- Although not quite as high as it was in 2024, the price of bitcoin, which was trading at $48,500 at the time this story went to print, is still far higher than it was at the beginning of January ($34,705). Although the editors feel that some of the excitement has dissipated with time, cryptocurrencies and digital assets nonetheless attract the market’s maturing, wealth sector. We have this piece by James Evison (shown below), partner at Stevens & Bolton, to help put market changes in perspective and think about what lies ahead. He specifically takes the possibility of investment fraud into account.
- The editors are happy to offer these opinions; outside authors’ opinions are subject to the customary editorial disclaimers. Readers are welcome to join the discussion at any time! Send a message to tom.burroughes@wealthbriefing.com.
- The crypto winter ended in the first part of 2024, and a bull market took hold. The prolonged streak of bad news stories, market turbulence, extensive allegations of fraud, and high-profile bankruptcies did not seem to dampen investor desire. Bitcoin’s price has reached all-time highs, and some analysts believe there is still more upside.
- All too often, fraud attorneys are told cautionary tales about private investors who were lured in by the allure of cryptocurrencies and transferred money to scam artists. Frequently, it begins with some internet research. Then there could be a proposition for an investment that is appealing. They are very kind and helpful. They provide examples of the profits their platform can make. They advise making a little first investment to “see what happens.” More money is invested when the first one rises. The investor wants to take money out after a time. Apologies are offered. The funds cannot be released until further payments are made. Nothing has been released yet. The growing realization of what has transpired then follows.
- An example of how to illustrate this danger is to examine past events. The halving of bitcoin happened back in May of 2020. This essentially results in a halving of the bitcoin supply and occurs every four years. Value usually rises when an asset is harder to find while demand stays constant. Naturally, there was a surge in 2020 after the halving. Prior to the halving, the price was around $7,000; in 2021, it reached a high of almost $60,000.
- News outlets carried several stories, both favorable and bad, concerning digital assets. According to the Chainalysis 2024 crypto crime research, at the same time, the value of bitcoin received by unlawful wallet addresses increased from about $9.4 billion in 2020 to $23.2 billion in 2021 and then $39.6 billion in 2022. A wave of cryptocurrency claims also appeared in English courts around this time, with deceived investors requesting disclosure orders, freezing injunctions, and the recovery of their pilfered money.
- Let’s fast-forward to 2024 when the Bitcoin halving cycle has just begun again at a time when prices have already surged significantly. Once again, news concerning opportunity and loss abound in the media: the effect of growing prices, the US regulatory body’s acceptance of exchange-traded funds, Dr. Craig Wright’s legal woes in England, and the lingering consequences from the collapse of FTX.
- It is ot difficult to predict what fraud attorneys anticipate happening next. The simple equation increasing prices + public interest = FOMO = fraud may be used to summarize it.
- What steps might thus be taken to reduce the dangers and stop investors from becoming victims of these frauds? Part of the solution is more regulation. Around the globe, a number of nations are vying to establish regulatory frameworks that strike a balance between safeguarding consumers’ interests and establishing a novel but secure financial industry.
- In the United Kingdom, a restricted set of regulations pertaining to companies who sell cryptocurrency assets to customers has been implemented with the goal of integrating cryptocurrency asset-related operations within the Financial Services and Markets Act 2000’s current regulatory framework. For investors, this is generally excellent news, but we’ll have to wait and see whether it makes it through the next general election unscathed. In any case, it won’t take the place of exercising care and doing thorough research before making a financial commitment. It is preferable to prevent than to cure.
- But even in the unlikely event that anything goes wrong, and it will for some, there is still hope. When it comes to helping victims of fraud, English courts are well known for their kindness. A wealth of case law that applies conventional legal ideas to fraud cases involving digital assets has been established. Several steps may be done to preserve those assets and attempt to gain their return if they can be tracked, which they often can be because of the blockchain, and you move fast enough.
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