crypto scammers not above the law: how victims can fight back

Scams are not new. Financial fraud has long adapted to whatever financial technology, communications channel, or investment narrative is available at the time. Crypto scams are just a newer form of that problem. Crypto scams use familiar patterns of deception such as Ponzi schemes, romance scams, phishing. But the mechanics of crypto scams make detection and recovery difficult: fast, cross-border transactions, pseudonymous addresses, and opaque business platforms.  

When someone realises they have been defrauded, the instinct is to report it to police or a regulator. That is the right instinct. But reporting alone rarely results in recovering funds. In 2025, more than 28,000 Australians reported losing money to scams through Scamwatch, with total reported losses exceeding $2.18 billion. For crypto scams specifically, Australians reported losses of $121.3 million across almost 4,000 separate incidents. The scale of the problem explains why law enforcement and regulatory agencies cannot investigate every case. This means that it may be worthwhile seeking advice about private enforcement options.  

A recent decision of the County Court of Victoria, Siegers v Nest Services Ltd & Ors [2026] VCC 15 illustrates how private legal action can help uncover information to chase crypto scams.  

The identity problem 

To sue someone for misappropriating funds, you need to identify them. In crypto scam cases, the perpetrators are deliberately trying to hide.   

The transaction pathway, however, is usually clear. Funds move from a bank account to a digital currency exchange, are converted into cryptocurrency, and are then transferred to wallets controlled by the fraudsters. From there, the assets are moved quickly across multiple wallets and exchanges, often across jurisdictions. 

Most widely used cryptocurrencies (for example, BTC, ETH, USDT and XRP) operate on public blockchains. These are publicly accessible ledgers that record all transactions, which means the movement of crypto assets can be traced. In practice, this work is undertaken by forensic accounting and blockchain analytics specialists who have access to licensed software tools. These specialists reconstruct transaction flows, follow assets from wallet to wallet, and in some cases cluster addresses that appear to be controlled by the same actor.  

Wallet addresses are pseudonymous. They are strings of characters, not names. Even after a detailed tracing exercise, it is common to know where the assets went without knowing who controls the relevant wallets. But where funds pass through known services, such as exchanges, wallet addresses can be linked to real-world entities and people. That is where centralised exchanges become critical. Unlike the blockchain itself, exchanges collect identifying information about their users. The legal difficulty is that they will not disclose that information voluntarily. In practice, a court order is required. 

The private legal pathway

Preliminary discovery allows a victim to apply to the Court for an order against a respondent to provide documents relating to the description of the person concerned.  

In Siegers, His Honour Judge Wise described the requirements for preliminary discovery in the following way:  

a. That Mr Siegers applies for an order of preliminary discovery not merely on a hunch of wrongdoing;  

b. That Mr Siegers applies for an order of preliminary discovery after first making reasonable inquiries to ascertain the description of the possible defendants sufficiently for the purposes of commencing a proceeding in the Court; and  

c. Some person has or is likely to have knowledge of facts or documents in their possession which would assist in identifying a possible defendant.  

In affidavits filed in support of the application, Mr Siegers demonstrated to the Court’s satisfaction that he was a victim of a sophisticated crypto scam, that he had obtained an expert tracing report linking his funds to the various digital currency exchanges, that it was likely the digital currency exchanges held information about the recipients of his funds, and that had attempted to obtain information about the fraudsters from those exchanges before going to Court.  

In addition to seeking identity documents from the exchanges, Mr Siegers sought other documents including emails and account transactions. The Court noted – in its written reasons and in the hearing – that these were not strictly identity documents but accepted that transaction records, for example, may show if assets had been transferred to some other entity possibly related to the fraudsters.  

What victims can do 

Dealing with crypto scams is difficult. Here are three key steps to take if recovery is the goal:  

First, act quickly. Once fraud is suspected, preserve records, engage a forensic tracing expert, and seek legal advice quickly. Legal advisors should then engage a suitable forensic tracking expert.  

Second, invest in evidence before going to court. Preliminary discovery is not available on a hunch. The decision in Siegers shows the high standard of preparation that is required for a successful application.  

Third, think in sequences. Preliminary discovery application might be just the first step on the pathway to recovery. Disclosure from one exchange may identify further wallets or services, requiring follow-on applications.  

Contrary to popular belief, crypto scams and digital currency exchanges are not beyond the reach of Australian courts. Private enforcement is possible, but they require a technically informed, evidence-driven, and strategically executed approach.  

Authored by Dr Aaron Lane who appeared in Siegers v Nest Services Ltd & Ors [2026] VCC 15 instructed by Duxton Hill. duxtonhill.com.au