According to the annual report of the analytics firm Chainalysis (the 2026 Crypto Crime Report), victims of crypto-fraud schemes lost a record $17 billion in 2025 — separate from the $3.4 billion stolen through hacking attacks, and against a backdrop of $154 billion received overall by illicit crypto addresses that year (162% more than the year before). A particularly alarming trend of the past year is the explosive growth of AI-enabled fraud: the number of impersonation schemes relying on deepfakes, cloned voices, and AI-generated investment “advice” grew by more than 1,400% over the year, and the average size of a single fraudulent payment rose from $782 to $2,764. To this must be added tens of thousands of already-familiar schemes: phishing exchange websites, fake investment platforms promising guaranteed returns, fraudulent ICOs, and messenger-app “pig-butchering” scams. Crypto fraud has definitively turned from a niche problem into a mass phenomenon — and remains, at the same time, one of the most difficult categories of cases to investigate and defend in court. In this article, we explain why that is, which protective mechanisms already work, and what a person or company that has become a victim should specifically do.
Why crypto fraud is difficult to investigate
A blockchain is a public, immutable ledger: every transaction is permanently recorded and, in theory, available for analysis. Paradoxically, it is precisely this transparency that creates the main difficulty — the records are tied not to a person's name but to a pseudonymous wallet address. To identify the perpetrator, that address must be “linked” to a real person, and this is possible mainly at the point where the crypto-asset is converted into fiat money — that is, at an exchange.
US case law has already confirmed that this works as a legal tool, not merely as a technical possibility. In United States v. Gratkowski (2020), the appellate court held that a user has no reasonable expectation of privacy in their transactions on a cryptocurrency exchange, since that data is voluntarily provided to the exchange as a financial institution — just like bank records. This means law-enforcement authorities can obtain data on a wallet owner through an exchange without violating constitutional privacy guarantees. A similar approach appears in United States v. Ulbricht (Silk Road) and United States v. Sterlingov (the Bitcoin Fog mixer): courts directly recognise the blockchain as a “pseudonymous but traceable” ledger, and address-clustering methods as a legitimate evidentiary tool.
It is more difficult with specialised “mixers” (Tornado Cash and similar services), which artificially break the link between the sender's and recipient's addresses. But here, too, practice is moving toward accountability: in May 2024, a Dutch court held that the Tornado Cash protocol itself cannot be regarded as a “neutral” technological tool, but instead creates a “veil of uncertainty” over the origin of assets — and this broadens the circle of responsible parties from users to the developers of such infrastructure.
The legal status of crypto-assets in Ukraine — and why it matters for victims
This is where the biggest practical problem in Ukrainian law lies. Article 177 of the Civil Code of Ukraine, which lists the objects of civil rights, does not directly name virtual assets, so the relevant law attempts to classify them as “intangible goods” — a category that traditionally covers intellectual property rights and personal non-property rights, rather than transferable property. This legal imprecision has entirely practical consequences: if an asset is not formally recognised as property, seizure, confiscation in favour of the victim, and compensation for damage within criminal proceedings all become more difficult.
At the same time, the anti-money-laundering law defines a virtual asset quite differently — as an object of financial monitoring. The result is that the same asset is simultaneously subject to state control from a financial-monitoring standpoint, yet has no clear status as an object of civil rights. International doctrine (in particular, the 2023 UNIDROIT Principles on Digital Assets) resolves this problem through the criterion of controllability: property rights attach to an electronic record over which access can actually be controlled, regardless of whether it is a “thing” in the classical sense. This is a direct benchmark for improving the Ukrainian legal model, since it allows a crypto-asset to be unambiguously classified as property bearing the hallmark of “digital possession” through a private key.
Tellingly, even without an ideal civil-law classification, courts in other states are already finding a path to protecting victims. As early as 2017, Germany's Federal Court of Justice (BGH) held that confiscation rules do not depend on how an asset is classified under civil law: cryptocurrency has market value, is exchangeable for fiat, and is under the owner's actual control — that is sufficient for confiscation. In other words, the question of “whether cryptocurrency is property” and the question of “whether it can be confiscated or recovered” are different questions that can be resolved independently of one another, and Ukrainian practice could well move down the same path today, without waiting for an ideal legislative reform.
Legal strategy for asset recovery: a “reverse transfer” instead of “reversing” the transaction
A key technical feature of blockchain is that no transaction can be technically “cancelled” or “annulled” by a court decision, the way an invalid transaction can be annulled in a real-estate register, for example. From this fact, some draw the mistaken conclusion that a court is entirely powerless against the theft of crypto-assets. That is not so.
Modern European doctrine (in particular, the model proposed by Matthias Lehmann) suggests shifting the focus: instead of trying to technically “reverse” a transaction, the court orders the person who wrongfully received the asset — as a result of fraud, theft of a private key, or a hacking attack — to carry out a reverse transfer of the asset using the same technological means, under threat of liability for failing to comply with the court's decision. Legally, there is no need to determine “ownership” of the cryptocurrency in its technical form — it is enough to prove the fact of wrongful possession and to demand active conduct from the defendant. Here the principle applies that “a bad-faith acquirer does not deserve protection”: if the recipient knew or ought to have known of the asset's unlawful origin, they cannot rely on the blockchain record as grounds for lawful possession.
This construct has particular practical value for Ukrainian realities: it allows a claim to be built even without a final resolution of the question of a crypto-asset's civil-law nature — it is enough to prove the fact of possession without the owner's consent.
What is changing in the legislation
The EU Markets in Crypto-Assets Regulation (MiCA) has applied in full across all EU member states since 30 December 2024: it establishes mandatory licensing for exchanges and wallet providers (CASP status), an obligation to identify wallet holders for significant transfer amounts (the “travel rule”), and expanded powers for supervisory authorities (ESMA, EBA, national regulators). MiCA does not directly apply to Ukraine, since it is not an EU member state; however, as part of its course toward European integration, Ukraine is already going through the final stage of harmonising its own legislation: Draft Law No. 10225-d on regulating the circulation of virtual assets, aligned with the relevant EU regulations, was adopted by the Verkhovna Rada in its first reading on 3 September 2025 and, as of July 2026, is being prepared for its second reading. According to a statement by Danylo Hetmantsev, chair of the parliamentary Committee on Finance, Tax and Customs Policy, adoption of the law is planned for August 2026. The draft law already provides for specific tax rules, including a preferential 5% personal income tax rate for assets acquired before the law enters into force, if sold during 2026, VAT exemption for the exchange of most virtual assets, and an obligation for exchanges and exchangers to register with the tax authorities and report on the transactions of resident clients. This means that in the near term a clearer licensing regime for exchanges, mandatory client-verification procedures, and — especially important for victims — a more direct statutory mechanism for the seizure and confiscation of virtual assets can all be expected.
What to do if you have become a victim of crypto fraud
First, act quickly: the sooner the fraud is documented, the higher the likelihood of “freezing” the assets at an exchange before they are cashed out. Second, preserve all technical evidence — transaction hashes, wallet addresses, screenshots of correspondence and advertising materials, and payment confirmations. Third, in parallel, contact the cyberpolice to open criminal proceedings, and a lawyer to assess civil-law protective tools. Practice shows that the most effective outcome usually comes from combining criminal-law pressure on the perpetrator with a civil claim for the return of the assets or recovery of their value.
Crypto fraud is not an “unsolvable” technological problem, but a fast-moving area of practice in which the law is gradually catching up with the technology. But because of the imperfections in current Ukrainian regulation, the success of a case largely depends on a soundly chosen legal strategy from day one. If you have encountered the theft of or fraud involving virtual assets, contact our team: we combine an understanding of blockchain's technical nature with international and Ukrainian legal practice to recover our clients' assets.