Case Studies

Cryptocurrency Ponzi Scheme Forensic Analysis

J.S. Held’s Inaugural Global Risk Report Examines Potential Business Risks & Opportunities in 2024

Read More close Created with Sketch.

The Situation

The Commodity Futures Trading Commission (CFTC) filed a complaint alleging EminiFX purported an online investing platform for cryptocurrency and foreign exchange, as a “Ponzi-like scheme,” pooling together investments worth at least $59M from hundreds of investors. The Receiver was appointed over EminiFX and assets traceable to EminiFX customer funds. The FBI executed a search warrant on the EminiFX premises. J.S. Held arrived onsite to collect and preserve crucial data systems, and the Receiver took control of EminiFX. Since then, the Receiver and our team have endeavored to secure the assets of EminiFX, obtain those books and records of EminiFX not in the custody of the FBI, and begin a detailed assessment of the financial condition of EminiFX. Analysis of the computer servers hosting the EminiFX platform and certain offshore financial records revealed there were over 62K EminiFX users who collectively invested approximately $250M, primarily via either cash deposits in the U.S. or cryptocurrency deposits using an Estonian exchange.

How We Advised

Our engagement started with collecting multiple communication sources (including Slack) and financial documents, comprising dozens of unique custodians and hundreds of disparate electronic data sources and physical evidence. Approximately 1M documents were put through the discovery process as part of the investigation. During the early stages of the Receivership, the Receiver and J.S. Held dedicated significant resources and time to reviewing the records available to identify and analyze transactions (deposits and withdrawals) made by users to and from the EminiFX system, including cryptocurrency transactions.

The project eventually pivoted into a formal process to determine the universe of people who may be entitled to a distribution from the EminiFX receivership estate, in addition to those individuals or entities who deposited funds with EminiFX for investment purposes.

J.S. Held processed all the documents into an eDiscovery review platform; developed targeted content and metadata searches to identify key communications and financial statements; and used digital forensics tools to collect, track, and store physical evidence. We also performed data validation procedures and various transaction analyses to trace the flow of funds and calculate account balances.

Overall, we processed and analyzed over 110K transactions across multiple financial institutions and cryptocurrency exchanges. These transactions represented over $260M in deposits and $34M in withdrawals, affecting over 62K investors. As described in this Financial Conditions Report, the Receivership recovered over $151M in assets, which will be distributed amongst the investors based on our ability to calculate and validate investor claims.

Key Contacts

Stephen O'Malley
Senior Managing Director
Digital Investigations & Discovery
+1 917 764 1043
[email protected]

Karyl Van Tassel
Senior Managing Director
Global Investigations
+1 346 353 5172
[email protected]

Ken Feinstein
Managing Director
Digital Investigations & Discovery
+1 917 277 7868
[email protected]

Mike Gaudet
Managing Director
Digital Investigations & Discovery
+1 346 509 5373
[email protected]

Paula Durham
Economic Damages & Valuations
+1 602 279 7505
[email protected]

Related Practice Areas

> Data Analytics
We combine our knowledge and experience analyzing structured and unstructured data with our investigative expertise to help our clients uncover and manage legal, reputational, regulatory, and financial risk.

> Electronic Discovery & Digital Forensics
Our eDiscovery experts specialize in data collection, processing, document review, and evidence production. Our digital forensics team provides a practical approach to preserving, collecting, and analyzing electronic data.

> Cryptocurrency
Our team delivers expert advisory and investigative services to help generate and protect value related to blockchain technology and digital assets, and to ensure integrity and fairness of cryptocurrency markets.

Our Experts