It is not clear exactly what the seizure means in practical terms besides a splash page logo on the company’s website. CDN has said for at least the past 10 days that it is no longer accepting new clients. In a press release, the Manhattan DA’s office said that a criminal investigation is ongoing.
Cryptocurrency recovery companies entice victims of cryptocurrency-fueled scams by saying they can help get stolen crypto back, simply by paying a fee upfront to conduct a cryptocurrency trace. Typically, such companies then write a report detailing the movement of the cryptocurrency transactions, which is theoretically meant to assist law enforcement in recovering stolen funds. Then, if successful, the firm – like CDN – takes a cut of all recovered funds.
But, in a statement, the Manhattan DA’s office said that in practice, CDN “not only kept the fee but extracted additional Ethereum from their customers by making false promises of asset recovery and generated inaccurate blockchain tracing reports to victims.” Manhattan D.A. Alvin Bragg said that his office has been investigating CDN since November 2022. “We want victims of the Coin Dispute Network – no matter where you are – to come forward as we work to hold these bad actors accountable and prevent future fraud,” he said in a statement.