Michael Lauchlan Charged With Running Alleged Cryptocurrency Recovery Scam Through Coin Dispute Network

On Thursday, August 1, 2024, Manhattan District Attorney Alvin L. Bragg, Jr. announced charges against Michael Lauchlan for allegedly running a cryptocurrency recovery scam through his business Coin Dispute Network (CDN). Lauchlan, who used the alias “Max Handler,” was charged with grand larceny in the third and fourth degree and two counts of scheme to defraud in the first degree.

According to the District Attorney’s office, between July 2022 and June 2023, CDN offered blockchain analysis, tracing, recovery, and monitoring services for digital assets like Bitcoin and Ethereum through its website coindisputenetwork.com. The company claimed it could help customers dispute transactions and recover lost cryptocurrency for an initial consultation fee paid in Ether.

Prosecutors say Lauchlan would then falsely tell clients he knew where their cryptocurrency had moved and could successfully recover it with an additional fee. However, none of CDN’s more than 175 customers were actually able to get any assets back through the company’s services. District Attorney Bragg stated Lauchlan “manipulated customers with false promises and pocketed a fee, allegedly engaging in a scheme that defrauded dozens of people and stole from at least three New Yorkers.”

Through its investigation, the DA’s office identified around $14,000 worth of cryptocurrency belonging to CDN users that was transferred to the exchange CoinEx. In Spring 2024, a court-ordered seizure transferred the funds to addresses controlled by prosecutors pending further investigation. The DA’s High Technology Analysis Unit provided key assistance in tracing the digital transactions.

The charges mark the first time a cryptocurrency recovery site has been taken down by Manhattan prosecutors. In June 2023, the DA’s office secured a court order seizing CDN’s domain, which now displays a notice about the site being shut down. Homeland Security Investigations (HSI) New York assisted in the operation, with Special Agent Ivan Arvelo stating Lauchlan “exploited customers’ lack of experience” and “fleeced them out of thousands in sham services and stolen assets.”

Lauchlan was arrested on July 9, 2024, at Harry Reid International Airport in Las Vegas, Nevada with help from HSI’s New York and Las Vegas field offices as well as Customs and Border Protection. Assistant District Attorney Virginia Nguyen is prosecuting the case, assisted by other members of the DA’s Cybercrime and Identity Theft Bureau. Crypto analyst James Miller and investigators Patrick Ludlow and Thomas Mullin also supported the probe.