Extract from Michael Mora’s article “‘Perfect Storm:’ Crypto Litigation Surging”
In February, Luan Pham Doan received an unsolicited message on WhatsApp. The sender introduced herself as “Tina.” Over the next couple of weeks, their conversations deepened into something resembling friendship. Tina encouraged Doan to trade in Bitcoin, promising high returns and led him to believe he had personal control over his wallet.
It began with $100.
Doan transferred more money from his other financial accounts to a website recommended by Tina, and by the time he attempted to withdraw his gains, he had invested $10 million. He believed he now held nearly $50 million, until Tina told him a 1% fee (or $500,000) was required to unlock his funds. If he didn’t pay up, she warned, the penalty would rise to $50,000 per day.
“This appears to be a straight up scam that would be of interest to criminal authorities, but it is being handled civilly,” said Mark E. Bini, a partner in New York at Reed Smith’s global regulatory enforcement division and an ex-prosecutor of financial and corporate crime at the U.S. Attorney’s office in the Eastern District of New York and the Middle District of Florida.
This alleged scheme is an increasingly common species of financial fraud colloquially referred to as “pig butchering,” named for the process of grooming victims like livestock, fattened emotionally and financially before the final blow.
And experts say a combination of increased investment in crypto and decreased criminal and regulatory enforcement creates a ripe environment for litigation.
But Doan pushed back, and has since retained investigators who claimed they traced nearly $6 million of the investment to six wallets.
