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Crypto and DeFi fraud schemes have a lot in common with loan schemes and market manipulation in 1980 and the dot com era, AlixPartners’ David White observed.
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AlixPartners, a consulting firm assisting the defunct exchange FTX in bankruptcy proceedings, is working to improve cryptocurrency tracing through a collaboration with Chainalysis.
The blockchain research company Chainalysis and AlixPartners announced on Oct. 31 a strategic partnership to enhance capabilities in digital asset tracing and forensic investigations.
Through this collaboration, AlixPartners professionals have received extensive crypto training in blockchain investigations and will also bring their expertise to expand services offered to Chainalysis customers.
After decades of TradFi investigations, AlixPartners moved into crypto with the FTX case
Founded in 1981, AlixPartners is a major financial advisory and global consulting firm focused on bankruptcy proceedings. The company is known for its involvement in the Bernie Madoff scandal in 2008, recovering the bulk of the estimated $17.5 billion principal stolen from investors.
AlixPartners has been actively moving into cryptocurrency forensics in the past few years, getting involved in the FTX bankruptcy in December 2022.
The new FTX management reportedly hired AlixPartners to trace billions of dollars in missing crypto assets shortly after the exchange collapsed in November 2022. David White, AlixPartners’ director of investigations, is leading crypto forensics work in the FTX case.
FTX’s founder, Sam Bankman-Fried, is now serving a 25-year prison sentence in the US. Source: The New York Times
Apart from FTX, AlixPartners also assisted self-proclaimed Bitcoin (BTC) creator Craig Wright in disputes with Ira Kleiman and Peter McCormack. Additionally, AlixPartners is providing expert witness work in tracing crypto assets in the precedent involving Fabrizio D’Aloia. It also assists the blockchain gaming platform Gala Games in its dispute with Wright Thurston.
Crypto and DeFi fraud “echoes many patterns” in schemes from the 1980s
According to AlixPartners’ investigative director, fraud schemes in crypto have a lot in common with the market manipulation seen in the 1980s and the dot-com era.
“Fraudsters simply find new venues as markets and technology evolves,” White told Cointelegraph, referring to new tech like crypto and decentralized finance (DeFi). He stated:
“Crypto and DeFi markets have become the latest playground, echoing many of the patterns we saw in the 1980s saving and loan schemes, then again in the market manipulation in the dot-com era.”
According to White, DeFi’s “limited oversight and ample opportunities” triggered a resurgence of old tactics like pump-and-dump schemes, insider trading, market manipulation and Ponzi schemes.
David White, managing director and director of investigations at AlixPartners. Source: AlixPartners
Related: FTX estate sues KuCoin to recover over $50M in assets
With rising DeFi attacks, AlixPartners has been increasingly focused on governance attacks on decentralized organizations, smart contract exploits, collateral schemes and others, White said, adding:
“Addressing these complex challenges demands cross-functional expertise in crypto, accounting, digital forensics and cybersecurity — all areas where our team excels, enabling us to stay ahead in this fast-moving landscape.”
Magazine: The rise of Mert Mumtaz: ‘I probably FUD Solana the most out of anybody’
This article first appeared at Cointelegraph.com News
