XREX, a multinational virtual asset exchange created in Taiwan, recently assisted law enforcement authorities in successfully returning defrauded Ether coins to the victims in a case where the suspects were unknown and had no defendant status, setting a precedent in Taiwan’s judicial history.
In collaboration with the Criminal Investigation Bureau and the Judicial Reform Foundation, XREX used advanced blockchain transaction tracking technology to prove the flow of illicit funds and identify the owners of the cryptocurrency assets. They were able to assist law enforcement authorities in returning the defrauded Ether coins to the victims, even in a situation where the suspects were unknown and had no defendant status, marking the first case of its kind in Taiwan’s judicial history.
The uniqueness of this case lies in the following aspects:
1. The victims were phished while using the decentralized wallet MetaMask, commonly known as “Little Fox,” resulting in the theft of their Ether coins.
2. As MetaMask is a decentralized wallet, there is no customer service available to assist the victims.
3. As the perpetrators were likely to be a criminal organization based overseas, the authorities had no information about the identity of the suspects/defendants at the time of accepting the case.
4. The stolen cryptocurrency assets were transferred to the OKX exchange.
5. Through collaboration with multiple parties, the illegal funds were remotely frozen, and almost all of the stolen cryptocurrency assets were returned to the victims.
The victim in this fraud case, Mr. Wan, is an active member of the cryptocurrency community and a professional trader. He stated, “I never expected that the fraud group would impersonate Forbes for a ‘media interview’ and send a webpage with malicious code, stealing my cryptocurrency assets under the guise of filling out information. I sincerely thank the Criminal Investigation Bureau’s Sixth Division, the Judicial Reform Foundation’s Commissioner Mei-Hui Chen, XREX exchange, OKX exchange, and SlowMist Technology for their assistance. I hope my case can serve as a warning, and also make the law enforcement agencies believe that such decentralized wallet fraud cases can be solved successfully.”
Mr. Wan was phished while using the decentralized wallet MetaMask on the decentralized social platform Friend.tech on the Base chain, and the defrauded funds were transferred to the OKX exchange. Upon realizing the fraud, Mr. Wan immediately shared his experience on social media platforms and gained attention from the cryptocurrency community. Within 6 hours, SlowMist Technology and the OKX exchange intercepted the stolen Ether coins. According to OKX’s internal regulations, Taiwanese law enforcement authorities needed to intervene within 72 hours; otherwise, they would not be able to continue freezing the illegal funds. Therefore, with the assistance of Commissioner Mei-Hui Chen from the Judicial Reform Foundation, the victim was able to file a police report and collaborate with the Criminal Investigation Bureau and the prosecutor’s office to apply for a seizure order from the court.
The attacker transferred the assets to their own wallet and then to the OKX exchange, with each transaction clearly visible in the blockchain transaction analysis.
However, this case lacked a “defendant.” How could the funds be legally returned to the victims? To resolve 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, track the flow of funds, and re-verify the financial documents. XREX exchange, which has successfully implemented several top international blockchain analysis tools, played a crucial role in this process. Their internal cybersecurity and anti-money laundering team used TRM Labs and SlowMist Technology’s MistTrack for cross-analysis of blockchain transactions, providing reliable evidence and compiling a comprehensive forensic report.
Commissioner Mei-Hui Chen stated, “This case relied on mutual trust among multiple units and rapid and effective cross-sectoral cooperation in a very short period. Even though the illegal funds were transferred to an overseas exchange, they were still recovered. This is a great encouragement for all law enforcement agencies and experts involved. Although this is the first case, I hope it will not be a singular lucky case but a precedent for similar cases.” Investigator Rui-Xuan Xie from the Criminal Investigation Bureau’s Sixth Division, who was responsible for this case, stated, “Fraud groups extend their illegal activities globally through the internet and emerging technologies such as blockchain. This has become a serious social problem in Taiwan. Although Taiwan’s ability to combat overseas crimes is limited, making it difficult to capture criminals hiding abroad, seizing and returning fraudulent proceeds has substantial significance for the victims.” Xie also emphasized that law enforcement agencies must continue strengthening their cryptocurrency tracing techniques and explore and experiment within the current legal framework. “I hope this case can be a cornerstone, making remote freezing of cryptocurrencies a common practice and promoting cooperation between law enforcement agencies, blockchain experts, lawyers, and cybersecurity professionals to jointly combat fraudulent activities abusing blockchain technology.” Sun Huang, the Chief Security Officer and General Manager of XREX, has over 15 years of international practical experience in cybersecurity, with expertise in both offensive and defensive capabilities.
Sun Huang stated, “This collaboration with law enforcement highlights the public and transparent nature of blockchain, making money laundering more difficult. All transactions are permanently recorded on the blockchain and cannot be tampered with or erased. The current challenge lies in the adoption and effective use of blockchain tracking and analysis tools. We believe that XREX is a leader in this field and can be a trusted and cooperative partner for law enforcement agencies.”
XREX has implemented top blockchain analysis and monitoring technologies and tools, such as CipherTrace from Mastercard, TRM Labs, Chainalysis, and MistTrack, and continues to fulfill its social responsibility as an industry player by providing free assistance to prosecutors and investigators in analyzing illegal fund flows and fraud schemes, producing forensic reports. XREX is also the first Taiwanese company to be audited by the British Standards Institution and be certified for the ISO/IEC 27001:2022 information security management system. XREX’s Taiwan subsidiary, ChainUP Co., Ltd., is listed as a qualified service provider on the Financial Supervisory Commission’s “List of Virtual Currency Platforms and Trading Businesses that Have Complied with Anti-Money Laundering Laws and Regulations.”
Sun Huang urges all cryptocurrency users to remain vigilant and verify information carefully. If unfortunate enough to fall victim to fraud, immediate actions should be taken, such as transferring assets to a new wallet, filing a police report promptly, and preserving evidence to minimize losses. Moreover, they should avoid falling into secondary scams claiming to help recover assets on the internet and seek assistance from qualified service providers and law enforcement agencies.
XREX exchange, co-founded by internationally renowned cybersecurity expert Yau-Wen Wong, is the first cryptocurrency company in Taiwan to obtain the Monetary Authority of Singapore’s (MAS) provisional approval for a Major Payment Institution (MPI) license, and is a qualified service provider that has completed the anti-money laundering compliance declaration with the Financial Supervisory Commission in Taiwan. XREX’s predecessor, Amachain Technology, specialized in vulnerability analysis and advanced persistent threat (APT) network attacks.
About XREX:
XREX is an international financial institution born out of blockchain technology, working closely with banks, governments, and users to redefine finance. They provide enterprise-level services to help small and medium-sized enterprises engaged in cross-border financial services in developing countries or with business dealings with developing countries, as well as provide the most user-friendly entry point for cryptocurrency newcomers worldwide. Founded in 2018 and licensed to operate globally, XREX offers one-stop services, including digital asset custody, wallets, cross-border payments, fiat-to-cryptocurrency conversion, cryptocurrency exchanges, diversified asset investments, and fiat currency deposits and withdrawals. XREX views 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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