Cryptocurrency is big business these days. People are hoarding and speculating in such currencies as Bitcoin, Litecoin, Ethereum and Ripple today like they did in gold and other precious metals in the past. The craze for the unregulated cryptos has led to the creation of investment funds, soaring prices with wild fluctuations and, of course, fraud. In South Florida, the similarities between today’s hunger for cryptocurrencies and that for precious metals has not gone unnoticed, inviting comparisons between infamous gold fraud cases of the past and the $700 million in crypto fraud claims that arose in last year.
As the housing bubble was bursting and the world teetered on the edge of the Financial Crisis of the early 2000s, investors started investing in gold. Several South Florida businesses cropped up offering to store bullion for unsuspecting investors. A largely unregulated business practice, several of the operators defrauded their clients, resulting in nearly $100 million in losses for the clients who trusted them.
Two decades earlier, investors lost almost $44 million in the same type of gold storage fraud. The past year’s crypto frauds were eerily similar. In a largely unregulated, near-untraceable industry, cryptocurrency owners lost more than $700 million over two separate incidents when major exchanges entrusted with owners’ cryptocurrency keys were hacked.
If the exchanges were somehow negligent in handling their clients’ crypto-funds, they may have breached their fiduciary duty to their clients. Or worse, if the losses were the result of an inside caper, they may have abetted fraud. Individuals or businesses who suspect that they are the victims of fraud need the counsel of seasoned business litigation firm. They can investigate the matter and advise on the best course of action for recouping losses due to fraud.
Source: Miami New Times, “How Miami became America’s capital of cryptocurrency, for better or worse,” Jessica Lipscomb, Mar. 27, 2018