't have specific #s. However in the US alone, over 440K people submitted complaints to the FBI last year (2022) that involved cryptocurrencies. That's almost a half a million people defrauded.

They all know it's a problem. Many of the Federal agencies are taking big strides to change how they tackle these cases bc they realize there won't be less of them in the future.

This has been an amazing event. Thanks to everyone who participated! I really appreciate all the great questions and the dialogue.

If you ever have any questions or concerns you can hit me up on Twitter https://twitter.com/djkinkle

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Apologies for the delay. The AMA wiki told us to post early so we had time for questions to pile up.

What do you, personally, Chris, think the future of crypto is? Is there any way to secure these even further?

I lost my wallet in a hack back in 2013 I think? Mine and my late husband's. Wasn't much in it, maybe 2 bitcoins we got for free for signing up for something. I don't have a lot of faith in crypto but I like tech :D

I'm sorry to hear about your unfortunate situation with the hack back in 2013, and even more so about the passing of your late husband. You should definitely have faith in crypto. It's not going anywhere and it is helping pull people out of poverty.

Being that your hack was 10 years ago I don't have a lot of faith that your assets are going to be recovered. However the blockchain and its permanence live on forever, so technically if we wanted to we could look at your transaction data and see what happened. Now this most likely isn't going to give you a lot of benefit, but it could give you peace of mind.

However the blockchain and its permanence live on forever, so technically if we wanted to we could look at your transaction data and see what happened.

What data is required for this? Just the wallet address?

It's all about telling a story...both for us and law enforcement to investigate more efficiently. We would want everything the scammer sent you for starters (screenshots of texts/email correspondence/social media profiles/websites). Next up would be wallet and transaction info so we know where to start tracking. We also want to know how to scam played out. The more you can give us the better.

What difficulties and obstacles you face in your daily work?(like fear of be hacked or server crashing or whatever)

Another great question. Yeah I'm constantly concerned about personally being a target of hacks, attacks and phishing, etc.

Last week I received an email regarding sextortion and how I needed to pay $400 in Bitcoin to an address in order to keep them from posting a video of me pleasuring myself. LOL. I did a quick search of the Bitcoin address and found that several people had already made deposits into it, this was definitely a scam.

Also all of my team members are constantly getting phished by people pretending to be me or people pretending to be customer support from the different services that we use. The attacks never really seem to stop. We even get scammers showing up to our intake calls pretending to be victims themselves sometimes.

I've even had friends and family members targeted. The scammers don't care, they just want your money.

The only other thing I would say that can be difficult is my schedule. Since compliance is another facet of our company, I have spent more and more time advocating for better and more fair regulation on behalf of the industry and my clients. I find myself traveling more often to talk with regulators, which can be tough when also running CoinStructive.

Have you ever worked or know of CipherBlade. What are your thoughts about them?

I know Rich from CipherBlade. We've had many conversations and we are basically doing the exact same kind of work. He's one of the good guys.

They are a legitimate firm.

Our services are less expensive though ;)

Great to know, thank you.

What's the best way to reach out and leverage your services?

Please visit https://coinstructive.com/investigations

when filling out the survey, make sure you note that you found us through the AMA on reddit

Are you able to track privacy coins Monero? Ever? If so, what variables determine a trackable transaction?

General question but I'm wondering about Monero specifically because I had over 300,000 stolen last year.

Personally and professionally, No. We can’t track Monero. However, there are some tools available only to Law Enforcement that do assist them with Monero investigations, but it isn’t perfect. Only Federal Law Enforcement have these tools btw.

If you’d like a free consultation, hit up our site and get a case going. No charge to get an evaluation.

Do you use tor like browser(to keep your VPN secret) to track them..or any other method?

We are tracking the blockchain data, so we don't really need worry about our IP addys.

thoughts on traders domain and coffezilla's reporting on it?

Sorry, I'm not aware of this particular situation.

How are MITM Attacks possible on darkweb markets where the malicious actor is able to override page content such as wallet address?

There may be other ways to execute the attack that you mentioned but that's more of a cyber security related question to the site itself

Dude, any Coinbase scams? Those guys are scammers...

We see several people being scammed through the Coinbase stand-alone wallet. It is often confused with the Coinbase platform because it has the same name and you can connect the stand-alone wallet to the OTC function to buy crypto and put it directly in the wallet. However, there are several apps you can connect your wallet to and that's when the scammers get ya. This ties into the smart contract scams that was talked about in another question.

We know everyone involved in crypto is either a Moron or a Scammer trying to rip off other Morons.

This is as certain as the Law of Gravity.

That said, with websites like Crypto Washing Machine (and 100 variations) -- where say $10 million of stolen crypto is inserted with a shit load of other stolen money --- mixa mixa mixa, washa washa washa, the mixed money is sharted out to 1000 random addresses-

For smart scammers it's basically impossible to track down the stolen goods, and the Morons cannot be made whole again.

Correct?

Crypto has been acquiring the brightest minds from all industries for over a decade now. Not everyone gets the gravity of this situation and so I and many other bright people would take offense to being called a moron. I am not foolish, nor stupid.

It only seems like there are a lot of scammers because that's what gets talked about the most. Negative news cycle.

Untrue. There are tools that allow blockchain forensics companies to trace through mixers and tumblers. Eventually, the bad guys will slip up, they will get caught. The problem is more so that people do not report their losses and then cannot be made whole once an investigation is completed.

No scammer wants to maintain a 1000 wallets, so they will consolidate them. That's how you catch a crook. Watch for consolidation patterns.

How much u make a year?

Our investigations dept runs like a non-profit.

Let's put it this way. I used to make significantly more money in my previous career, but am 100% more satisfied and fulfilled. So to me it's not about the money, it's about helping people.

Nice man keep it up! Do you help those who might’ve got scammed with a job I might need u

I've hired people in the past who were victims. I have 2 on staff currently. Keep at it. Stay persistent. You'll get where you want to go if you have an end goal.

Have you ever had any luck tracking any of the Cryptsy stuff? I heard some were confiscated by the US

Never looked into it, sorry.

Best physical wallet for someone who believes crypto is a good investment but doesn't know anything past that?

I recommend Ballet Wallet. You can check 'em out at https://bitcoin.ballet.com

**Notice**
I am a contractor of Ballet Crypto Inc.. However, I do not get paid or compensated for any referrals or sales that come into their site. I do own a few Pure Cards myself.

Nothing is without risk and I recommend you do your own research. Don't store too much crypto in anyone place. That is the best advice I can give in regards to physical storage.

What was the most complex crypto scam case you've worked on and how was it resolved?

A SIM Swap case involving a Mixer. The mixer was chipmixer, which is now Sanctioned by OFAC, but I was successfully able to track BTC thru the mixer and see them recombine before it went to Binance. The victim’s case is still open with Law Enforcement.

How dangerous is for a customer to buy btc and use them to purchase personal recreational amounts of drugs from darkwebs? Like if someone occasionally buys small amounts what is the likelihood of them being pursued by law enforcement? I imagine the cost to pursuing these ppl would outweigh the gains since its unlikely to lead anywhere higher in a supply chain.

While I can’t condone the purchasing of illegal or prohibited substances, I do concur with you that it is unlikely the occasional dark web purchase may not come across anyone’s radar.

Usually how people get in trouble is through some situation they never saw coming.

Let's say in this situation the dark web market store gets seized and they get busted. Perhaps they have some of the buyer's personal data like home address or IP address. Perhaps they share that information with law enforcement as part of a plea deal.

It’s more likely that a user of the dark web marketplaces could be wrapped up in an investigation that wasn’t initially intended for them, but may lead to them being a suspect.

I actually know someone that went to jail this way. So be careful, it’s usually the unforeseeable consequences that get us in the most trouble.

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If it's cryptocurrency, that's the first red flag.

The reality of it is that cryptocurrency isn't going anywhere. That said, more and more people will end up holding it, and the bad actors who also use it will try to steal from others. Regardless on how someone might feel about crypto, there is still a need to keep it safe and secure for its proponents.