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All things asset recovery on the Women in Crypto podcast

Author
Joanna Summers

Our SVP of Client Relations, Joanna Summers, was recently featured on the Women In Crypto podcast by the Association for Women in Cryptocurrency, sponsored by Bracewell LLP.

In this insightful episode, Joanna discusses the world of crypto asset recovery with Helen Pugh from Outer Temple Chambers. Together, they explore the Financial Action Task Force (FATF)'s new emphasis on improving asset recovery and provide valuable insights into the current state of asset recovery in the US, UK and beyond.

Listen to the full episode:

Episode Notes

The following text was extracted from the original show notes of the episode.

Welcome to our latest episode of Women in Crypto, the podcast presented by the Association for Women in Cryptocurrency and sponsored by Bracewell LLP! In this exciting episode, we delve into the fascinating world of crypto asset recovery, a topic that all three speakers are passionate about.

Join Amanda Wick, Founder and CEO of the Association for Women in Cryptocurrency, as she engages in a conversation with two outstanding professionals, Joanna Summers and Helen Pugh. Joanna, from Asset Reality but previously of the U.S. Marshal’s Service, immerses us in building the world's first seized asset management platform, paving the way for the successful forfeiture and recovery of physical and digital assets.

Helen, hailing from bustling London where she serves as a Barrister with Outer Temple Chambers, shares her background in commercial litigation and insolvency, highlighting her current involvement in cases of misappropriated crypto assets. Both women offer a unique insight into the thrilling field of crypto asset recovery and blockchain technology.

In this episode, sponsored by Bracewell LLP, we explore the incredible work of our members worldwide, shedding light on the fundamental difference between civil and criminal forfeiture, revealing the intricacies of asset recovery on a global stage.

Don't miss this enlightening conversation as we delve into the need for speed in crypto asset recovery, a crucial aspect in a world where cryptocurrency movement can change with a single click.

Join us on Women in Crypto, where we give voice to outstanding women and male allies leading the crypto, blockchain, and Web3 industries. Discover more about the exciting work of our members in this must-listen episode!

To learn more about AWIC, you can visit our website: www.womenincrypto.org

Follow AWIC on LinkedIn: www.linkedin.com/company/the-association-for-women-in-cryptocurrency

Follow AWIC on Twitter: www.twitter.com/awicglobal

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Transcription

00:00:00

Welcome to our podcast Women in Crypto, hosted by the Association for Women in Cryptocurrency,

00:00:09

sponsored by Bracewell LLP.

00:00:11

Bracewell is a leading law and government relations firm whose award-winning teams lead

00:00:15

the market in cutting-edge transactions and litigation, regulatory matters, and government

00:00:20

relations.

00:00:21

You can learn more at Bracewell.com.

00:00:23

We couldn't do this podcast without them, and I'm very excited to be talking today about

00:00:27

a topic that I'm super passionate about and I know these two ladies are, which is crypto

00:00:31

asset recovery, something that we're all either currently involved in or, for some of us,

00:00:36

our past lives we're all about.

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The Association for Women in Cryptocurrency is a global professional network of women

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and male allies around the world who advocate for the equitable inclusion of women in the

00:00:46

future of digital finance, blockchain technology, and Web3.

00:00:50

I want to make sure it's clear that the views of the speakers are their own and do not necessarily

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represent those of the Association, its sponsors, or its board of directors.

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This podcast is our opportunity to showcase the incredible work being done by our members

00:01:03

around the world in the crypto, blockchain, and Web3 industries.

00:01:06

I'm your host, Amanda Wick, founder and CEO of the Association for Women in Cryptocurrency,

00:01:11

and I'm incredibly excited to introduce you to Joanna Summers and Helen Pugh, and I'm

00:01:15

going to let them introduce themselves.

00:01:17

So Joanna and Helen, can you tell us a little bit about yourselves and how about Helen will

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start with you?

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Thank you so much Amanda for having us on the podcast.

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I'm a barrister in London, so part of the Association for Women in Cryptocurrency in

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the London chapter.

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My background has been fraud work, insolvency, commercial litigation, until the last few

00:01:38

years when there's been a bit of an explosion of crypto-related litigation in the UK.

00:01:44

So I'm now heavily involved in that, doing fraud recovery cases where there's been

00:01:50

misappropriated crypto assets, advising office holders on insolvencies involving crypto assets,

00:01:58

and even things like shareholder disputes where it involves a crypto company.

00:02:03

Joanna?

00:02:04

Good morning.

00:02:05

Thank you so much for having us today, Amanda.

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I am with Asset Reality, and we are building the world's first seized asset management

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platform, laying the groundwork for successful asset forfeiture and recovery to help governments

00:02:19

and insolvency practitioners seize, manage, and liquidate both physical and digital assets.

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And my background comes from the Department of Justice, US Martial Service, where I spent

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10 years in the Asset Forfeiture Division, and I ran our complex assets unit.

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So any ongoing business or complex financial instrument that was targeted for federal forfeiture

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came through my team for evaluation, management, custody, and disposal.

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And I'm Amanda, I know I worked with you while I was at DOJ, and I'm so happy that we're

00:02:52

together again in Women in Crypto, and I am the DC member ambassador.

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I'm very excited to have you both.

00:02:59

I want to jump right in and touch on something that you just said, Joanna, because I know

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we have a tendency in the US to refer to it as asset forfeiture.

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A lot of folks abroad call it asset recovery, and I want to touch on a very basic foundational

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concept, which is the difference between what we would call civil and criminal forfeiture

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in the United States, but what a lot of countries would call non-conviction-based forfeiture

00:03:23

and criminal forfeiture.

00:03:25

And Joanna, I know you are working in a ton of countries around the world.

00:03:29

Can you just really quickly explain the difference so that people kind of know what it is we're

00:03:33

talking about when we're talking about asset recovery?

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Because I know Helen's going to talk about civil cases, where there's not even a crime

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involved, but can you talk about cases where there might be a crime, but it's not forfeited

00:03:45

criminally, which I think confuses people?

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Sure.

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So civil forfeiture or non-conviction-based forfeiture is a court proceeding that's brought

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against the property that was derived from a crime or used to commit an offense rather

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than the person who committed the offense.

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There is no criminal conviction required, but the government is still required to prove

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in court that the property was linked to a criminal activity.

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So civil forfeiture, in my opinion, complements criminal forfeiture because it fills in the

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gaps where criminal forfeiture is not always feasible.

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So think about your cases where a defendant's a fugitive or they're deceased or maybe they're

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unknown, which is the case in a lot of money laundering schemes.

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And the case in a lot of cryptocurrency fraud, if you think about romance scams, pig butchering

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schemes, investment frauds.

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Those cases where maybe someone was contacted through an online dating app and you just

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don't know who that person is on the other end of that dating app.

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So civil forfeiture is particularly helpful in cases where the offense was committed in

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a country that doesn't provide mutual legal assistance to the United States.

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So think about a country like China.

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Even if you did manage to find the criminal, it's highly unlikely you would be able to

00:05:04

drag them into a US court at a later date.

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In terms of crypto asset recovery, civil forfeiture, it shows that it's all about the need for

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speed.

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It's the battle to get to the funds the fastest in crypto asset recovery.

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And we all know here how quickly cryptocurrency can move.

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It just takes the click of a button and criminals know this as well.

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So without this civil forfeiture aspect, the funds for the victims of financial crimes

00:05:33

would quickly go to zero.

00:05:35

Yeah, I think that's something that people don't appreciate.

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And unfortunately, I think there are groups in the United States from like a political

00:05:41

lobbying perspective who kind of really kind of butcher that narrative that for us, when

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we're trying to help crime victims, the non-conviction based forfeiture or the civil forfeiture process

00:05:52

of getting the property back for the victim when we can't get a body that's a defendant

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is oftentimes sometimes the best thing that we can do.

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Most of my victims, when I was a prosecutor, financial crime victims would have far preferred

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to have their money back, even if it meant not necessarily catching the criminal.

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And so I think people don't realize how essential that aspect is for making financial crime victims

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whole.

00:06:15

And Helen, we haven't really even touched on this civil side because you mentioned during

00:06:19

your introduction a lot of the work that you do in asset recovery that doesn't even involve

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a crime.

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And I'm curious if you could touch on that because I think you do both cases that where

00:06:30

a crime is involved, but sometimes a crime isn't involved at all, right?

00:06:33

Yeah, that's right.

00:06:34

So to complicate things, I would say in the UK, we have the criminal forfeiture.

00:06:40

We then have civil forfeiture under the Procedure Crime Act, which as Joanna said, is this setup

00:06:47

where if you prove 51% essentially that a crime has been committed, then you can seize

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the proceeds of that crime, and that's a much lower threshold than proving that you're

00:07:00

sure somebody is a criminal and that the proceeds are proceeds of crime.

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But then we have the third limb, which is just pure civil court actions, which are remedying

00:07:12

civil wrongs.

00:07:13

So misrepresentation, deceit, breach of contract, those sorts of things, you just go straight

00:07:20

to the civil court.

00:07:22

And so I do do a lot of that.

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And actually, in terms of speed, I think, I mean, I would say this, given I work in the

00:07:30

field, but I do think we have the edge on the law enforcement agencies because you don't

00:07:36

have to go through layers of authorities.

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If it's an overseas jurisdiction, the courts in the UK are still very open to issuing injunctions

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abroad.

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Now, whether you can enforce that abroad is a different issue.

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But you at least have something quick.

00:07:53

You can get it in 24 hours if you need to.

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You've got the right case and the right tracing evidence, what have you.

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And then a lot of the exchanges will cooperate even if they are based overseas.

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So I think often the civil route can react much quicker because it can take a while to

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get law enforcement interested.

00:08:16

I have seen that.

00:08:17

And it's interesting because I've had that conversation with some lawyers in the United

00:08:20

States where I've said, you know, if you can find a UK tie, you guys have some tools in

00:08:26

your toolbox that the United States doesn't.

00:08:28

And to Joanna's point, when you have the need for speed, oftentimes you want what we

00:08:34

would call parallel investigations where you want to call law enforcement and have them

00:08:39

investigating, but you also want to work civilly just in case it can move faster.

00:08:43

And I find it fascinating in crypto to your point that I have seen some amazing cases

00:08:48

that folks in the UK are doing where in 24 hours they can get a response from a exchange

00:08:54

like that you said oftentimes is cooperating for whatever reason.

00:08:58

But you know, Joanna mentioned earlier when she said defendants that aren't in countries

00:09:03

with mutual legal assistance treaties and in our old life we called those MLATs.

00:09:08

But the process by which law enforcement has to go through to officially request records,

00:09:13

sometimes you get lucky.

00:09:14

You know, there's some state district attorneys in the US who are doing that where they're

00:09:18

basically like courtesy requesting freezes or requesting documents, but it's very difficult,

00:09:23

especially for the feds to informally do that.

00:09:26

And so I think it's an interesting thing that a lot of people don't know that not only can

00:09:30

the civil go faster, but that the UK has these really unique processes that in some cases

00:09:35

if you can get that jurisdictional hook, you guys can move insanely fast on is it is it

00:09:41

because I always get it wrong.

00:09:42

It's like bankers trust or Norwich Pharmacol orders or something like that.

00:09:46

Right.

00:09:47

But they're two different things, but you're absolutely right.

00:09:49

And you normally want them both.

00:09:50

Yeah.

00:09:51

It's actually quite pleasing to hear that because usually we're looking across the

00:09:55

pond quite enviously at the litigation tools that are used in the US usually.

00:10:03

Well, and I think it's a combination of both.

00:10:05

Right.

00:10:06

I mean, like, you don't necessarily want either or.

00:10:09

I know one of my mutual friend that we have who's a former AUSA Evelyn Sheehan at Cobrain

00:10:15

Kim, I think she does very similar work.

00:10:17

And what I've heard is that it's both.

00:10:20

Right.

00:10:21

You want to be looking if you're doing it right, you want to be looking at the best jurisdictions

00:10:25

who has the best process.

00:10:27

I think some folks just don't realize that the UK is an option.

00:10:31

And I think you guys have some advantages here that the US doesn't.

00:10:35

Yeah.

00:10:36

Whereas you see in the bankruptcy with the FTX.

00:10:39

You saw it got anchored in the states rather than in Bahamas.

00:10:43

And the Bahamas has got similar systems to the UK.

00:10:46

So it just depends on which tools are best in your particular situation really.

00:10:53

And yes, England just have the advantage of moving fast if it's a hot pursuit case where

00:10:59

you're trying to freeze and exchange wallet, for example, where you've traced funds to.

00:11:05

Yeah.

00:11:06

So one of the things, one of the differences that I've noticed, and this is just probably

00:11:10

my own bias having been a prosecutor that tried to get other prosecutors to do asset

00:11:15

recovery.

00:11:16

I enjoy and I'm curious to get your thoughts on this, but it feels like often the focus

00:11:21

in the United States is on punitive measures, like getting the body, getting the defendant,

00:11:27

prosecuting somebody and putting them in jail.

00:11:29

While it feels like the UK prioritizes asset recovery first, some of that might be because

00:11:34

your jail system doesn't give as much time.

00:11:37

So the punitive measures are somewhat less.

00:11:39

But I'm curious to you, would you agree with that characterization?

00:11:43

And if so, how do you think that affects the outcomes of cases?

00:11:47

Yeah, I'll stop with that.

00:11:48

I have more questions, but we'll stop there.

00:11:50

Is that an unfair characterization and what do you think that leads to, I guess?

00:11:56

No, I think that is a fair characterization.

00:12:00

I think in the US, we do prioritize getting the individual and we focus on the punitive

00:12:06

measures.

00:12:07

And I understand that emotionally, a lot of the time, that's what makes us feel good.

00:12:13

We want to get that criminal and we want to see them behind bars.

00:12:15

We want to make them pay for their actions.

00:12:18

But when you take a step back and you look at things like non-conviction-based forfeiture

00:12:24

and you understand the differences in the two, you just come to the realization that

00:12:29

that's not always feasible and you have to think about it a little bit differently.

00:12:33

And in my DOJ life, working at the US Marshall Service, I can tell you for sure that taking

00:12:39

away the proceeds of crime from victims, taking away the yachts, the planes, the jewelry,

00:12:44

that's really where you're hitting these criminals where it hurts.

00:12:48

You're taking away their toys.

00:12:49

And then transitioning over to my life at Asset Reality, I've spoken to so many victims

00:12:54

of cryptocurrency fraud.

00:12:56

And to your point earlier, Amanda, the first thing every victim has said to me is, how

00:13:01

do I get my money back?

00:13:03

That was my college fund.

00:13:04

That was my life savings.

00:13:06

That was my parents' retirement fund.

00:13:08

That's what moves the needle on their life and will really make an impact on their life

00:13:12

is getting that money back and making them and their family whole.

00:13:15

So I think when you start to look at it from that perspective, you realize that there are

00:13:20

a lot of differences.

00:13:21

And Helen and I were talking about this the other week as well, that it is more of a focus

00:13:25

in the US, I think, on criminal than getting the asset back to a victim.

00:13:31

And I think there should be more of a focus on asset recovery itself, allowing for that

00:13:35

recovered assets to be returned to victims, especially when you look at things like the

00:13:40

IC3 report, which is put out by the FBI every year.

00:13:45

Cryptocurrency investment fraud rose from $907 million in 2021 to $2.57 billion in 2022.

00:13:55

That's over 180% increase.

00:13:58

And there were over 19,000 victims of romance scams reported to IC3 in 2022.

00:14:05

And those are just the victims who reported and the victims in the United States.

00:14:10

So I think when you start to hear these staggering numbers, you realize there's got to be more

00:14:15

of a focus on the asset recovery itself.

00:14:18

And Helen, I know that it just seems to me like the UK might have some more legal tools

00:14:23

to address that than we do in the United States.

00:14:26

Yeah.

00:14:27

I mean, I think the English approach to asset recovery essentially supposes that as long

00:14:34

as you can identify through the tracing an account which you can point to and say, this

00:14:39

is more than likely to be involved in the original wrongdoing and it's got funds and

00:14:44

still, then it's usually you'd think unlikely that someone who is engaged in that wrongdoing

00:14:52

will pop up and try and contest that.

00:14:54

So often, although that these things are urgent and there's a lot of upfront work, once you

00:15:00

get to the point of having served the injunction and spoken to the cooperative exchange, it's

00:15:07

unlikely that your wrongdoing is going to pop up and say, actually, I'm going to fight

00:15:11

you over this partly because they want to protect their identity and avoid the criminal

00:15:16

penalties that would follow.

00:15:17

Well, and you raise a really several important points, one of which is this is why the importance

00:15:24

of having crypto tracers, like there's unfortunately a lot of companies now that are re-scamming

00:15:30

people where victims will say, I've lost my funds and then they'll go online and they'll

00:15:35

find like crypto investigators who are saying, oh, we'll find your funds for you and for X,

00:15:40

they actually charge a percentage of the stolen amount and they will re-scam people because

00:15:45

to your point, if they can't trace it quickly and the funds aren't there, there's nothing

00:15:50

to be collected back.

00:15:53

And it's unfortunate because I know the three of us all know really good companies that

00:15:56

are legitimately doing this work that will not take money from people that will say,

00:16:01

look, I can tell you with just a quick search, like whether this money is gone or not and

00:16:05

you shouldn't throw good money after bad.

00:16:07

And then there are just scam companies that are out there that are sadly like re-scamming

00:16:11

people.

00:16:12

I think that kind of like PSA message of if you're a scam victim, please, please, please

00:16:18

be so careful before you reach out to a company that says it can get your money back for you

00:16:23

because unfortunately so many of those are scam artists.

00:16:26

But to the other point in there, in the United States, the movement to like abolish non-conviction

00:16:31

based forfeiture frequently points to cases where, Joanne and I know this from our past

00:16:36

lives, but where like people get pulled over and have like a suitcase full of unexplained

00:16:41

cash.

00:16:42

Like maybe they've got like a prior record and whatever it is, there's like a seizure.

00:16:46

It's frequently involved seizures of cash and unexplained massive amounts of cash, right?

00:16:52

Which is not traceable.

00:16:54

Whereas to your point, if you've gone through and you've traced stolen funds in crypto and

00:17:00

you can make that showing to a court, this is where you have an established, like a legally

00:17:06

established like, no, these are more likely than not or whatever the standard is in the

00:17:10

way, proceeds of a crime.

00:17:12

It's not like we're just saying, this is super sketchy that they have files of cash.

00:17:16

It's like a weekend actually traced back to here's where the funds were stolen in, here's

00:17:20

where they ended up in this account and whoever's controlling this account is in receipt of stolen

00:17:25

funds.

00:17:26

And I think that gets lost that you don't just like lose all due process.

00:17:30

When you're doing this, you're actually tracing funds to proceeds and then saying to a criminal,

00:17:35

if you're the person who stole these or if you know how these got here by all means,

00:17:40

get that forward and claim them in court and identify yourself.

00:17:43

And that's a very different dynamic in non-conviction based forfeiture in crypto cases.

00:17:48

And I think it is in cash.

00:17:50

And I think that's lost sometimes.

00:17:52

I will say, I also think people don't appreciate the actual traceability of crypto.

00:17:58

And I know this gets talked about a lot and they see haters online who don't really understand

00:18:03

this.

00:18:04

But Joanna, I'm wondering like if you could talk briefly and then Helen, I'd love to

00:18:07

know from like the civil side that the issues that people have in tracing crypto, because

00:18:14

I don't think it's as anonymous as some people still want to believe it is.

00:18:19

Yeah, absolutely.

00:18:20

And just backing up for a minute, I agree too, Amanda.

00:18:23

We've seen a lot at Asurality over the past year of unfortunately victims being re-victimized

00:18:29

by some of these law firms or supposed investigators who demand money upfront and claim they can

00:18:36

100% get the proceeds back.

00:18:39

And there's just so many red flags there.

00:18:42

Like, first off, you shouldn't be paying someone upfront and no one should be guaranteeing

00:18:45

you they can get your funds back.

00:18:47

And there are a lot of people who are very good at doing the asset tracing out there.

00:18:51

But unfortunately, there are a lot of people out there looking to re-victimize people who

00:18:56

are looking for help after they've just been scammed.

00:18:59

So just wanted to point out that we've seen a lot of that too.

00:19:02

So I definitely think people should be careful with that.

00:19:05

And Helen, I'm curious on the civil side, because I know Joanne and I spend a lot of

00:19:09

time or used to spend a lot of time tracing on the criminal side.

00:19:12

And there's all kinds of blockchain analytics tools that you can use for that.

00:19:16

But I'm curious, how does it work on the civil side?

00:19:18

Is the asset recovery tracing process similar?

00:19:21

I know the tools might be different, but is the process similar?

00:19:25

Yeah.

00:19:26

So I think from what I can gather, a lot of the software is a bit more restricted in

00:19:31

civil.

00:19:32

So I think the software providers might have extra add-on tools, which law enforcement

00:19:38

get access to, which we might not have access to on the civil side of things.

00:19:44

Essentially just responsible behavior, I think, by these software companies.

00:19:49

But that's not to say we don't have really extensive tools at our disposal.

00:19:54

So there's on-chain tracing that we use.

00:19:57

And often, certainly my experience is you're not just tracing along one branch, if you

00:20:03

like, you'll find that there are similar patterns because it's unlikely that only one person

00:20:07

is being scammed.

00:20:09

This person is often involved in multiple similar scams.

00:20:13

So from the analytic process of this software, you can draw patterns, you can show that funds

00:20:21

from other suspect transactions are flowing through the same wallet.

00:20:25

So that's all hugely useful and quite compelling to the court.

00:20:30

But in addition, you have the off-chain research as well.

00:20:33

So old school detective work where often through the bankers trust in the Norwich Pharmacal,

00:20:39

you can get the KYC documents from the exchange.

00:20:43

And then you use the old school Hercule Pro, sort of like, hmm, let's see what we can find

00:20:50

out about the KYC people on the account.

00:20:53

Now sometimes you'll come across a passport that's clearly not genuine and it's part of

00:20:58

the fraud.

00:20:59

But quite often, they will have had to put forward genuine KYC documents and you can

00:21:06

trace and you can ask the exchange what other accounts to these people have the KYC to and

00:21:12

trace that way as well.

00:21:13

So it's a bit of a mixture of both, really, just drawing the dots.

00:21:18

Helen, we've seen a lot of that too, where you start with a small victims case and then

00:21:23

you see the funds flowing in and out of the same wall to address and more victims come

00:21:27

forward and before you know it, it's been $10,000 through the same wall and over and

00:21:31

over again and suddenly you're up to a multi-million dollar case.

00:21:35

And I think that's where doing really good investigative research there comes in handy.

00:21:39

Yeah.

00:21:40

And I will say, I'm curious, Helen, if you've seen this, because I know I've seen in the

00:21:43

United States where sometimes the private attorneys that are working for one victim,

00:21:49

maybe a victim who loses a lot of money or has the means to try to hire a law firm to

00:21:54

get it back, the law firm then basically makes a package presentation and says, in order

00:22:00

to get law enforcement, basically pick it up.

00:22:03

It's like, well, it's not just my victim that lost five, six, maybe seven digits.

00:22:08

If you add, if you look at this wallet, it took all these other deposits around the same

00:22:13

time and you're looking at my victim times 50 times 100 because nobody ever just does

00:22:20

one scam, sees how it goes and then it's like, oh, I've got enough money for life.

00:22:24

They blitz, right?

00:22:26

They almost like DDoS attack victims.

00:22:28

And it's like, well, let me just send this out to 200 possible victims and see, oh, look,

00:22:32

I've got 80 victim pickup rate, right?

00:22:35

It's never usually just one victim in these cases.

00:22:39

And I'm curious if folks do that on the UK side, if you see kind of, because I know

00:22:43

you guys have like a private prosecution system, it's very interesting, but I'm curious, do

00:22:47

you see like law firms able to kind of pick up and say, oh, this just went from a one

00:22:51

victim case to like a 50 or a hundred victim case?

00:22:54

Well, they're definitely trying to do that and put together group actions on the civil

00:22:58

side because if you've lost 50,000, that's a huge amount of money to an individual.

00:23:04

I mean, it's like twice the average annual income in the UK or something, but you take

00:23:08

it to a lawyer and they say, well, that won't get you very far in the process sometimes

00:23:14

by the time you've paid for lawyers, investigators, court fees and what have you.

00:23:18

So if you put together the group of victims, then they only have to contribute a smaller

00:23:24

amount and then it's a many multiple claim and then you might get interest from the

00:23:29

investigation funders.

00:23:30

We have a very active mature investigation funding market in the UK.

00:23:34

So I definitely see that.

00:23:36

Can you explain that just a little bit just in case people don't know what a litigation

00:23:40

funder is for anyone listening?

00:23:41

Because I think the average person really doesn't understand that there are actually

00:23:46

entities that fund litigation and they think, I think a lot of people I talk to think I

00:23:51

have to pay for my own case and if I don't have money, it's hopeless.

00:23:54

But can you explain what litigation funders are and how they can sometimes kind of help

00:23:58

a case get made even if the individual person doesn't have their own money?

00:24:03

Yeah, so litigation funding is now permitted in the UK and there are basically these huge

00:24:12

companies backed by hedge funds or investors who you can approach with a summary of the

00:24:19

case and all the information and they will take a view on whether they think you're

00:24:24

going to win or not and then they'll essentially make you an economic offer and say, you know,

00:24:30

to run it to this stage, we want X multiple of the legal costs.

00:24:36

There's been an issue recently in the UK about whether you can have a percentage of

00:24:39

the outcome and I think you can but it's quite highly regulated so you have to get your agreement

00:24:45

in order.

00:24:46

So there are various different commercial economic deals that can be done.

00:24:50

There are definitely companies out there.

00:24:52

The problem in crypto is twofold really.

00:24:57

One you often don't have a huge amount of time to negotiate these things if you're moving

00:25:02

fast and so it might not be suitable for that hot pursuit case.

00:25:08

And secondly, they're nervous about the value of crypto because they will work on a well-it's

00:25:14

worth X value but we all know that the volatility in the value of a lot of cryptocurrencies and

00:25:20

even Bitcoin fluctuates hugely and so at the moment, I think there's a lot of appetite

00:25:28

to get involved but they're still trying to work out how their economic models work with

00:25:34

an asset that fluctuates so wildly in value.

00:25:37

Yeah, that's an interesting thing because I know like Joanne and I had some cases where

00:25:42

it was so old where they bought it at like $600 or $1,000 and what was like maybe a six

00:25:50

digit crime by the time it gets prosecuted became an eight digit crime because of over

00:25:56

time like what it could be and conversely now, if something happens when it's at $35,000

00:26:02

and then it plummets, your point like that can really impact the...

00:26:06

Because the lip funders are kind of like gamblers.

00:26:09

They're essentially like litigation gamblers which I find fascinating.

00:26:12

It's like betting on the house.

00:26:15

That could be a whole another podcast topic but I think it's just...

00:26:19

The reason I think it's important is because I don't think a lot of people out there think

00:26:23

it's an option to get an attorney.

00:26:25

They don't know that it's always worth...

00:26:27

I think it's always worth talking to a good attorney who knows and can really tell you

00:26:32

like your chances and I think that finding crypto attorneys who actually know what they're

00:26:36

talking about can really help victims and I've had some victims that I send to great

00:26:40

attorneys and the attorney...

00:26:43

The proof of their greatness is that they look and they say, real talk, that money's

00:26:46

gone.

00:26:47

Yeah.

00:26:48

They say, good money after bad which is sometimes the nicest thing that you can tell somebody

00:26:52

is the truth and not take more of their money or a lot more of their money depending but

00:26:57

it's a very real thing.

00:26:59

I think one of the things Joanne and I'd love to go back to that you were talking about,

00:27:04

the importance...

00:27:05

I think we all know the importance of crypto asset recovery.

00:27:09

I think in the United States on the criminal side and frankly, I think the civil side is

00:27:14

trying but is having the speed issues but my understanding is there's a new FATIF rule

00:27:19

coming out.

00:27:20

I was wondering if you could talk about that because I think it is going to encourage everyone

00:27:26

to do this more.

00:27:27

Do I have that right?

00:27:29

Yeah, absolutely.

00:27:30

FATIF just came out of a conference in October where they did a lot of discussions on strategic

00:27:37

initiatives to improve asset recovery and we've all known that asset recovery has been

00:27:43

underperforming globally and FATIF just announced last week that they're starting the process

00:27:48

of improving the standards for freezing, seizing and managing seized assets.

00:27:54

We've heard this before but it's great to see a renewed focus from them on it and I

00:27:59

think that this is going to really help put pressure on countries that are underperforming

00:28:03

in these areas of fraud and seized asset management to ensure that they do get an effective system

00:28:09

in place because overall, that's what's going to help improve the returns for victims and

00:28:14

for their societies.

00:28:17

Another point that FATIF came out with was they did formally recognize non-conviction-based

00:28:23

forfeiture and they noted in their revised recommendations that they require countries

00:28:28

to have policies and operational framework that prioritize asset recovery and prioritize

00:28:34

establishing that non-conviction-based confiscation structure or framework in their legal systems.

00:28:43

They are promoting the non-conviction-based forfeiture as well and a lot of people are

00:28:49

following that US model of it but I think especially talking to Helen in some other

00:28:53

countries, it's great to get that global approach to it because they're different countries

00:28:58

doing different aspects of it very well and it's great to have a body like FATIF that

00:29:03

can sit in and kind of pull all of that together.

00:29:06

Well, I think one of the things and Helen, I want to come back to you because I know

00:29:10

I think the UK also recently passed a, is it in the process of passing the law or is

00:29:15

doing something to kind of like make it easier to do crypto asset seizures and recovery?

00:29:20

But I want to touch on something that you said, Joanna, which is the perception of

00:29:24

which countries are doing it well because I think there are countries that don't have

00:29:28

non-conviction-based forfeiture statutes, right?

00:29:31

They don't have the regime and they need to build that, right?

00:29:35

And I know like a former colleague of ours, Steph Cassell, I think he travels the world

00:29:38

helping countries who want to put that into place because he literally drafted the statute

00:29:43

in the United States, right?

00:29:45

And so those countries that don't have a framework not doing it well, I think one of the things

00:29:49

that frustrates me about the United States is that it's moving backwards whereas countries

00:29:55

like the UK are moving forwards.

00:29:57

Here in the United States, we have a massive amount of resources.

00:30:01

We have like the system is in place and we just don't do the best job training and requiring

00:30:08

prosecutors and agents to do the asset recovery as much as kicking indoors and putting people

00:30:13

in jail.

00:30:14

I think that's my frustration is that we have the potential to be doing it.

00:30:18

We're doing it badly for how well we could be.

00:30:21

But if you just compare countries like country outputs, yes, the US is probably here compared

00:30:26

to some others, but given the capabilities that the US has and what they could be doing,

00:30:32

it's incredibly frustrating to watch, especially when there are statutes that are being put

00:30:37

forward to eliminate non-conviction-based forfeiture in the UK.

00:30:41

I think in the UK, didn't you guys just get, there's like a statute that you guys are passing

00:30:46

to make it easier to get crypto and address the need for speed, right?

00:30:50

Did I see that come out?

00:30:51

Yeah.

00:30:52

So I think it's the Economic Crime and Corporate Transparency Act.

00:30:57

And I think it just came into force last week, actually.

00:31:00

And the idea is that, yes, law enforcement will focus more on asset recovery themselves

00:31:06

and in the crypto sphere.

00:31:08

And it gives them a few extra tools.

00:31:10

I mean, I might be saying something a bit controversial here and it may not, it may be

00:31:15

partly because it's not my area, but it looked to me like a lot of the tools already existed,

00:31:21

but it's more trying to encourage their use, really, and sharpening them up a bit.

00:31:27

I mean, again, controversially, perhaps, the problem we have in England, I think, and one

00:31:33

of the reasons people go down the civil recovery route is that a lot of the public services

00:31:39

are underfunded.

00:31:40

So I think, you know, police, of course we have forensic experts, of course we have digital

00:31:47

experts and asset recovery experts, but the public attitude and appetite for that sort

00:31:53

of work is less than for the type of, you know, overt violence and what have you.

00:32:01

So I think when funds are scarcer in England for public services, I think you'll find

00:32:07

that victims of financial crime are perhaps not given as much of the public purse as other

00:32:14

victims of crime.

00:32:15

Yeah, I could second that with the United States as well.

00:32:19

I think funding is a major issue, especially at a state and local level because they just

00:32:25

don't have the funding to get that advanced cryptocurrency training that they need to

00:32:30

feel confident in completing these types of cases.

00:32:33

And I really do think it is an issue of you just need to do it a few times and not put

00:32:37

it in the too hard pile and give it a shot and then you'll figure it out and you'll start

00:32:42

to get better at it.

00:32:43

And I noticed this at DOJ too, like when we first started doing the cryptocurrency cases,

00:32:48

I worked with the same US attorney's offices and the same agents for like years before

00:32:54

it branched out and I'd stopped hearing so many people say, I don't do crypto cases,

00:33:00

I don't do that stuff.

00:33:01

It took a really long time for just cryptocurrency training to get woven into general DOJ training

00:33:08

or into training at FLETC, which is the Federal Law Enforcement Training Facility.

00:33:13

So I think as that's been incorporated, we've seen more and more districts and more and

00:33:17

more special agents work those types of cases, but it's still, I think, underfunded and under-trained.

00:33:24

And I think while Federal law enforcement is doing a great job trying to get more of

00:33:28

that training, it just seems to me like more of it's needed still.

00:33:32

100%.

00:33:33

I think that's probably the one thing that if I could, and I'll ask you guys, what's

00:33:37

the note that you would end on?

00:33:40

I would be thinking about that, but I think if I could say like one of the takeaways,

00:33:44

if you took away anything from this, Joanna and I were part of a small, like the asset

00:33:50

recovery community in DOJ is very small and tight because not enough people know it or

00:33:55

do it, which is really sad.

00:33:57

And if I could say one thing, it would be that we need more people who understand asset

00:34:02

recovery both from a criminal and a civil aspect, from a conviction and a non-conviction

00:34:06

based perspective, from an international perspective of what tools the United States

00:34:10

attorneys have versus what tools the UK or Singapore or foreign jurisdictions have because

00:34:16

this technology is so globalized.

00:34:18

And so our response needs to be globalized.

00:34:21

And the ability to trace assets and follow crypto is something that we have got to build

00:34:26

more capacity in.

00:34:28

And I know that's something that all of us are really passionate about.

00:34:31

And it'll probably be the topic of another podcast that we'll do just because we could

00:34:34

spend an entire hour talking about the need for crypto investigators.

00:34:38

But I would love for you guys to have the last word Helen, Joanna, things that you

00:34:42

would want people to take away from crypto asset recovery.

00:34:47

Last thoughts.

00:34:48

My last thought would be especially in the United States, we've seen a lot of pushback

00:34:53

on the civil forfeiture route.

00:34:56

And there's a big case coming up in the Supreme Court, which if you have a chance to listen

00:35:00

to Steph Cassella's podcast on recently, they've been phenomenal.

00:35:03

I would just like everyone to kind of think about things holistically.

00:35:07

And when you hear things like this happened to victims, the civil forfeiture happened

00:35:11

to victims.

00:35:12

Think about all of the victims that civil asset forfeiture is also helping and what

00:35:17

you'd be taking away from them without that.

00:35:19

And I think unless you look at both sides of that equation, you're not really getting

00:35:23

the full picture on the severity of limiting asset forfeiture in this country would have.

00:35:29

And I think that's a really good and impression point.

00:35:32

Helen.

00:35:33

I think for me, the fact you can recover these assets should be a key takeaway.

00:35:38

Because so often I think people think, oh, the blockchain's untraceable.

00:35:43

It's so anonymous.

00:35:45

I'll never get it back.

00:35:46

There is a way you might need to think about the economics of it in certain cases, but

00:35:53

there is often a way to get things back, particularly if you work quickly.

00:35:58

So I would say to people who are investing in this area, consider it like your bank

00:36:04

account.

00:36:05

If somebody steals things from your bank account, think about claims against your bank and about

00:36:09

tracing the perpetrator.

00:36:11

There's no reason why you shouldn't look into it for crypto as well.

00:36:16

I just think, yeah, crypto just shouldn't go in the too hard pile.

00:36:19

And having worked both physical and digital assets in the US, I can tell you like once

00:36:24

you get crypto assets into your custody and it's safe and secure, the maintenance on it

00:36:29

is a lot less than managing a boat or managing a plane and having to have all sorts of people

00:36:36

come in to maintain that asset.

00:36:39

Once you actually get into custody, it is much more like a bank account where it can

00:36:42

sit in place frozen until the case is adjudicated.

00:36:47

So I think in a lot of ways people overcomplicate the crypto asset seizures and asset recovery

00:36:51

process.

00:36:52

So it is quite streamlined once you start working on it.

00:36:55

Well, I will say it helps to have two subject matter experts who make it very relatable

00:37:00

and accessible.

00:37:01

So we're super excited to have had you on the podcast.

00:37:04

I just want to say a huge thank you to both of you.

00:37:07

Helen, Joanna, thank you so much for coming on.

00:37:09

We really appreciate you sharing your knowledge.

00:37:11

I also want to say a huge thank you to our sponsor Bracewell LLP, Emily Kobroski for

00:37:16

her invaluable technical support in everyone listening.

00:37:19

Thank you for coming.

00:37:21

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00:37:46

Thanks again for tuning in and we hope to see you next time.

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