In November 2024, a modern-day bank robbery began. This heist was not carried out with masks and getaway cars, but through deception, manipulation, and digital precision. The perpetrators, an organized crime syndicate based in Malaysia, deliberately targeted American citizens, gaining their trust over time in order to steal assets that were believed to be securely held. To date, more than $65 million has been stolen from innocent Americans. The robbery is ongoing, and the perpetrators remain at large. Though fully digital, the impact is no less devastating than traditional bank robberies. One such victim is Frank Gilroy, an elderly man who lost $850,000 in this modern-day bank robbery.

Mr. Frank Gilroy, a recent widower, was contacted by a young woman who claimed to have dialed a wrong number. Unbeknownst to Frank, the person who had reached out was not a stranger, but the “salesperson” of a Malaysian crime syndicate. The woman, who identified herself as "Moshi," would soon gain Frank’s trust through weeks of communication, frequently Face Timing him at night and sharing intimate details of her life to build emotional rapport. Moshi introduced Frank to cryptocurrencies, claiming she had made millions investing in them. Over time, she positioned herself as a cryptocurrency expert and offered to help Frank navigate this new world. At first, Frank was cautious. But she never asked for his login information, Coinbase was a publicly traded company, and he was able to see and withdraw his earnings freely. Her guidance initially appeared legitimate. Acting on her advice, Frank invested $850,000 in various cryptocurrencies through well-known, legitimate platforms such as Coinbase Inc. and Crypto.com.

However, this was just the beginning of the fraud. After gaining his trust, Moshi told Frank about a new way to trade cryptocurrencies more efficiently, allegedly using a platform affiliated with Coinbase and Crypto.com. She encouraged him to try it. Frank followed her instructions, which closely mimicked the real platforms, except for one critical step. He was directed to transfer his crypto holdings to a different wallet and create an account on a so-called exchange to optimize trading. What Frank didn’t realize was that this “exchange” was entirely fake. Once he transferred the funds, they were gone. Still unaware of the theft, Frank was shown a fake investment dashboard that falsely displayed rising gains. Encouraged by the apparent success, Frank continued transferring money, not realizing he was being robbed in real time. Frank had become the victim of a modern digital heist, what is now commonly referred to as a "pig butchering scam."

Attacks like this are all too common today. Victims are often told that once their assets are stolen in this manner, recovery is impossible. However, that is not entirely true. While recovery is undoubtedly difficult, there are legal remedies potentially available to Frank. These remedies generally fall into two categories. First, Frank may pursue claims against Coinbase and Crypto.com, demanding compensation for their role in facilitating the crime. Second, efforts can be made to trace the stolen funds and seek court orders to freeze the cryptocurrency wallets where the assets are now held. Although courts have not yet held major crypto exchanges like Coinbase and Crypto.com liable, that does not mean recovery is out of reach. Legal theories of negligence, failure to implement proper anti-fraud measures, or aiding and abetting fraud may provide a path forward, especially as courts and regulators adapt to the evolving landscape of cryptocurrency fraud.

A recent federal district court case, decided on February 5, 2025, may offer hope for recovering stolen cryptocurrency from exchanges. In circumstances similar to Frank’s, the court held that cryptocurrency exchanges could potentially bear responsibility for engaging in a pattern of racketeering activity involving the use of international wire communications, in violation of 18 U.S.C. § 1343. See Licht v. Binance Holdings Ltd., No. CV 24-10447-NMG, 2025 WL 625303, at *20 (D. Mass. Feb. 5, 2025). While the court ultimately dismissed the claim, it notably held that “plaintiffs may be able to cure the deficiencies.” Id. This ruling suggests that, under the proper circumstances, cryptocurrency exchanges may be liable for facilitating the theft of funds they are expected to safeguard. Whether an exchange would be held liable in Frank’s case remains uncertain, but similar actions are currently pending before courts across the country.

Further Crypto exchanges may have a duty to take reasonable steps to prevent fraudulent transfers. In Sec. & Exch. Comm'n v. Coinbase Inc., the court held that "the SEC has sufficiently pleaded that Crypto.com operates as an exchange, as a broker, and as a clearing agency under the federal securities laws." Sec. & Exch. Comm'n v. Coinbase Inc., 726 F. Supp. 3d 260, 307 (S.D.N.Y. 2024). Furthermore, courts have recognized that "banks may have a 'duty to make reasonable inquiries' when 'the circumstances alleged' are 'sufficiently suspicious' and the risks are 'sufficiently apparent.'" Bhatia v. Silvergate Bank, 725 F. Supp. 3d 1079, 1111 (S.D. Cal. 2024). In the same case, the court emphasized that there exists a "duty to make reasonable inquiries to discover the fraudulent scheme and prevent its success." Id. This reasoning supports the conclusion that brokers have a duty to make reasonable efforts to uncover fraudulent schemes and prevent their execution. Accordingly, because Sec. & Exch. Comm'n v. Coinbase Inc, established that Crypto currency exchanges functions as a broker, Crypto.com had a corresponding duty to take reasonable steps to prevent the success of fraudulent schemes conducted through its platform.

On December 10, 2024, a federal court in the Eastern District of Texas provided another potential path to recovery for victims of “pig butchering” scams like Frank. In Cohn v. Popescu, the plaintiff employed a forensic blockchain investigator to track the stolen cryptocurrency. Using novel blockchain tracing technology, the investigator was able to follow the stolen funds through the blockchain and identify the specific cryptocurrency exchanges where the funds were being held. The court subsequently granted the plaintiff’s request for a restraining order to freeze those accounts. Cohn v. Popescu, No. 1:24-CV-00337, 2024 WL 5656582, at *1 (E.D. Tex. Dec. 10, 2024). This order prevented the cryptocurrency from being moved or dissipated, allowing the plaintiff a realistic opportunity to recover the stolen assets.

In Frank’s case, each of these legal avenues could have offered a path to recovering his stolen assets, and may still hold potential. While it is often said that there is no recourse for victims of pig butchering scams, that is not entirely accurate. Recent court decisions show that, under the right circumstances and with skilled legal assistance, it is possible to recover stolen cryptocurrency. Although the process can be challenging, time-consuming, and not always guaranteed, asset recovery is increasingly within reach for victims willing to pursue the proper legal action.

If you are a victim of pig butchering scam or have had cryptocurrency stolen, contact Joe Ingram or Joe Joe Ingram Law, LLC at 205-335-2640. Get Relief * Get Results.