As a researcher with decades of TradFi (Traditional Finance) investigations under my belt, I must admit that delving into the world of cryptocurrencies and DeFi feels like a trip down memory lane – albeit a more technologically advanced one. The similarities between the schemes we saw in the 1980s and what’s happening now with crypto are striking, much like comparing a vintage VHS tape to a modern streaming service.
Working together with Chainalysis, AlixPartners – a consulting company helping the bankrupt crypto exchange FTX – aims to enhance the tracking of cryptocurrencies as part of their collaboration.
On October 31, Chainalysis, a firm specializing in blockchain research, and AlixPartners have joined forces in a strategic partnership. This collaboration aims to boost their abilities in tracking digital assets and conducting forensic investigations.
By teaming up, AlixPartners experts have gained comprehensive education on cryptocurrency matters, specifically in blockchain investigations. Moreover, they are set to apply their skills to enhance the range of services provided to clients of Chainalysis.
After decades of TradFi investigations, AlixPartners moved into crypto with the FTX case
Established back in 1981, AlixPartners stands as a prominent player in the field of financial advisory and global consulting, with a significant focus on bankruptcy cases. This firm is well-recognized for its role in the Bernie Madoff scandal that occurred in 2008, where they managed to retrieve a substantial portion of the approximately $17.5 billion principal that had been allegedly misappropriated from investors.
Over the past couple of years, AlixPartners has been increasingly engaged in the field of cryptocurrency investigations, and they took part in the FTX bankruptcy case in December 2022.
In response to FTX’s collapse in November 2022, the new leadership reportedly brought on board AlixPartners to track down billions of dollars worth of misplaced cryptocurrency assets. David White, who heads investigations at AlixPartners, is overseeing the crypto-related forensics work related to FTX.
Beyond FTX, AlixPartners has also aided Craig Wright, who claims to be Bitcoin’s creator, in disagreements with Ira Kleiman and Peter McCormack. Furthermore, AlixPartners is engaged in providing expert witness services in the case of tracing cryptocurrency assets concerning Fabrizio D’Aloia. Additionally, they are assisting Gala Games in their legal conflict with Wright Thurston.
Crypto and DeFi fraud “echoes many patterns” in schemes from the 1980s
As per the findings of the Investigative Director at AlixPartners, the deceptive practices occurring within the cryptocurrency market exhibit striking similarities to the stock market manipulations that were prevalent during the 1980s and the dot-com bubble era.
Criminals adapt by discovering fresh platforms as the market landscape and technology advance,” is how White put it when speaking with CryptoMoon. This includes innovative technologies such as cryptocurrency and Decentralized Finance (DeFi).
“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.”
Based on White’s explanation, the lack of extensive supervision in Decentralized Finance (DeFi) platforms, combined with numerous possibilities, has led to a revival of ancient strategies such as stock hoarding and quick selling (pump-and-dump), insider trading, manipulation of market conditions, and Ponzi schemes.
Due to the escalating number of attacks on Decentralized Finance (DeFi), AlixPartners has been devoting more attention towards governance breaches in decentralized entities, smart contract vulnerabilities, manipulative collateral strategies, among other issues, according to White. To clarify further, he stated:
“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.”
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2024-10-31 15:38