TLDR:
- City of London Police partnered with law firm Gowling WLG to recover digital assets lost to fraud
- The program recovered over £2 million (~$2.6 million) for an elderly woman with Alzheimer’s in a pilot project
- UK’s amended Proceeds of Crime Act allows court orders to retrieve digital assets directly from exchanges
- £570 million (~$730 million) was lost to fraud in the UK in first half of 2024
- Digital asset recovery is becoming more common with specialized services and favorable laws
The City of London Police has launched a new civil asset recovery program in collaboration with international law firm Gowling WLG. This partnership aims to help victims of digital asset fraud recover their stolen funds, especially in cases where criminal prosecution isn’t possible.
The initiative follows a successful pilot project where the team recovered more than £2 million (approximately $2.6 million) for an elderly woman suffering from Alzheimer’s disease who had been defrauded in a cryptocurrency scam. The case demonstrated the potential effectiveness of coordinated efforts between private firms and law enforcement.
Bríd Holden, Director at Gowling WLG, expressed optimism about the program’s future. “We are hoping that working in collaboration with City of London Police will change the landscape and encourage more victims to report fraud, raising awareness generally,” Holden said in an April 3 press release.
The scale of the problem is immense. According to Holden, £570 million (approximately $730 million) was lost to fraud in the UK in just the first half of 2024. Blockchain analysis firm Chainalysis reports that digital asset scams received at least $9.9 billion globally in 2024 alone.
Legal Framework Supporting Recovery
Recent legal developments in the UK have strengthened authorities’ ability to recover stolen digital assets. In March, UK police working with specialist lawyers recovered over £520,000 (approximately $670,000) in digital assets that had been defrauded from an 80-year-old man.
This recovery was the first of its kind using the recently amended Proceeds of Crime Act 2002 (POCA). The updated law allows for court restraining orders to be issued and used by authorities to retrieve digital assets directly from exchanges and custodian wallet providers.
The groundwork for this kind of recovery was laid in April 2024 when the Economic Crime and Corporate Transparency Act 2023 came into force. This legislation expanded law enforcement powers regarding digital asset-related criminal activity.
The Act extended the confiscation and civil recovery regime under POCA to include digital assets. This gave law enforcement agencies authority to seize, store, and potentially sell or destroy digital assets as part of investigations.
Additionally, the Act required exchanges and custodian services to cooperate with law enforcement agencies, including providing access to relevant transaction information. This cooperation is critical for tracking and recovering stolen funds.
Growing Industry of Asset Recovery
Digital asset recovery, once thought impossible, is becoming increasingly common. Some experts argue that the process can be easier than with physical assets, thanks to blockchain technology features like immutability and traceability.
Numerous services and firms now exist to assist in recovery processes. For example, Token Recovery launched its end-to-end digital asset recovery service in June. According to the company, it “retrieves digital assets from all networks,” making its services “chain agnostic.”
Other services combine expertise in blockchain investigations with legal knowledge and analysis of blockchain protocols. These specialized firms work to trace, freeze, and ultimately recover lost and stolen assets.
These digital asset-focused companies operate alongside traditional law firms like Gowling WLG, which bring their own legal and technical expertise to solve these complex cases.
Detective Chief Inspector Craig Mullish of the City of London Police highlighted the importance of this work for victims. “As a victim of fraud, you can feel helpless and that you have to shoulder the often heavy financial burden of losing money at the hands of criminals,” Mullish said.
“This trial with Gowling WLG is an incredibly positive initiative, which we hope will provide a clear process for victims in helping them take back what is owed to them,” he added.
The future of digital asset recovery looks promising. The UK is currently reviewing the Property (Digital Assets etc) Bill, which would create a new category of personal property for digital assets and NFTs. This would officially recognize digital assets as property under UK law, with all associated protections and recourses.
The bill was introduced in September 2024 and is currently being reviewed in the House of Lords. If passed, it would further strengthen the legal framework for asset recovery.
With the collaboration of authorities, favorable laws, and specialized recovery services, victims of digital asset fraud now have more hope of recovering their stolen funds than ever before.
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