Fraud is the United Kingdom’s most prevalent crime, representing an estimated 41% of recorded crime while historically receiving less than 1% of policing resources. Cryptocurrency gives sophisticated fraud operations speed, pseudonymity, cross-border reach and the ability to convert digital assets into fiat before conventional enforcement can intervene.
The central proposition of this paper is enforcement parity. A criminal restraint order under sections 40–41 of the Proceeds of Crime Act 2002, a civil freezing injunction, a Mareva order or a sanctions notice can be deployed by REKTify™ as an immutable, court-sanctioned on-chain token within seconds of being granted. That gives an enforcement instrument the same operational speed as the movement of the assets it is intended to restrain.
The paper proposes a nationally standardised on-chain legal-enforcement and fraud-marker system built within existing legal and asset-recovery frameworks. Such a system could increase the value of assets seized and recovered, improve intelligence sharing with regulated exchanges and create a cost-neutral enforcement capability funded through recovered proceeds.
The scale of cryptocurrency-enabled fraud in the United Kingdom
The UK is one of the world’s largest cryptocurrency economies. FCA research indicates that approximately 8% of UK adults hold cryptoassets, around 4.2 million people. That scale brings opportunity, but it also creates substantial exposure to technology-enabled financial crime.
The reporting gap
Published figures capture only reported incidents. An estimated 86% of fraud never reaches Action Fraud or the police. Victims may feel embarrassed, may not recognise that a crime has occurred, or may believe they made a poor investment rather than being deliberately deceived. Cryptocurrency’s technical complexity adds a further barrier, meaning the true scale of loss is likely to be substantially higher.
How cryptocurrency provides cover for fraudsters
Pseudonymity and the anonymity illusion
Public-blockchain transactions are permanently recorded. Wallet addresses, values and timestamps are visible, but addresses are not automatically tied to a named controller. Fraudsters exploit that pseudonymity by creating addresses without identity verification, dispersing funds across large wallet networks and operating beyond investigative processes designed for traditional finance.
Speed: the critical asymmetry
Blockchain transactions can become final within minutes or seconds. Stolen funds can be divided, routed through mixers, exchanged through decentralised platforms and moved to a centralised exchange for conversion within an hour. Law-enforcement notification, tracing and court applications are commonly measured in days or weeks. That mismatch is a structural advantage for criminals.
The off-ramp
Centralised exchanges are the principal chokepoint where cryptocurrency is converted into fiat. Regulated Virtual Asset Service Providers are subject to KYC, due-diligence and transaction-monitoring obligations, but intervention depends on receiving rapid, reliable and legally authoritative information. Under existing arrangements, that information often arrives too slowly to prevent conversion.
Common fraud typologies
- Investment fraud and advance-fee schemes, including AI-generated celebrity endorsements.
- Romance fraud directing victims to fraudulent cryptocurrency platforms.
- Authorised push-payment fraud involving impersonation of banks or public authorities.
- Ransomware and cyber-enabled extortion using irreversible crypto payments.
- Rug pulls and fraudulent token issuance that remove project liquidity.
Approximately 75% of UK fraud shows signs of overseas involvement. Crypto can move a UK victim’s funds through infrastructure and services in several jurisdictions before an investigator has identified the first wallet.
How technology can uncover and disrupt cryptocurrency fraud
Analytics are necessary, but insufficient
Blockchain analytics reconstruct transaction trails, cluster addresses and identify known services. They are powerful retrospective tools, but do not place an enforceable notice on-chain, do not automatically alert exchanges and do not persist as funds move into new wallets.
The REKTify™ approach: on-chain legal enforcement
REKTify™ deploys a legal notice directly to a target wallet as a soulbound smart contract. A restraint order, freezing injunction, worldwide Mareva order, police fraud marker or sanctions notice can become an immutable on-chain token. The wallet holder cannot transfer or remove the notice. It follows the movement of funds, applies markers to subsequent wallets and triggers automated alerts.
Irremovable legal markers deployed directly to target wallets.
Court orders, police references and compliance certifications attached to the contract.
Continuous monitoring with rapid alerts to investigators and exchanges.
Interaction intelligence supporting identification and court-ready evidence.
Deployment across large wallet sets with markers following subsequent movement.
Legal validation
Courts in Singapore and England and Wales have authorised on-chain service of freezing orders using the REKTify™ methodology. The Singapore High Court authorised a worldwide freezing injunction to be served via smart contract, followed by an equivalent order from the High Court of England and Wales. These decisions provide cross-jurisdictional precedent for court-enforceable on-chain notice.
In a separate matter, REKTify™ traced more than $3 million in stolen cryptocurrency within six hours, locating 95% of the assets and notifying centralised exchanges. The technology identified more than $1 billion in unlawfully held cryptocurrency across investigations during 2023.
Building a national on-chain fraud marker system
The CIFAS parallel
CIFAS enables traditional financial institutions to share fraud markers, apply enhanced scrutiny and restrict accounts. REKTify™ applies that principle to blockchain wallets: a visible marker signals to exchanges and other service providers that an address is associated with a court order, police reference or legal concern.
Freezing orders and digital assets
Account Freezing Orders and criminal restraint orders already provide rapid asset-denial powers for conventional property. Deploying their digital equivalent as a soulbound token gives those instruments a direct on-chain mechanism. When a VASP suspends funds after detecting a marker, established forfeiture and victim-compensation processes can follow.
Funding enforcement through recovered assets
The Asset Recovery Incentivisation Scheme redistributed £98.1 million to law enforcement, prosecutors, the NCA and the Home Office in the year ending March 2024. Recovered digital assets could enter the same pipeline. Deployment costs can be offset against recovered proceeds, making the model cost-neutral initially and self-funding at scale.
Sanctions and terrorist financing
Official sanctions notices can be placed directly on designated wallets. A visible, verified marker warns regulated and unregulated participants, helps prevent members of the public from unknowingly funding sanctioned entities, and creates evidence relevant to whether a sender knew or should have known of a designation.
Supporting VASPs
Verified on-chain signals help exchanges fulfil KYC, due-diligence, monitoring and Suspicious Activity Reporting obligations. They also create an auditable record that supports targeted action and demonstrates proactive compliance.
Recommendations
- 01Formalise on-chain orders
Recognise deployment of criminal restraint and civil freezing orders under POCA 2002 as a standard enforcement tool, coordinated with prosecutors, the NCA and the judiciary.
- 02Create a fraud-marker framework
Develop a nationally standardised REKTify™ fraud marker, analogous to the CIFAS National Fraud Database, for adoption by UK-regulated VASPs.
- 03Connect recovery to ARIS
Integrate recovered digital assets into the Asset Recovery Incentivisation Scheme to fund enforcement and compensate victims.
- 04Deploy sanctions notices
Work with OFSI and allied authorities to place official, verified sanctions notices on designated cryptocurrency wallets.
- 05Pilot coordinated deployment
Run a measured programme with the City of London Police, the NCA and UK-regulated VASPs to establish the evidence base for national adoption.
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