Cryptocurrency Disputes: Fraud and Scams
The cryptocurrency market is experiencing considerable expansion in Switzerland, a country that has positioned itself as a centre of innovation for financial technologies. This growth is accompanied by a significant increase in litigation relating to fraud and scams involving digital assets. The technical complexity of cryptocurrencies, combined with an evolving legal framework, creates an environment conducive to fraudulent activities. PBM Avocats assists victims in identifying possible remedies and implementing appropriate legal strategies under Swiss law.
Types of Fraud and Legal Bases under Swiss Law
| Type of Fraud | Criminal Classification | Legal Basis (SCC) | Maximum Penalty |
|---|---|---|---|
| Fraudulent ICO / rug pull (false promises, misleading white paper) | Fraud | Art. 146 SCC | 5 years imprisonment |
| Misappropriation of funds by a platform or fund manager | Misappropriation / criminal mismanagement | Arts. 138 / 158 SCC | 3 to 5 years (aggravated) |
| Ponzi scheme using crypto | Commercial fraud + accepting deposits without authorisation | Art. 146 SCC + Banking Act art. 46 | 5 years + FINMA sanctions |
| Phishing / private key theft | Data theft / theft | Arts. 143 / 139 SCC | 5 years |
| Crypto money laundering | Money laundering | Art. 305bis SCC | 3 years (aggravated: 5 years) |
| Market manipulation (pump and dump) | Market manipulation if token = security | Art. 143ter SCC / FMIA art. 143 | 3 years + fine |
Criminal Procedure: Steps for Victims
Filing a criminal complaint is often the first recommended step. The complaint must contain:
- A detailed description of the facts and chronology of events
- The precise identification of wallet addresses involved
- Proof of transfer of the cryptocurrencies (transaction hashes)
- Communications with the alleged perpetrators (emails, messages, contracts)
- Any information allowing the identification of those responsible
Swiss criminal authorities have developed specific expertise in handling cryptocurrency offences, notably within the cybercrime divisions of cantonal police forces. These specialised units use blockchain analysis tools allowing transactions to be traced.
Civil Actions and Interim Measures
In parallel with criminal proceedings, victims can bring civil actions:
- Interim measures (arts. 261 et seq. CPC) can be sought urgently to freeze funds on exchanges or bank accounts linked to fraudsters
- A restitution action allows claims for the return of misappropriated cryptocurrencies
- A damages action (art. 41 CO) aims to obtain financial compensation
- Criminal attachment (art. 263 CPC) can freeze assets as soon as an investigation is opened
Crypto Asset Recovery Strategies
Recovering misappropriated cryptographic assets presents considerable challenges. PBM Avocats combines:
- Blockchain forensic analysis to trace transactions and identify destination addresses
- Resort to interim measures to rapidly freeze assets
- Coordination with criminal prosecution authorities (public prosecutor's office, fedpol)
- International cooperation via mutual legal assistance conventions (MLAC)
- Collaboration with regulated exchanges to obtain KYC identification information
Frequently Asked Questions about Cryptocurrency Fraud and Scams in Switzerland
How do I file a criminal complaint for cryptocurrency fraud in Switzerland?
The complaint is filed with the cantonal public prosecutor's office at the victim's domicile or at the place where the offence was committed. The file must contain: a description of the facts, screenshots of communications, transaction records, and the wallet addresses involved. For offences committed from abroad, the public prosecutor's office may refer the matter to the Federal Public Prosecutor's Office (OAG) if the case has a federal or international dimension.
What are the limitation periods for cryptocurrency fraud in Switzerland?
Fraud (art. 146 SCC) is time-barred after 10 years from the date of the act. For money laundering (art. 305bis SCC), the period is also 10 years. These periods run from the time the offence was committed. In civil matters, the action for damages is generally time-barred after 3 years from knowledge of the loss (art. 60 CO), or 10 years in the case of a criminal unlawful act.
Can funds diverted to a foreign platform be recovered?
Recovery is possible but complex. It requires blockchain analysis to trace the funds, international judicial cooperation via mutual legal assistance treaties, and preventive freezing of assets on regulated foreign exchanges. Some exchanges (Coinbase, Kraken, etc.) cooperate with judicial authorities on official request. PBM Avocats coordinates these steps in collaboration with partners in the relevant jurisdictions.
Can FINMA intervene in the event of fraud on an unauthorised platform?
Yes. FINMA can open enforcement proceedings against entities operating without authorisation (accepting deposits, securities trading without a licence). It can issue a prohibition on business activities, order reimbursement of collected funds and liquidation of the structure. These administrative proceedings can complement criminal and civil proceedings by victims.
What is a rug pull and how can one defend oneself legally in Switzerland?
A rug pull is the sudden abandonment of a crypto project by its founders after fundraising, leaving investors with worthless tokens. Under Swiss law, depending on the circumstances, this may constitute fraud (art. 146 SCC) if sophisticated deception is demonstrated, or criminal mismanagement (art. 158 SCC). Demonstrating that the founders never intended to carry out the project is key. Analysis of the white paper, communications and fund flows is decisive.