David White of AlixPartners noted that loan scams and market manipulation in the 1980s and the dot-com era are similar to crypto and DeFi fraud schemes.
In partnership with Chainalysis, AlixPartners, a consultancy firm supporting the now-defunct exchange FTX in bankruptcy proceedings, is attempting to enhance bitcoin tracing.
On October 31, the blockchain research firm Chainalysis and AlixPartners established a strategic alliance to improve forensic investigation and digital asset tracing capabilities.
Professionals from AlixPartners have obtained in-depth crypto training in blockchain investigations as a result of this partnership, and they will also contribute their knowledge to increase the range of services available to Chainalysis clients.
AlixPartners entered the cryptocurrency space with the FTX case, following decades of TradFi investigations.
AlixPartners, a prominent global consulting and financial advising firm specializing in bankruptcy processes was founded in 1981. The business gained notoriety for its role in the 2008 Bernie Madoff scam, where it retrieved most of the estimated $17.5 billion in investor principle that had been stolen.
After becoming involved in the FTX bankruptcy in December 2022, the firm has been aggressively expanding into cryptocurrency forensics recently.
Shortly after the exchange crashed in November 2022, the new FTX management reportedly recruited AlixPartners to track down billions of dollars in lost cryptocurrency holdings. In the FTX case, David White, director of investigations at the firm, is in charge of the crypto forensics work.
In addition to FTX, AlixPartners supported Craig Wright, the self-described founder of Bitcoin (BTC$72,027), in his legal battles with Peter McCormack and Ira Kleiman. Furthermore, in the case involving Fabrizio D’Aloia, AlixPartners offers expert witness services to track down cryptocurrency holdings. Additionally, it supports Gala Games, a blockchain gaming platform, in its conflict with Wright Thurston.
Fraud involving cryptocurrency and DeFi “echoes many patterns” in scams from the 1980s.
The investigative director of AlixPartners claims that cryptocurrency fraud schemes are similar to the market manipulation that occurred throughout the 1980s and the dot-com era.
About emerging technologies like cryptocurrency and decentralized finance (DeFi), White told Cointelegraph, “Fraudsters just find new venues as markets and technology evolve.” He said:
“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.”
White claims that DeFi’s “limited oversight and ample opportunities” led to a return to old-fashioned strategies like insider trading, pump-and-dump schemes, market manipulation, and Ponzi schemes.
White added that AlixPartners has been concentrating more on brilliant contract exploits, collateral schemes, governance assaults on decentralized organizations, and other issues because of the increase in DeFi attacks.
“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.”