Kluastax Blog

The scheme, operating as "CryptoYield Partners," promised investors 5% weekly returns through arbitrage trading. Our forensic analysis revealed the operation was a classic Ponzi, paying early investors with funds from new participants.

Our recovery process involved:

1. Tracing the flow of funds through blockchain analysis
2. Identifying exchange accounts holding client assets
3. Obtaining emergency freeze orders in three jurisdictions
4. Negotiating with exchanges for voluntary restitution

Key to our success was demonstrating to authorities that the majority of funds remained in cold storage, contrary to the operators' claims of active trading. This case highlights the importance of acting quickly when fraud is suspected.

Wallet Security

For optimal security, we recommend a tiered approach:

• Cold Storage: Keep 80-90% of holdings in hardware wallets
• Hot Wallet: Use a mobile wallet with biometric security for daily transactions
• Multi-sig: For significant amounts, require multiple signatures for transactions

Transaction Safety

Always:

• Verify the first and last 4 characters of wallet addresses
• Send a small test transaction first
• Double-check smart contract permissions before interacting

Device Protection

Maintain dedicated devices for crypto activities with:

• Full disk encryption
• Regular security updates
• No unnecessary apps installed

Positive Developments

• EU: New rules require exchanges to cooperate with recovery efforts within 24 hours of receiving a court order
• Singapore: Established a centralized registry of wallet addresses associated with fraud
• US: FinCEN now permits limited sharing of suspicious activity reports with victims

New Challenges

• Privacy Coins: Several jurisdictions now prohibit exchanges from listing privacy-focused cryptocurrencies
• Cross-border: Some countries now require local presence for recovery actions
• Time Limits: Reduced statute of limitations in certain states

Our recommendation is to initiate recovery proceedings as soon as fraud is detected, as the legal landscape continues to evolve rapidly.

Immediate Actions

1. Verify the Transaction: Check the blockchain explorer to confirm the transaction was completed
2. Contact the Recipient: If it's an exchange wallet, immediately contact their support
3. Gather Evidence: Screenshot all relevant transaction details

Exchange Wallets

For transactions sent to exchange addresses:

• Most major exchanges can reverse transactions if contacted quickly
• Be prepared to provide proof of ownership of both sending and intended receiving addresses
• There may be a processing fee for recovery efforts

Private Wallets

For transactions to unknown private wallets:

• Consider sending a small additional transaction with contact information
• Monitor the address for any outbound transactions
• In some cases, professional recovery services may be able to help

Prevention is always best - always use address book features and QR codes when available.