XREX, a multinational virtual asset exchange founded in Taiwan, recently assisted law enforcement agencies in successfully returning stolen Ether coins to the victims in a cryptocurrency fraud case, marking the first such case in Taiwanese judicial history. This collaboration between the Criminal Investigation Bureau, the Judicial Reform Foundation, and XREX utilized cutting-edge blockchain transaction tracking technology to trace the illegal funds and assist law enforcement agencies in returning the stolen Ether coins to the victims, even in the absence of a known suspect or defendant.
The case involved a victim who fell prey to a phishing attack while using the decentralized wallet MetaMask, commonly referred to as “Little Fox”. The victim’s Ether coins stored in the wallet were stolen. As MetaMask is a decentralized wallet, there is no customer service available to assist victims. Additionally, due to the likelihood that the perpetrator was an overseas criminal organization, the authorities had no information about the identity of the suspect (defendant) when the case was received. The stolen cryptocurrency assets were transferred to the overseas exchange OKX.
Through collaboration with multiple parties, illegal funds were remotely confiscated, and almost all of the stolen cryptocurrency assets were returned to the victims. The victim in this fraud case, Mr. Wan, an active member of the cryptocurrency community and a professional trader, expressed gratitude towards the efforts of the Criminal Investigation Bureau, the Judicial Reform Foundation’s Commissioner Chen Mei-Hui, XREX, OKX, and SlowMist Technology. He hopes that his case serves as a warning to others and instills confidence in law enforcement agencies that they can successfully handle similar decentralized wallet fraud cases.
Mr. Wan was phished while using the decentralized social platform Friend.tech, located on the Base chain, through his decentralized wallet MetaMask. After realizing the fraud, he immediately shared his experience on social media and garnered attention from the cryptocurrency community. Within 6 hours, SlowMist Technology and OKX intercepted the stolen Ether coins. According to OKX’s internal regulations, Taiwanese law enforcement agencies needed to be involved within 72 hours, or the illegal funds could not be further withheld. Therefore, with assistance from the Judicial Reform Foundation’s Chen Mei-Hui, the victim completed the report, and the Criminal Investigation Bureau and prosecutors collaborated to apply for a seizure order from the court.
The attacker transferred the assets to their own wallet and then to OKX, with each transaction clearly visible in the blockchain analysis of the flow of funds. However, the case lacked a “defendant”, so the question arose of how to legally return the funds to the victims. To address this legal procedural issue, law enforcement authorities requested the involvement of a professional and neutral third party to confirm the owner of the stolen wallet, trace the flow of funds, and verify the financial documents. XREX, which has successfully incorporated several top international blockchain analysis tools, played a crucial role in this process. Its internal cybersecurity and anti-money laundering teams used TRM Labs and SlowMist Technology’s MistTrack to cross-analyze the blockchain transactions, providing reliable evidence and compiling a comprehensive forensic report of the flow of funds.
Chen Mei-Hui stated that this case relied on the trust and rapid and effective coordination of multiple units within a short period. Even though the illegal funds were transferred to an overseas exchange, they were successfully recovered, which is encouraging for all participating law enforcement agencies and experts. She hopes that this case, being the first, will not be an isolated lucky incident but instead become a precedent for similar cases. Investigator Xie Rui-Xuan from the Criminal Investigation Bureau’s Sixth Division, responsible for this case, stated that fraud groups are extending their illegal activities globally through emerging technologies such as the internet and blockchain, which has become a serious social problem in Taiwan. Although Taiwan’s ability to combat overseas crime is limited and it is difficult to capture criminals hiding abroad, seizing and returning fraudulent proceeds is of substantial significance to the victims.
Xie Rui-Xuan also emphasized the ongoing efforts to strengthen cryptocurrency tracing technology by law enforcement agencies, as well as the need to explore and experiment within the limitations of current regulations. “I hope this case will become an important cornerstone, not only making remote confiscation of cryptocurrencies a common practice but also promoting collaboration between law enforcement agencies and experts in the fields of blockchain, law, and cybersecurity to combat fraudulent activities abusing blockchain technology.” Sun Huang, XREX’s Chief Security Officer and General Manager, who has over 15 years of international cybersecurity experience, highlighted the public and transparent nature of blockchain, which makes money laundering more difficult as all transactions are permanently recorded on the blockchain and cannot be tampered with or erased. The challenge now lies in the implementation and effective use of blockchain tracking and analysis tools, and XREX believes it is a leader in this regard, becoming a trusted partner for law enforcement agencies.
XREX has already integrated top blockchain analysis and monitoring technologies and tools such as CipherTrace from Mastercard, TRM Labs backed by JPMorgan Chase, Chainalysis, and MistTrack. XREX continues to fulfill its social responsibility as an industry player by providing free assistance to prosecutors in analyzing illegal cryptocurrency flows and fraudulent techniques and generating forensic reports. XREX is also the first Taiwanese company to obtain ISO/IEC 27001:2022 certification for its information security management system, audited by the British Standards Institution. XREX’s subsidiary in Taiwan, ChainTech, is listed as a qualified business on the list of virtual currency platforms and trading businesses that have declared compliance with anti-money laundering regulations by the Financial Supervisory Commission.
Sun Huang urged all cryptocurrency users to remain vigilant and verify information carefully. If they become victims of fraud, they should take immediate action, such as transferring their assets to a new wallet, promptly reporting the incident, and preserving evidence to minimize losses. Furthermore, they should avoid falling victim to secondary scams that claim to help recover stolen assets on the internet and seek assistance from qualified businesses and law enforcement agencies. XREX Exchange, co-founded by internationally renowned cybersecurity expert Huang Yao-Wen, is the first cryptocurrency company in Taiwan to obtain a principle approval for a Major Payment Institution license from the Monetary Authority of Singapore (MAS). It is also a qualified business that has completed an anti-money laundering compliance declaration with the Financial Supervisory Commission. Its predecessor, AmaTech, specialized in vulnerability analysis and advanced persistent threat (APT) cyberattacks.
About XREX:
XREX is an international financial institution born out of blockchain technology that collaborates closely with banks, governments, and users to redefine finance. It provides enterprise-level services to help small and medium-sized enterprises engaged in cross-border business with developing countries or countries in development to process cross-border financial services. It also provides a user-friendly initial entry point for beginners in the global cryptocurrency market. Founded in 2018 and operating globally with licenses from multiple countries, XREX offers comprehensive services, including digital asset custody, wallets, cross-border payments, fiat-to-crypto conversions, cryptocurrency exchanges, diversified asset investments, and fiat deposits and withdrawals. XREX sees inclusive finance as a social responsibility and aims to promote financial participation rights, financial access rights, and financial education through the use of blockchain technology.
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