impeachment of president trump featured image

Ukraine and the 1st Impeachment of President Trump

Legal AssistantConstitutional Law

Donald J. Trump became the first president in the history of the United States to face impeachment twice. The initial impeachment was over allegations of improperly seeking help from Ukraine to bolster his chances of getting re-elected into office.

The second time was over his alleged role in inciting his Republican supporters to storm the Capitol, an event that was documented live on national TV and social media.

As far as the first impeachment goes, the question on most people’s minds is how a foreign nation in Eastern Europe could have threatened the future of Trump’s presidency. This article takes an in-depth look at how the two are related.

Trump Ukraine Extortion – Background

To understand why Trump was impeached the first time, you first need to understand how he got there in the first place. He stated that on July 25, 2019, he called his Ukrainian counterpart, the then newly-elected President Volodymyr Zelensky, to congratulate him on winning the election. Zelensky, a former television star with no prior experience in the murky world of politics, had been elected to office a few months before the now-infamous phone call from Trump.

Trump Ukraine Whistleblower

This telephone exchange did not sit right with an anonymous whistleblower, alleged to be a CIA agent. In the formal complaint lodged on August 12, 2019, the whistleblower stated that although they did not listen in on the conversation between the two heads of state, their account was similar to that of a dozen other officials who claim to have first-hand accounts of the conversation. Among them was Mike Pompeo, the sitting Secretary of State at the time.

Trump’s phone call to Zelensky occurred a few days after he blocked military aid to Ukraine worth $391 million. According to critics, this move was seen as a bargaining chip President Trump could use to sway Zelensky.

The whistleblower further accused Trump of abuse of Presidential power, alleging that he used the power of the White House to solicit a foreign nation to interfere with the 2020 presidential election.

According to the whistleblower, the phone call between Trump and Zelensky was deeply disturbing, and they felt they had no choice but to act on it.

Transcript of Trump Call to Ukraine

As the controversy continued to gather momentum, there was mounting pressure to release the transcript of Trump’s call to Ukraine. Trump promised to release the full, unredacted details of the phone call to the public to prove that nothing was inappropriate about their conversation.

It later emerged that the information released by the White House was not a verbatim account of the conversation but rather notes detailing what was allegedly discussed by the two. This move did not do much to quell the controversy that was now spiraling out of control.

Based on the notes shared with the public, Trump was urging Zelensky to launch investigations into the alleged corruption claims against Joe Biden, who was at the time a former Vice President and front runner in the upcoming 2020 presidential bid, as well as Biden’s son Hunter.

Trump asserted that in 2015, Biden used his influence as Vice President in Obama’s administration to get Ukraine’s top prosecutor fired. The prosecutor in question had been looking into the dealings of a major energy company in which Hunter Biden had been employed.

Hunter had faced widespread criticism for working with foreign-owned multinationals while his father was Vice President, suggesting a potential conflict of interest. There was no evidence of Biden taking any measures that would intentionally benefit Hunter.

Hunter further denied any wrongdoing, with Ukrainian authorities stating that they did not have concrete evidence suggesting that Hunter had broken any laws.

What Was Trump’s Abuse of Power?

A sitting president of one country pressuring the leader of a foreign nation to re-open investigations into allegations that have already been discredited is a significant issue. Trump’s actions against Biden were tantamount to abuse of power since Biden would be his leading rival in the elections slated for the following year. The fact that he was seemingly colluding with a foreign power to influence the outcome of a presidential election is against the law.

With this knowledge in hand, the Democrats launched an inquiry into the Trump-Ukraine affair. Several officials were summoned to testify, including Kurt Volker, the US special envoy to Ukraine. He provided a myriad of communications, including several text message exchanges.

Bill Taylor, the acting ambassador to Ukraine, was also summoned. He disclosed to the inquiry that Trump pegged the release of military aid to the European nation on Ukrainian authorities re-opening investigations into Biden’s dealings in the country. Taylor also alluded to the presence of an “informal and irregular” US policy-making channel in the country. The White House vehemently denied these allegations.

The inquiry then subpoenaed Rudy Giuliani – Trump’s personal lawyer – to hand over all Ukraine-related documents in his possession. Giuliani had been at the heart of pushing the allegations leveled against Biden and his son. Pompeo also received a similar subpoena.

Gordon Sondland Impeachment Testimony

Of all the testimonies heard, the most dramatic one of them all came from the US ambassador to the European Union – Gordon Sondland. He stated that he acted at President Trump’s “express direction” when putting pressure on Ukraine to investigate the discredited allegations against Joe and Hunter Biden. Sondland stated that Trump instructed him to present Zelensky with an offer of a visit to the White House while making it clear that the visit was contingent on him publicly announcing a probe into the Bidens.

Gordon Sondland’s impeachment testimony also implicated former National Security Adviser John Bolton, as well as Pompeo, in the Ukraine affairs.

In December 2019, the Democrats in the House of Representatives brought two impeachment charges against Trump. The first was for abuse of power and the second for obstruction of Congress.

The House proceeded to vote for Trump’s impeachment, after which the Senate held a trial. For a successful conviction, a two-thirds majority vote is required. However, given that Republicans controlled the chamber, a guilty verdict was unlikely.

Trump escaped impeachment by 52 votes to 48 on the first charge and 53 votes to 47 on the second.

Trump Quid Pro Quo

During his presidential tenure, Trump was quoted several times saying that there wasn’t any quid pro quo between the US government and Ukraine. Despite these assertions, there were, in fact, two instances that stood out.

Based on several key documents and volumes of testimony released during the impeachment inquiry that the Democrats launched, it became apparent that the Trump administration made multiple attempts to pressure the Ukrainian government to launch new investigations into discredited allegations in exchange for something. These quid-pro-quo offers proceeded in two distinct phases.

The first instance was the White House visit offer made to President Zelensky in exchange for investigations into the Bidens. The Ukrainian authorities confirmed that they were told on several occasions that Trump would be more than happy to host Zelensky for a meeting in the White House, but only if he directed the Ukrainian investigative agencies to look into Joe Biden and his son.

The Trump administration pressed Ukraine to commit and publicly announce two investigations: Ukraine’s alleged interference in the 2016 US presidential election and Burisma – the energy company that employed Hunter. Zelensky did not yield to this pressure, much to Trump’s dismay.

The second instance was when Trump’s administration withheld $391 million worth of military funding to Ukraine contingent on Zelensky agreeing to launch investigations into the Bidens. President Trump himself issued an order to block the aid sometime around mid-July 2019, alluding to the fact that the suspension came as a result of the ongoing investigations of his phone call with Zelensky. The Ukrainian government only learned of the aid block a month later.

Ukrainians Informed of Trump’s Demands

On July 10, 2019, US and Ukrainian officials had a meeting at the White House. In her testimony, Fiona Hill, a National Security Council (NSC) staffer, stated that when the Ukrainian officials inquired about a potential meeting between the two presidents, Sondland informed them that Mick Mulvaney, the White House chief of staff at the time, had already reached an “agreement” beforehand. He stated that a meeting between the two heads of state would only happen once Ukraine launched investigations into the energy sector in the country.

John Bolton ended the meeting abruptly shortly after, but Sondland led some of the attendees to a different venue to discuss the matter further. In a testimony submitted by Alexander Vindman, an NSC staffer at the time, he stated that Sondland explicitly asked the Ukrainian officials for an investigation of Joe and Hunter Biden, although Hill testified that she did not remember hearing a specific reference to them. She did, however, indicate that she was not present at that particular point during the discussions.

In the two weeks following the meeting, discussions centered on setting up a phone call between Trump and Zelensky. A series of text messages between Kurt Volker and Andriy Yermak (the presidential adviser to Zelensky) emerged, making the quid pro quo quite clear.

Russian Information War 2016

trump supporters during a campaign rally

Despite the spiraling controversy of Trump’s connection with Ukraine, it wasn’t the first time he faced scrutiny over his links to foreign powers. His election campaign in 2016 was also under investigation over alleged ties to Russia.

According to an indictment presented to a federal grand jury, a Russian organization dubbed the Internet Research Agency deployed a series of strategies designed to support Trump’s campaign while “disparaging” Hillary Clinton’s bid in the presidential race to the White House.

Some of the tactics used by the agency included widespread identity theft and putting out hundreds of posts on social media and blogs meant to present Clinton in a bad light. The indictment referred to this as information warfare, further revealing that the agency had a $1.2 million monthly budget to work with.

The operation began in 2014 when a group of Russian nationals traveled extensively across the United States in a bid to understand the country’s political landscape and the unique role social media played in it.

The team traveled using fake identities, gathering information that they would later use in their misinformation campaigns. Their main focus was on the states that traditionally swing both ways in elections.

Fake Identities

In early 2016, the Russians stole personally identifiable information from hundreds of American nationals. They stole Social Security Numbers, dates of birth, and home addresses of real Americans, used them to open and operate bank accounts, create fake social media profiles, particularly on Instagram, Facebook, and Twitter, purchase online ads, and even buy banners, flags, and buttons for campaign rallies that they would use close to the elections.

Social Media Warfare

The Russian agency had hundreds of people on its payroll to impersonate ordinary Americans and create social media accounts posing as them. They would then create thematic groups that touched on various issues such as religion, race, and immigration to fuel discord in the election.

Most of the accounts were used to disparage Clinton and support Trump. They were also used to promote certain hashtags such as #TrumpTrain, #Trump2016, #Hillary4Prison, and several others and push allegations of mass voter fraud.

Additionally, the Russians made a concerted push to discourage minority voters from voting in the 2016 elections or pushing them in the direction of third-party candidates who were also running for president.

Three Russian entities and 13 Russian nationals were charged for their respective roles in the scheme. Although the inquiry did not find a criminal conspiracy to interfere with the election, it did not entirely exonerate Trump from obstructing justice. The Russians had no direct contact with Trump’s campaign team, and no evidence was presented that linked Trump to Moscow.

Need more legal advice? Chat with a Laws101 attorney online right now.

ukraine no fly zone featured image

Why Won’t the US or NATO Establish a Ukraine No Fly Zone?

Legal AssistantInternational Law

Since Russia launched a full-scale invasion of Ukraine earlier in the year, Ukrainian President Volodymyr Zelensky has appealed to the US and NATO on several occasions to create a no-fly zone over the country.

In a fervent address to Congress in a joint session earlier in the year, Zelensky reiterated that it was critical for NATO and its allies to step in and protect the skies over Ukraine in a bid to put to an end the incessant artillery fire and airstrikes from Russian armed forces.

This article explores what no fly zones are and why the US or NATO won’t establish one over Ukraine.

What Is a No Fly Zone?

No-fly zones are predetermined sections of airspace where military forces restrict access to all other forms of aircraft. When one or more countries enact one, they are essentially taking responsibility for monitoring the airspace in question and suppressing and eliminating any aircraft that violates these boundaries.

For NATO to establish a no-fly zone over Ukraine, it would mean that US or NATO pilots would be flying military jets over the country, patrolling the skies with specific orders to shoot down any unauthorized aircraft that enters Ukrainian airspace. This move would, in turn, create a situation where US or NATO pilots are engaged in direct combat with Russian pilots.

How Is a No Fly Zone Enforced?

The concept of imposing a no-fly zone is nothing new. It has been around for more than three decades and has been established a total of three times in history. As a result, a standard modus operandi is yet to be established and enforced.

The first thing to consider would be the source of justification for NATO or the US to impose a no-fly zone. Who gives the green light to impose a no-fly zone over a country?

For starters, the UN Charter’s Chapter 7, Article 42 indicates that the UN has the legal authority to impose blockades and other operations by land, sea, or air forces. These strategies are employed when all other attempts to resolve a conflict that threatens international peace have failed.

With that in mind, to establish a no-fly zone, the first step involves obtaining a mandate from the UN Security Council, which is made up of 15 member states. This process usually requires some form of deft diplomacy, given the fact that any of the five permanent Security Council member states, namely, the US, the UK, China, Russia, and France, can veto the action, effectively blocking it.

For instance, Russia and China blocked the move when a mandate was sought to establish a no-fly zone over Libya. However, they were later persuaded to abstain from voting for the action to continue.

Why a No Fly Zone Cannot Be Established Over Ukraine Airspace

In the case of Ukraine, establishing a no-fly zone over the country’s skies would be impossible to do since Russia is a permanent member of the UN Security Council. For this reason, any attempt to pass a Ukraine no-fly zone resolution will most certainly be vetoed by Russia.

A March 2022 research report released by the UK House of Commons (the UK’s version of the US Congress) indicates that a no-fly zone resolution can indeed be established provided that the UN Security Council receives consent from the country whose airspace it seeks to protect. In other words, if the Ukrainian government authorized NATO to cordon off access to its airspace, then a no-fly zone over the country can be established.

Once the issue of authority has been established, the question then becomes: What are the specific conditions imposed on the no-fly zone order? To better understand how this would work, let’s examine the conditions of the 2011 no-fly zone resolution passed with regard to the Libyan airspace.

The UN Security Council banned all flights into and out of the Libyan skies except for humanitarian flights on missions to deliver food and medical supplies or evacuate foreign nationals from conflict-plagued regions.

The conditions set forth also allowed UN member states to enforce similar restrictions over their respective airspaces provided that they notify the UN of such action and provide monthly reports detailing their actions and any airspace violation they may have encountered.

Additionally, member states were allowed to deny permission to planes departing from, overflying, or landing in their country’s airspace, if they had reason to believe that the aircraft in question was transporting mercenaries or weapons to Libya.

The Complexities of Establishing and Enforcing No Fly Zones

A major reason establishing a no fly zone over sovereign airspace is so complicated is that the UN and the countries that will offer personnel, missiles, aircraft, etc., all have to agree on specific rules of engagement (ROEs).

These ROEs need to spell out in great detail how and when to confront potential violators, how much and what kind of force should be used against them, and which entity gives the green light for such action to be taken should the situation present itself.

The specific measures taken to establish and enforce a no-fly zone over a country vary widely. For instance, in Iraq, allied air forces had fairly restrictive ROEs. In most cases, they were actively engaged in cat-and-mouse chases with violators, whittling them away when they crossed over into restricted airspace.

Things were vastly different in Libya. The UN issued broad authority, giving NATO expansive leeway to take “all necessary measures” to enforce the no-fly zone resolution.

The Bottom Line

Russian President Vladimir Putin expressed in no uncertain terms that any state that declared a no-fly zone over Ukraine would be deemed a party to the war, putting it in direct conflict with Russia.

From Putin’s remarks, what became immediately clear is that establishing a no-fly zone over Ukraine would do little to deter Russia from its devastating attacks on Ukrainian towns and cities. It is also worth mentioning that Russia has been using planes, rockets, and artillery that long-range fire missiles without ever having to leave Russian airspace.

Need more legal advice? Chat with a Laws101 attorney online right now.

Is Russia Committing War Crimes in Ukraine

Is Russia Committing War Crimes in Ukraine?

Legal AssistantCriminal Law, International Law

In 1945 the United Nations instituted a charter that made aggressive war (different from defensive war) illegal in international law. Based on the charter’s provisions, Russia’s invasion of Ukraine falls within the confines of aggression crimes.

In the Nuremberg trials of 1945-1946, senior leaders of Nazi Germany were convicted on charges of war aggression. The Tokyo war crime trials also had similar outcomes for the perpetrators.

The question then becomes, what are war crimes, and is Russia committing war crimes in Ukraine? Here’s everything you need to know.

What Is a War Crime?

The international law war crime definition is as follows: A serious violation of the customs or laws of war as outlined by international treaties and international customary law. The original definition has evolved tremendously since the end of World War I and now encompasses a wide range of criminal war activities.

In 1863, President Abraham Lincoln issued the “Lieber Code” – named after its author Francis Lieber – for distribution among military personnel. It contained a series of instructions for the United States armies on how to conduct themselves when out in the field. The Lieber Code became the first-ever systematic attempt to define military activities that would constitute war crimes.

For instance, according to the provisions of the Code, it was against the law of war for military personnel to commit wanton violence such as rape, murder, and maiming against individuals in the invaded country. It also made it illegal for the war victors to force enemy subjects into service. Any officer convicted of these crimes would face the death penalty.

The definition of war crimes has since been expanded and embedded in various international statutes, including those that gave rise to the International Criminal Court (ICC) and those used in war crime tribunals in Rwanda and Yugoslavia. Unlike the earlier versions, modern-day definitions of war crimes are broader and criminalize various actions taken by both soldiers and civilians.

At the heart of the definition of a war crime is the idea that any individual can be held criminally liable for the actions of their country or its military personnel. War crimes and crimes against humanity are among the most severe offenses in international law. They are so grave that there’s no limitation period for them.

Anyone who commits these crimes can be arrested, prosecuted, and convicted regardless of how much time has elapsed since the commission of the crimes.

List of War Crimes

War crimes are defined by the International Criminal Court statutes, Laws and Customs of War (an older area of law), the precedents set by the Nuremberg Tribunals, and the Geneva Conventions. With that in mind, there are generally four categories of war crimes:

1. Crimes Against Peace

Any act of aggression that involves planning, preparing, initiating, or waging war in violation of international agreements, assurances, or treaties constitutes a crime against peace. Additionally, participating in a conspiracy or common plan to accomplish any of the aforementioned activities is also considered a crime against peace.

2. Crimes Against the Laws and Customs of War

War crimes that fall in this category involve offenses or atrocities against individuals or property that go against the provisions of the laws and customs of war. Other war crimes include:

  • Murder, deportation to slave labor, or ill-treatment of the civilian population in the invaded territory
  • Murder or ill-treatment of the individuals taken as prisoners of war
  • Murder of hostages
  • Torture or inhumane treatment of hostages and the civilian population of the occupied territory, including conducting biological experiments
  • Plunder of private or public property
  • Wanton destruction of towns, villages, or cities
  • The devastation of the invaded territory without any military justification

3. Crimes Against Humanity

War crimes that fall into this category involve offenses and atrocities committed against the civilian population of an invaded territory both before and during the war. Crimes against humanity include enslavement, deportation, extermination, and murder.

Mass sexual enslavement, systemic rape, and other inhumane acts perpetrated by soldiers and civilians in the occupied territory also constitute crimes against humanity.

Additionally, persecuting any individual based on their political, religious, or racial affiliation in connection with or in the execution of any crime that falls within the ICC jurisdiction is considered a war crime.

Keep in mind that the violation question doesn’t have to violate the domestic laws of the country in which it was perpetrated for it to be deemed a war crime.

4. Genocide

Genocide is considered to be among the gravest crimes against humanity. It refers to the deliberate intent to extinguish, in whole or in part, a racial, ethnic, national, or religious group based on their affiliation. The term “genocide” is derived from a combination of the Greek word “genos,” which means race, and “cide,” which is Latin for “kill.”

Below is a list of acts that constitute genocide:

  • The forcible transfer of children belonging to the group to a different group
  • The imposition of measures designed to prevent the additional births among members of the group
  • The deliberate infliction of life conditions on the group to cause physical destruction in whole or in part
  • The deliberate infliction of grievous bodily or mental harm to individuals affiliated with the group
  • The mass killing of individuals belonging to the group

The targets of genocide are selected as victims purely and exclusively on the basis of their membership in the target group and not based on anything the individuals in question may have done. International law classified genocide as a crime even if it is not criminalized in the country in which it is perpetrated.

In short – Is killing civilians a war crime? Intentionally killing civilians, hostages, and prisoners of war all constitute war crimes.

What Happens When You Commit a War Crime?

The 1919 Treaty of Versailles was one of the first documents created to discuss war crimes. In the document, the authors came up with a list of war acts that would be deemed war offenses. They faced a lot of challenges when deciding what constitutes criminal activity and what does not.

There was even more dissension when deciding on the appropriate punishments for each war crime. During that period, the idea of establishing an International Court of Justice was proposed, but most of the participants did not support it.

After World War II, war crimes were discussed in greater detail, with member states belonging to the Allied Forces setting up international tribunals at Tokyo and Nuremberg.

These tribunals were charged with delivering judgment on offenses perpetrated during the war. The majority of the principles laid down by the tribunals remain at the heart of international criminal law as we know it today.

In 1946, the UN General Assembly adopted these principles. It started creating resolutions that defined punishments for individuals convicted of war crimes as well as crimes against humanity.

Punishment for War Crimes

close up of man using brown wooden gavel

Today, war crimes are punishable in two ways: Long-term imprisonment or death. For an individual to receive one of these sentences, the instance of the war crime they stand accused of must be tried at the International Criminal Court. The purpose of the ICC, which was established on July 1, 2002, is to hold war criminals accountable for their role in a war crime.

The court’s existence is based on a treaty supported by 108 countries. The nations that have signed and agreed to the ICC treaty are required to adhere to and respect the authority of the ICC. Soldiers from non-participating countries cannot be subjected to ICC trials even if they are found to have perpetrated war crimes.

For a case to be tried at the International Criminal Court, it needs to fall within any of the categories that fall under its jurisdiction. These categories include war crimes, crimes against humanity, and genocide. While each of them is notably broad and includes several specific crimes, none of them include acts of terrorism.

Geneva Convention Rules on Weapons

In a bid to outlaw or restrict specific types of weapons and firearms used in war, a total of 51 countries negotiated the Inhumane Weapons Convention, also known as the Convention on Certain Conventional Weapons (CCW). The idea behind it is to protect military personnel from sustaining inhumane injuries as well as to prevent civilians from getting killed or wounded by certain types of weapons.

The treaty, which was enacted in Geneva in December 1983, applied to mines, booby-traps, weapons designed to injure by dissipating tiny fragments, and incendiary weapons. Since that time, several additional provisions have been added, including bans on blinding laser weapons and rules to address the danger posed by leftover, unexploded munitions once active combat concludes.

Weapons Banned by the Geneva Convention

The CCW has several provisions annexed into various protocols. Any state that becomes a CCW member is required to sign on to a minimum of two protocols contained within the convention. It is not mandatory for them to sign on to all of them.

In the beginning, the scope of the CCW was limited to international armed conflicts. Parties to the convention later amended one of the protocols, expanding the scope to include intrastate conflicts. In 2001, this modification was applied to all the protocols in the entire convention.

Unfortunately, the convention does not have the means to ensure that state parties adhere to it, nor does it have verification mechanisms to ensure compliance. It also lacks a formal mechanism to resolve compliance issues.

Below is a list of the weapons banned by the Geneva Convention as spelled out in the various protocols:

  • Protocol 1 – Non-detectable fragments: Any weapon that can injure or kill through tiny fragments that are undetectable by x-rays.
  • Protocol 2 – Booby-traps, landmines, and other devices: Landmines and mines delivered by missiles, artillery, or aircraft have to be outfitted with self-destruct or self-deactivation mechanisms to disarm them after a certain period.
  • Protocol 3 – Incendiary weapons: Any weapon such as a thermobaric weapon designed to burn or set fire to its target.
  • Protocol 4 – Blinding lasers: Laser weapons that lead to permanent blindness.
  • Protocol 5 – Explosive remnants of armed conflict: Gravity bombs, grenades, artillery shells, and munitions that fail to explode as they’re supposed to, left unmanned by military forces.

Is It a War Crime to Use Nuclear Weapons?

Nuclear weapons have been deployed during warfare twice in history – in the 1945 bombings of Hiroshima and Nagasaki. In 1946 the United Nations General Assembly adopted the first-ever resolution that set up a Commission to deal with the issues surrounding the discovery and use of atomic energy.

Since then, several multilateral treaties have been established to prevent the testing and proliferation of nuclear weapons without necessarily curtailing the progress made in nuclear disarmament. Among these are:

  • The Treaty on the Prohibition of Nuclear Weapons
  • The Comprehensive Nuclear-Test-Ban Treaty
  • The Partial Test Ban Treaty
  • The Treaty on the Non-Proliferation of Nuclear Weapons

There are several potential uses of nuclear weapons that would fall in the realm of a war crime.

  1. If the properties of the weapon itself render it indiscriminate by nature;
  2. If its characteristics can result in unwarranted suffering or superfluous injury;
  3. If the weapon is used indiscriminately and directed at the civilian population.

If any of the above conditions are met, using nuclear weapons in warfare would constitute a war crime.

Is Russia Committing War Crimes in Ukraine?

There have been several reports of Russian mercenaries committing violations that go against the laws and customs of war. These atrocities have been committed against civilians in the Kyiv, Kharkiv, and Chernihiv regions of Ukraine.

Some of these include instances of summary executions, unlawful threats and violence meted against civilians, and rape. The individuals who perpetrated these abuses are guilty of committing war crimes and can be made to answer for their actions.

All parties involved in the armed conflict involving Russian and Ukrainian forces are required to adhere to the International Humanitarian Law (IHL) provisions, including customary international law and the protocols of the Geneva Conventions.

The laws of war prohibit the inhumane treatment of prisoners of war and civilians in custody, torture, all forms of sexual violence, willful killing, looting, and pillaging.

Russia has a legal obligation to the international community to investigate all alleged reports of war crimes committed by its military personnel.

Need more legal advice? Chat with a Laws101 attorney online right now.

person signing a document

Estate Planning with Cryptocurrency – How to Pass Assets After Death

Legal AssistantAdministrative Law, Estate & Probate Law, Regulatory Law, Resources

According to CoinMarketCap data, there are currently more than 18,000 different types of cryptocurrencies, with Bitcoin and Ethereum being the most popular ones of the bunch. As crypto continues to evolve and become more mainstream, it only makes sense that its value in your investment portfolio will continue to rise as well.

The only challenge this poses is—unlike traditional assets, crypto exists virtually, meaning it has no physical manifestation in the real world. You can immediately see how this would be a problem when it comes to incorporating it into your estate plan.

With that in mind, this article explores everything you need to know about estate planning with cryptocurrency.

Bitcoin and Estate Planning – Understanding the Legal Challenges

First off, Bitcoin and cryptocurrency are generally designed to be anonymous. This setup creates three main issues for estate planning:

  1. The lack of personally identifiable information associated with your crypto asset
  2. The fact that crypto exists only in the virtual space
  3. No crypto transaction can be authorized without the owner’s private key

Below is an in-depth look into each of these challenges.

1. The Lack of Personal Identifiable Information

Every Bitcoin wallet has a private key and public address associated with it. The owner of the crypto assets does not put their name, social security number, or any other form of personally identifiable information. There’s no account statement, deed, or certificate of title that comes with cryptocurrency to prove ownership.

In a conventional Revocable Living Trust estate plan, an individual would transfer an asset to the Trust. By doing this, the successor trustee acquires legal rights over the asset upon the settlor’s passing. Unfortunately, this is not possible with a crypto wallet.

2. Crypto Only Exists in the Virtual Space

To complicate matters further, cryptocurrencies are virtual assets. They can be stored in a cloud, hard-drive, smartphone, USB drive, or any other storage device capable of holding data. Even if your heirs came across that information after your passing, they likely wouldn’t have any idea what they’re looking at, especially if they were not aware that you owned crypto assets.

3. All Crypto Transactions Require the Owner’s Private Key

The only way anyone can transact Bitcoin, Ethereum, or any other crypto asset is they have the owner’s private key. This key is usually saved in the owner’s digital ticket and is the “golden ticket” that grants access to the crypto assets, therefore, allowing them to transact. This presents two problems:

  1. As the crypto owner, you would need to keep the private key secure while you’re alive and also provide a means for your heir(s) to find it after your demise; and
  2. If you lose the private key, you and subsequently your heir(s) will no longer have access to your crypto assets.

The second issue can be particularly problematic for your estate plan. Generally, there’s usually a third-party holding the asset in question with all other assets. This asset is subject to court jurisdiction. If it is left out of a Trust for some reason, the successor trustee can file a petition with the Probate Court.

The probate route is not an option for cryptocurrency. If your private key gets lost, there’s no court order in the world that would be able to recover it. Any crypto assets you may have held will be lost forever.

Cryptocurrency in a Will

To pass your crypto estate to your heirs, ensure that your estate plan has a disclosure provision for your digital assets and that it provides a means to securely transfer your private key to your surviving kin after your demise.

One way to do this would be to include detailed instructions in your will to your successor trustee, which you would then place in a safety deposit box. Alternatively, you could set up an automated dead man’s switch that transfers crypto asset custody to your successor trustee upon your passing.

Other Estate Planning Techniques of Passing Crypto Assets After Death

bitcoin on a hundred dollar bill

The fact that digital wallets don’t come with a “reset password” function means that you need to devise a foolproof way of making sure your loved ones find a way to access your virtual asset after your demise. If you hold the crypto alone, consider letting your loved ones know that the wallet exists, let them know where to find it, and show them how to access it using your private key.

You could share your wallet information – private key included – with your spouse, trusted family member, or a close friend. Remember to treat your private key and wallet information like your bank account. Access to the private key itself is all they would need to access your wallet and claim the assets as their own.

You could splinter your private key among a few individuals you trust. You could provide your financial advisor with half the key and your attorney with the other half. That said, it’s always advisable to enter into an agreement with all the parties involved to define how and when the splintered information is to be shared with the intended beneficiaries.

Alternatively, consider splitting the key information among the intended beneficiaries. However, keep in mind that they should know how to decipher it correctly when the time comes.

For instance, suppose you give your spouse, son, and daughter digits 123, 456, and 789, respectively. While it might make sense when they’re all together, it might not be as obvious if one of them ends up losing their key. A better solution would be something like 123(A), 456(B), and 789(C) for your spouse, son, and daughter, respectively. That way, even if one of them loses their “code,” the entire key can still be deciphered.

All in all, consult an experienced estate planning attorney to explore all your options on the best way to pass your crypto assets to your loved ones after your passing.

Need help from a legal expert? Chat online with a Laws101.com attorney today.

bitcoin on a hundred dollar bill

Cryptocurrency and Taxes – What You Need to Know

Legal AssistantAdministrative Law, Business Law, Regulatory Law, Resources, Tax Law

2021 was a great year for cryptocurrency. It saw many first-time investors buying in, most of whom began investing in the last nine months or so. The market recorded several all-time highs and lows throughout the year, resulting in massive profits and losses in equal measure for many investors.

If you’re part of this new crop of investors who got into crypto this past year, one of the questions on your mind this tax season is: Is cryptocurrency taxed, and how does it work? Here’s everything you need to know.

Do You Pay Taxes on Crypto?

Is crypto taxable? The short answer is – yes, Uncle Sam needs you to pay up. According to the IRS, crypto assets are a form of property. Bitcoin, Ethereum, and other forms of cryptocurrency are all taxable.

If you’re a taxpayer and have been trading in crypto, you need to pay taxes on any gains you derive from it. If you haven’t been doing so, it effectively means that you’ve not been complying with the existing IRS regulations, the consequences of which could inevitably catch up with you someday. The only way to avoid getting penalized by the federal agency would be by proving “reasonable cause.”

The fact that the IRS categorizes cryptocurrency as property is nothing new. This classification of crypto assets has been in effect since 2014. The federal tax code requires taxpayers to report the equivalent dollar value of all transactions involving virtual currency on their tax returns.

Virtual Currency Meaning

The IRS defines a virtual currency as the digital representation of value that works as a store of value, unit of account, and/or a medium of exchange. Cryptocurrency is considered a type of virtual currency that relies on cryptography technology to secure and validate each transaction before being recorded digitally on a distributed public ledger. A great example of a distributed ledger would be blockchain.

Convertible virtual currency is a virtual currency that acts as a substitute for fiat currency or has an equivalent value in fiat currency. Bitcoin is one such example of what would be considered convertible virtual currency. Users can trade with it, purchase it using US dollars and other fiat or virtual currencies, and convert it into US dollars and other fiat or virtual currencies.

When reporting transactions involving virtual currency on your tax returns, you need to determine what its fair market value is on the date you transact. To do this, you need to convert the currency into its US dollar equivalent or into any other currency that you can convert into US dollars.

Keep in mind that the prevailing exchange rate will be determined by the market demand and supply.

Do You Need to Back-Date Your Taxes?

The short answer is—yes, you do. Remember, the IRS classified crypto assets as property in 2014. It essentially means that if you’re a US taxpayer who’s held cryptocurrency since 2014, you’re effectively on the hook for all transactions dating back to that year.

Moreover, the IRS has since sent out notices to taxpayers involved in crypto transactions, letting them know that they are required to file amended returns and remit back taxes. Form 1040 – Individual Income Tax Return now includes a phrase that asks taxpayers whether they received, sold, sent, exchanged, or otherwise disposed of any financial asset in virtual currency in 2021. This removes any confusion as to whether cryptocurrency is taxed. If your answer to that question is “Yes,” the IRS expects you to report it on your return.

Are All Cryptocurrencies a Capital Asset?

The first question you need to ask is: What is a capital asset? Suppose you are moving out of state and, as a result, end up selling your home and cashing in a profit. Suppose you own some stocks and sell them at a higher price than what you bought them at, making a profit in the process. Those properties, i.e., your home and your stocks, would be considered capital assets.

A capital asset is defined as any property or item you hold for personal or investment purposes. When you sell a capital asset, it either earns you a capital gain or capital loss, depending on the prevailing market rates.

Virtual currencies work the same way. You’re required to pay either long-term or short-term capital gains on them. If you’ve held the crypto-assets for less than a year, they would be taxed in the same way normal income would. If you’ve held them for longer, you would report the gains or losses on Schedule D.

How Is Crypto Taxed?

To calculate capital gains taxes on crypto trading, you take the amount you initially paid for the currency (cost basis) and calculate how much the value has increased or decreased since the date you paid for it. The applicable cryptocurrency tax rate for crypto gains tax can be 0%, 15%, or 20%, depending on what constitutes your taxable income.

If you sell property or an item as part of a trade or business transaction, the property in question is not considered a capital asset. As a result, it will be taxed as ordinary income. This same rule applies to the sale of virtual currency. The IRS considers the intent behind the sale to determine the “character” of the capital gains or losses.

Do I Need to File Form 8949?

As stated earlier, any short-term capital gain for crypto assets that you sell will be taxed as ordinary income based on the current IRS income tax brackets. To reconcile your capital gains and losses, you’ll need to use IRS Form 8949 to do so before reporting them on Form 1040 using Schedule D.

If you’re a Non-Fungible Token hobbyist or investor, you can also report your NFT trades and NFT minting gain or loss on Schedule D as well. Ensure you input “C” in column (f). By doing this, you’re telling the IRS that you sold an NFT. That way, the agency knows to treat it as a collectible.

The IRS website has several resources you can use to help you figure out what your cryptocurrency-related tax liability is and the right way to report it on the agency’s website. If you’re dealing with large amounts of money, consider hiring a crypto CPA to file the tax returns for you.

When Should I Report Cryptocurrency Trades on My Tax Return?

A person holding a Bitcoin
Image Credit: Unsplash

Below is a list of the three potential scenarios when you’re required to report cryptocurrency transactions on your tax return.

1. When You Purchase Cryptocurrency Using Dollars

If you buy virtual currency using US dollars and keep it in the crypto exchange you used to purchase it or transfer it to your crypto wallet, you won’t owe any taxes on it at the end of the financial year. If the only activity you engaged in was buying cryptocurrency with US dollars, you don’t need to report this transaction to the IRS as per the guidance listed on Form 1040

2. When Trading Cryptocurrency

If you use crypto assets as a medium of exchange, that’s the point at which your income becomes taxable. Activities that fall in the realm of trading cryptocurrency include paying for commodities using crypto, exchanging one crypto asset for another – for instance, purchasing Bitcoin using Ethereum, or selling your crypto asset for its equivalent in US dollars.

A taxable transaction occurs anytime you exchange one investment for another or sell the asset entirely. If you engage in a lot of trading, ensure that you keep track of and log every trade you make since each of them constitutes a taxable event.

3. When Minting or Trading Non-Fungible Tokens

Non-fungible tokens, or NFTs for short, are tokens created on a blockchain proving that you have sole ownership of a single, unique digital item. An NFT could be anything from an animated, flying-saucer shaped like a samurai sword to a digital collectible item. NFTs can be purchased and sold on popular digital marketplaces like SuperRare and OpenSea.

Just like cryptocurrency, NFTs are taxed. Navigating the tax guidelines surrounding them can be quite confusing since the IRS has not provided any tax guidance on them. The tax implications of a particular NFT depend on whether you’re an NFT investor or creator and the frequency and extent to which you interact with them (i.e., as a hobby or a business).

Identifying the taxable events when minting or creating NFTs and how they are taxed is an important piece of the puzzle. An example of this would be if you paid gas fees to mint a specific NFT. This constitutes a taxable transaction.

NFT hobbyists can report income but cannot claim business-related expenses as a tax deduction. On the other hand, if you’re minting NFTs as part of your business, you can claim any business-related expense as a tax deduction.

If you decided to sell your NFT to purchase crypto or exchange it for another NFT, that transaction would trigger a taxable event and would be taxed as part of your income.

How to Report Cryptocurrency Income

Some individuals and entities receive payment for services in the form of virtual currency. This mode of exchange means that their income would be in the form of crypto as opposed to cash, mining new coins to earn Bitcoin, or receiving rewards for certain activities in the form of coins of tokens (such as the Earn Rewards Program run by Coinbase).

Regardless of the method used to earn it, the crypto asset’s value in US dollars at the point of receipt needs to be recorded. That’s the income value you’ll report on your tax return. For instance, suppose a customer pays you one Bitcoin for services rendered.

You’ll need to record that asset’s Fair Market Value (FMV) as soon as you receive it. For instance, if the FMV of one Bitcoin is $41,000, you’ll need to indicate $41,000 worth of revenue as personal income.

According to the IRS, any taxpayer who receives payment in the form of virtual currency for goods sold or services rendered needs to include the FMV of the virtual currency when calculating the gross income. This value needs to be recorded on the date they received the currency.

The FMV you capture will stick to that coin, and that’s what will be used as the cost basis. Likewise, if you later use the cryptocurrency you earned to purchase something else, the IRS requires that you reconcile that cost basis you recorded earlier with the current value when using it to pay for commodities.

How to Keep Track of Your Crypto Activity

One of the key things to keep in mind when trading or transacting in cryptocurrency is that you’re responsible for keeping track of all your taxable events and the FMV of your crypto assets throughout the lifetime of those events. While it’s easy for anyone to get into the crypto space, keeping track of the cost basis and ensuring you’re doing it the right way is where things can start to get a little dicey.

Depending on the exchange you’re using, you might be issued with a Form 1099-B to help you figure out what your crypto gains and losses are, although this approach isn’t that common. Ultimately, you’ll need to come up with a system that helps you track your currency’s FMV and taxable events.

The good news is—President Biden signed into law the bipartisan infrastructure bill that makes it mandatory for crypto exchanges to issue Form 1099-B. It means that from the 2023 tax year, exchanges will be notifying the IRS directly of taxpayers’ cryptocurrency transactions. That said, don’t expect any 1099-B forms for the 2021 and 2022 tax years.

To easily track your crypto transactions, the best thing to do would be to leave your crypto assets in your wallet. That way, you can generate reports about all your transactions. It’s easy to see how you might have a hard time keeping track of your taxable events if you keep moving your assets between different private wallets or if you have them stored in different places. Consider working with a crypto CPA if you’re conducting complex cryptocurrency transactions.

person holding a Bitcoin

Can I Sue Coinbase for Inadequate Protection?

Legal AssistantAdministrative Law, Business Law, Consumer Law, Personal Injury Law, Regulatory Law, Resources

In November 2021, Coinbase, one of the world’s most popular digital currency exchanges, was slapped with a class action suit filed in the California Northern District Court. The plaintiff, Adam Alfia, alleged that Coinbase failed to protect customer accounts against data breaches and took unreasonable steps such as freezing customer accounts for extended durations to mitigate the cyberattacks.

Adam Alfia further stated a transaction of $50,000 to purchase Ethereum was made in his Coinbase account, a transaction he claims was not authorized by him. When he brought his grievances to the company, Coinbase responded by freezing his account and locking him out for two months, making it impossible to reverse the $50,000 debit made from his Bank of America account.

Unfortunately, this isn’t the first Coinbase lawsuit of its kind the company is facing. It has become notorious for freezing customer accounts and taking actions that have been previously described as dubious, unethical, and illegal.

Is Coinbase safe? Can I sue Coinbase for inadequate protection? This article explores the answers to these questions and more.

What Is Coinbase?

Coinbase is a cryptocurrency exchange that allows individuals to buy, sell, and exchange Bitcoin and several other types of cryptocurrency. The company operates in more than 100 countries worldwide, has more than 50 million users, employs roughly 3,000 individuals, and supports an ecosystem of almost 10,000 financial institutions.

If you’re new to the world of crypto exchanges, you’re probably wondering: What is Coinbase wallet, and is it the same as Coinbase?

Coinbase vs Coinbase Wallet

To understand the difference between the two, you first need to understand what a cryptocurrency exchange is and how it is different from a cryptocurrency wallet.

You can think of a cryptocurrency exchange as a brokerage service. It allows users to trade in digital assets and even supports digital currency conversion into fiat currency and vice versa. Coinbase, Kraken, Gemini, and Binance are all examples of cryptocurrency exchanges.

A cryptocurrency wallet is software (or a physical device in some cases) that allows users to store crypto assets as well as their private keys. Additionally, users can use cryptocurrency wallets to send, receive, and spend their cryptocurrency. Coinbase Wallet, Electrum, Ledger, and Exodus are all examples of cryptocurrency wallets.

To sum up: Is Coinbase a crypto wallet? No, it’s not. Coinbase Wallet is the crypto wallet. Coinbase (single word) is a cryptocurrency exchange.

Is Coinbase Wallet Safe?

In light of the recent reports of customers’ Coinbase crypto wallets getting hacked, the question on your mind is likely – How secure is Coinbase Wallet? Going by the growing number of proposed class action suits against the company for allegedly failing to secure users’ cryptocurrency wallets from unauthorized money transfers, your guess is as good as any.

Coinbase security breaches have resulted in hackers conducting unauthorized transfers of crypto assets and fiat currency, to which end the company responded by freezing accounts and locking customers out in a bid to mitigate the breaches.

Given how volatile cryptocurrency is, customers’ inability to access their cryptocurrency wallets for extended periods proved problematic when they needed to buy or sell their assets. As a result, many suffered severe financial losses due to missed investment opportunities.

Can You Sue a Cryptocurrency Exchange?

There are generally two forms of cryptocurrency litigation—class action suits or single suits. On the one hand, you can sue an entire cryptocurrency exchange as a class so that all the affected individuals can receive assistance.

On the other hand, you can opt to sue the exchange as an individual to recover damages for any financial losses you might have incurred as a result of the actions taken by the company. Several lawsuits have been lodged against various exchanges and crypto wallets by users who have allegedly been frozen out of their accounts for extended periods.

There are also several suits alleging that crypto wallets have failed to adequately safeguard their wallets against hackers who’ve somehow managed to bypass the platforms’ security protocols and proceeded to carry out unauthorized transactions on customers’ accounts.

Coinbase Scam

In November 2021, a federal judge approved a warrant authorizing the recovery of Bitcoins worth more than $600,000 after a Coinbase user fell victim to an alleged scam. Earlier that year, they purchased 200 Bitcoins, whose value appreciated about $12 million by the time the warrant was issued.

According to the user, they received a pop-up notification that appeared to be from the Coinbase app, indicating that their account had been locked. They later learned that the notification did not originate from the app. It was part of an elaborate fraud scheme to steal cryptocurrency from the user’s account.

According to the Federal Trade Commission (FTC), cryptocurrency scams account for more than $80 million in reported losses every year.

Coinbase Arbitration Agreement

In January 2022, Coinbase updated the terms of its user agreement to include an arbitration clause. Users were compelled to agree to the new terms before they could continue using the platform.

By including an arbitration clause, Coinbase effectively prevents users from filing a lawsuit when a dispute arises. Parties to the agreement would instead enter into arbitration to resolve the issue, avoiding civil court litigation entirely.

If you’re a Coinbase user and are currently using the cryptocurrency exchange or the wallet, you’ve, in effect, agreed that any dispute that arises from here on out is to be settled out of court. You will not be able to pursue any legal claim against Coinbase through a lawsuit.

Arbitration agreements are legally binding. This means that if you later decide that you want to pursue the matter in court, you will either:

  1. Not be able to; or
  2. Rack up massive amounts in legal fees trying to get a lawyer to invalidate the agreement

By including an arbitration clause, Coinbase has found a way to keep disputes confidential and limit litigation costs. This move is likely in light of the numerous lawsuits the company is currently fighting in court.

Have legal questions? Chat online with an available Laws101 attorney.

Man in an orange jumpsuit behind bars

Bail vs Bond – What’s the Difference?

Legal AssistantCriminal Law

You’ll often hear the terms bail and bond being used interchangeably and assume they mean the same thing. The truth is – they don’t. While most people use one in place of the other in normal, everyday conversation, they mean completely different things from a legal standpoint.

If you or a loved one find themselves on the wrong side of the law and end up getting arrested, it’s important to understand what the difference between them is to make an informed decision based on the options available to you. Bail vs bond – what’s the difference? This article explores everything you need to know.

Bail Definition

Bail and bail bond both refer to a monetary sum given to a court by a defendant as collateral. It is supposed to ensure that they show up to court for their trial on the appointed date or fulfill any other court-mandated obligation.

When someone “posts bail,” it essentially means that they have paid the collateral required to secure their release from jail. While it is possible for bail to be ordered in civil cases, this article will focus on the term as it is used in criminal cases.

Bond Definition – What Is a Bail Bond?

A bond is a pledge to make good on bail. In such instances, the sum of money used as collateral to secure the release of an arrested individual is not posted by them. Instead, a third-party – usually a bond company – posts the amount on behalf of the defendant at a fee. The bond company is also responsible for making sure that the defendant honors their court appointment, or else they risk losing the money they paid in its entirety.

What Happens After an Arrest?

To understand how bail bonds work, you first need to understand the surrounding circumstances that might warrant one or the other. For this reason, we must explore what happens after an arrest.

When law enforcement officers arrest an individual for an alleged crime and take them into custody, they will first go through the regular steps of fingerprinting, getting their mugshot taken, and basically being processed into the system.

Once that takes place, a significant amount of time might pass between the date of the initial arrest and the date they’re arraigned in court to answer for the charges being leveled against them. This period could be anywhere between a few days to several months.

The question then becomes – what happens during this period in limbo?

Bail Hearing

That’s where bail or bond comes into play. A judge has to decide whether the arrested individual should remain in jail and wait until their court date to determine their guilt or innocence, or if they can leave and go about their business until their court date. When making this decision, there are several factors the judge has to take into consideration, including:

  • The safety and wellbeing of the community should the defendant be released from custody
  • If the individual in question poses a flight risk
  • Whether or not they have a criminal history

If the judge determines that the defendant can be trusted to leave jail and show up to court on the appointed trial date, they’ll be allowed to post bail and leave.

Types of Bail Bonds

There are seven different types of bail bonds. Here’s an overview of each of them and their associated requirements.

Surety Bonds

What is a surety bond? This is the most standard form of bail bonds and is usually given through bail bonds companies. The reason for this is simple. In most cases, the bail amount is usually set at a dollar value that’s much higher than the defendant’s budget. As a result, the average person would ordinarily not be able to foot this cost on their own.

Individuals who can’t pay the bail amount set by the court turn to bail bonds companies to purchase a surety bond from them. They then pay back the amount over an agreed-upon period. Bail bonds companies usually charge defendants a 10% fee of the total bail amount over and above the bail figure itself.

Property Bonds

Property bonds are exactly what they sound like – bonds that use property assets as collateral. It’s important to mention at this point that not all US states accept property bonds. It is, therefore, important to familiarize yourself with the laws in your state to find out whether or not this form of bond is permissible.

The most commonly accepted form of property bond uses real estate as collateral. It is not the only kind of collateral used, though.

When obtaining a property bond, keep in mind that full rights to the property must be surrendered. The downside to this type of bond is the time it takes to process all the required paperwork and inspections, which can take several weeks at a time.

Cash Bail

Cash bail refers to a bail bond that’s fully paid for in cash. If the defendant has some extra funds they don’t mind tying up in bail money, they can post cash bail themselves. Once they appear at all the court appointments right up to the conclusion of the case, the court will refund the bond amount. It is by far the easiest and most convenient option since the defendant doesn’t lose any money in the long run.

Can You Pay Your Own Bail?

Yes, provided that you can pay the entire amount upfront at the time of the arrest. Keep in mind that you would be the sole cosigner to the amount. This is only an option when posting cash bail.

Federal Bail Bonds

These are essentially bail bonds posted for federal offenses. They are often the most expensive and most difficult to obtain compared to bonds for state-level offenses.

Immigration Bail Bonds

These are special types of bail bonds that exist for non-US nationals who commit crimes within US borders. An immigration bail bond has a very strict set of requirements and is often quite complicated and extremely difficult to secure. The process of getting this type of bail also takes quite a bit of time to complete.

Citation Release

This is not a bail bond in the strict sense of the word. A citation release is a type of discharge that is accorded to an individual who received a citation for an offense (usually traffic-related) but was not taken into police custody. A defendant cannot apply for this type of bond on their own. It is usually left to the discretion of the citing officer to decide whether or not the defendant can receive a citation release.

Recognizance Release

The different types of bail bonds outlined so far have some sort of monetary component attached to them. A recognizance release is an exception. In this instance, the defendant is released on their recognizance. They are not required to pay any money as collateral to secure their release. Similar to a citation release, whether or not a defendant is granted this type of bail bond is left up to the arresting officer’s discretion.

How Is Bail Set?

Silhouette of a man facing jail cell window
Source: Pexels

Now that you have a basic understanding of the different types of bail that exist, the next logical question would be – who sets bail, and how is it set?

A judge is responsible for setting bail. That said, most arrested individuals are eager to get out of jail as soon as possible. Because of the sheer volume of people in jail at any given time, it is not feasible to get every single one of them before a judge for a bail hearing. If that were the case, people would have to wait several days to get released.

For this reason, most jails have a standard bail schedule that specifies the bail amount for common crimes. The arrested person simply has to pay the amount set forth, and they can get out of jail quickly.

If an individual finds the amount set on the bail schedule to be too high, they can request for a special bail hearing to request the presiding judge to lower it. They can also file their request during their arraignment.

Some jurisdictions use bail algorithms to set the bail amount. Information about the arrested individual, such as their age and criminal past, is entered into a program. The system processes this information and generates a score that translates to the risk level of the defendant failing to appear in court or committing another crime. The bail amount is set based on this score.

What Is Bail Jumping?

Many people believe that failing to appear in court after being released on bail simply results in forfeiting the bond. This act is known as bail jumping, and the repercussions are not as straightforward as you might believe.

Bail jumping may result in not just losing the bail money; it can be charged as a separate crime altogether. Even if a defendant believes that they are innocent of the underlying charge, this cannot be used as a defense for jumping bail. Depending on the state you reside in, it can be charged as a felony or misdemeanor offense. Some states only charge a defendant with bail jumping if their underlying charge is a felony.

To be charged with bail jumping, the prosecution has to prove that the defendant intentionally missed their court appearance. To defend against these charges, the defendant would have to prove that they were not served with proper notice of the court date.

What Happens if You Violate Bail Conditions?

Violating the conditions set forth in your bail could be anything from failing to show up on your court-appointed date to committing another crime and getting arrested for it. If a defendant violates bail conditions, a bounty will be set on them, after which a bounty hunter will embark on a mission to find them. Once they do, they’ll likely be arrested, taken into custody, and their bail revoked. The money that had been paid as bail will be forfeited at that point.

What Happens to Bail Money?

One of the most frequently asked questions we get is – Do you get bail money back? If not, where does it go? There’s a lot that goes on behind the scenes.

If you don’t violate the conditions of your bail, the court system, through the county sheriff to whom your case is assigned, holds on to the cash. The amount will be returned to you in a few weeks once you’re exonerated of the charges leveled against you. The amount will be less administrative and statutory fees.

Remember, bail is essentially a means – a form of collateral, if you will – of getting you to return to court on the appointed dates and answer to your charges. If you don’t show up to court on any of the dates you’re supposed to, you forfeit the amount, and an arrest warrant against you is issued.

How to Bail Someone Out of Jail

Getting a phone call from a friend or family member in jail informing you of their arrest isn’t fun. Worse still, they’re now asking you to bail them out, and you have no clue where to begin. How does bail work? Here’s a step-by-step breakdown of what you need to do.

Gather Critical Information

When most people get that unexpected phone call from the local jail, they get so flustered that they end up forgetting to ask what the bail amount is. If the person is calling before their initial arraignment, you may have to wait until the hearing to find out how much the bail is or if they’re entitled to bail at all.

Also, find out what specific charges they’re facing, where they’re being detained, and basic personal information about them that you might not be aware of, such as their date of birth, full names, etc.

Contact a Bail Bondsman

Once you’ve obtained all the necessary details, get in touch with a local bail bondsman and give them all the information about the situation your friend or loved one is in. The bail bondsman will then inform you of all the available options. Most people tend to go with surety bonds.

Pay a Portion of the Bail

Surety bonds usually require an individual to pay a certain percentage of the bail amount. You’ll need to remit this money and fill out some paperwork before the bail bondsman can arrange for the release of your loved one.

Go to the Jail

Once you’ve paid the required amount, the bail bondsman will handle everything involved in securing your friend or loved one’s release. Nonetheless, you should still go to the jail facility where they’re being held since they’ll likely need a ride home. Then, talk to them about refunding the surety bond amount you paid or, at the very least, the importance of not violating the terms of their bail.

Do you need more legal advice on how to navigate criminal charges? Have legal questions? Chat online with an available Laws101 attorney.

Lawyers in an office

Is It Worth Hiring an Immigration Lawyer?

Legal AssistantImmigration Law, International Law

There’s no denying that immigration proceedings and processes are legally-binding matters that hold your life in balance. Nonetheless, the federal government doesn’t require immigration lawyers to oversee all immigration processes. Individuals seeking legal status in the US aren’t entitled to legal representation.

While hiring an attorney is not always necessary, the question is – Is it worth hiring an immigration lawyer? This article explores the answer to this question and more.

What Does an Immigration Lawyer Do?

Immigration lawyers interpret the law, help clients analyze their strategies, possibilities, and rights, and walk them through each step of the intricate immigration process. They prepare all the necessary paperwork on your behalf or that of your employer. Besides saving you time and resources, the process can help you organize the paperwork you need, ranging from proof of a valid, bona fide marriage to a birth certificate.

Additionally, an immigration lawyer will ensure that all the information you submit to the government when filling out the required forms, preparing a testimony or statements, and collecting documents are consistent, concise, and accurate. In most cases, immigration applications all come down to the government officer believing your story. It’s in your best interest to avoid any discrepancies that would raise red flags that could potentially get you deported.

An experienced immigration attorney also understands what the government expects. They know how to mitigate the challenges and delays that inevitably crop up.

When Do You Need an Immigration Lawyer?

An immigration lawyer can be a lifesaver in the following scenarios.

  • Acquiring legal status for those with immigration issues as a result of medical problems, misrepresentation, court history, or falsifying documents
  • Acquiring US citizenship
  • Appealing a deportation order
  • Becoming a business owner as an immigrant or hiring immigrants
  • Concerns of inadmissibility
  • Delays that have more to do with bureaucracy than the law (For instance, if you’re trying to move from San Francisco to Los Angeles after applying for a Green Card. Your application might disappear into a bureaucratic black hole when it should have been transferred to the LA USCIS office)
  • Ensuring that employers abide by the requirements for hiring immigrants and follow the stipulated procedures to confirm employment authorization
  • Family-based immigration
  • Helping foreign employees ensure that their employers follow appropriate conduct
  • Helping students and workers get a visa
  • Helping those who’ve been deported get back into the US
  • Helping those who have violated immigration laws, such as having a criminal conviction that could lead to deportation
  • Helping those with a criminal record relocate to the country
  • Maintaining legal status when you need to leave the country for an extended period
  • Obtaining legal status for those in the US illegally
  • Obtaining refugee or asylum status
  • Prevent deportation
  • Those on trial for a crime that could impact their legal status
  • Uncertainty about basic eligibility criteria for immigration benefits such as a Green Card
  • Visa renewal for legal status

The Cost of Hiring an Immigration Attorney

How much does an immigration lawyer cost? Legal fees vary broadly based on the services required. Here’s an overview of some of them:

  • Adjustment of Status Application: $600-2,500
  • Asylum Application: $1,000-6,000
  • Citizenship Application: $500-1500
  • Deportation Appeal: $2,000-15,000 depending on the number of complex defense strategies or court appearances
  • Employment Petitions: $1,500-7,000
  • Family-Based Green Card Petition: $800-3,000
  • Work Permit Application (Employment Authorization): $300-600

It’s worth noting that some immigration lawyers can charge more depending on their level of expertise, whether they’re based in major cities such as San Francisco or New York or whether they rely on specialized processes and tools.

lawyer writing immigration
Source: Shutterstock

Finding a Great Immigration Lawyer for Your Case

How do I find a good immigration lawyer? Here are a few pointers to steer you on the right path.

  • Referrals: A great starting point when looking for a good immigration attorney is to ask for a referral from someone you trust. If you have an attorney for other issues, they likely have a network of lawyers, which means they can help you find a great one to handle your immigration case.
  • Reach out to a bar association: All attorneys are members of legal associations. They rely on these to broaden their professional networks, get new clients, and access continuing education. While state and local associations might be compulsory or voluntary for attorneys practicing in a given area, most of their national counterparts center on a particular practice area. As far as immigration matters go, the American Immigration Lawyers Association (AILA) is the most renowned of them all.
  • Conduct your due diligence: Even though you have an immigration attorney in mind, a quick online search can make all the difference. You can check out the lawyer’s profile to ensure they handle your type of case. For instance, if you need help with a student visa, an immigration attorney who specializes in asylum cases might not be a great fit for you.

Furthermore, ensure that you check the attorney’s license online to verify its validity and ensure that there are no disciplinary issues for professional misconduct. Every state’s Supreme Court usually avails this information on a public site.

Best Immigration Lawyers

If you’re in Chicago, New York, or Houston and are looking for an immigration attorney that will give you value for your money, here are some of your best options:

1. Best Immigration Lawyer Chicago: Angie Garasia

As a partner of Lee & Garasia, LLC law firm, Angie Garasia handles all aspects of Nationality law and Immigration. That includes non-immigrant and immigrant visas, citizenship applications, and employment applications for permanent residency. She even travels out of state to handle intricate immigration issues in USCIS locations such as Chicago.

2. Best Immigration Lawyer Houston: The Law Office of Lindsey J. Harris

With a team of multilingual immigration attorneys, this law firm is one of the most specialized ones in Houston. The team at the Law Office of Lindsey J. Harris handles:

  • Academic visas
  • Citizenship issues
  • Family-based immigration
  • International adoption
  • Investor and employment visas
  • Temporary Protected Status (TPS) and asylum

3. Best Immigration Lawyer New York: Matthew L. Guadagno

He has been practicing law since 1994 and has worked at one of the best deportation defense firms in New York for 13+ years before starting his practice in 2011. Matthew L. Guadagno has successfully litigated dozens of immigration cases across the US.

Immigration issues can be a nightmare if you don’t get the right support. Hiring an immigration lawyer for advice on your rights or to correctly file the paperwork makes all the difference.

Do you need ongoing legal support for immigration-related matters? Chat online with an available Laws101 attorney.

person slipping Bitcoin into their pocket

How to Recover Stolen Cryptocurrency

Legal AssistantAdministrative Law, Consumer Law, Criminal Law, Regulatory Law, Resources

The theft of cryptocurrencies such as Bitcoin and Ethereum is becoming increasingly common and has become a high priority target for fraudsters.

According to a recent report compiled by Chainalysis, cybercriminals made away with a whopping $14 billion worth of crypto assets in 2021, translating to a 79% increase in crypto-related crime compared to the previous year. Scamming and hacking were the two biggest forms of crypto-related crimes reported.

The question on most investors’ minds is: Can cryptocurrency be stolen, and if so, can you get it back? Here’s everything you need to know about how to recover stolen cryptocurrency.

Can My Bitcoin Be Stolen?

The short answer is—yes. To understand how this would be possible, you need to familiarize yourself with how this widely popular form of cryptocurrency came into being.

Bitcoin was first launched in 2009 and was designed to be a decentralized virtual currency. The idea behind its creation was that it was supposed to be independent of government and bank oversight and would not be regulated by any single administrator. Instead, every transaction would be recorded on a public ledger referred to as a blockchain, which is how all currency activities would be logged and verified.

Since its creation, security has been a major concern for crypto. On the one hand, the blockchain technology on which Bitcoin runs is extremely difficult to hack. It is constantly being analyzed and improved upon by Bitcoin users, making the possibility of hacking the framework it runs on near-impossible and very unlikely.

On the other hand, simply because the technology Bitcoin runs on is difficult to hack doesn’t necessarily mean that your investment is safe. Fraudsters employ other avenues to steal crypto-assets at different phases of the trading process.

Digital Wallets and Crypto Exchanges

Bitcoins and other forms of cryptocurrencies are stored in wallets. Users rely on digital currency platforms known as crypto exchanges to trade (buy, sell, and exchange) crypto assets. Coinbase is one of several popular crypto exchanges.

These two components pose some inherent security risks that may lead to the loss of crypto assets through theft and other types of fraudulent activities. While the developers of these platforms are always looking for ways to improve their overall security, fraudsters mainly focus on using dubious means to gain access to people’s wallets before proceeding to empty them of the crypto assets contained within.

Two-factor authentication is the most commonly used security measure implemented on these platforms during a cryptocurrency transaction. The transaction’s security is linked to an individual’s phone number or email address, which subsequently means that anyone who has access to any of the two components can verify and validate the transactions.

If a sufficiently motivated hacker can determine a good amount of your non-crypto-related personal information, they have everything they need to hack your wallet and transact without your knowledge or authorization.

The widely publicized Coinbase hacking is one of many hacks, scams, and frauds that have plagued individual investors who’ve had their crypto assets stolen after cybercriminals capitalized on security loopholes in crypto wallets and exchanges.

How to Steal Crypto – Entering the Mind of a Cybercriminal

If you don’t voluntarily give up your wallet login credentials to a third party, the next logical question would be how do cybercriminals steal crypto assets? Here is an overview of the five main ways they use to hack your crypto wallet.

1. Phishing

Phishing attacks are as old as the internet itself. It is undoubtedly the most widely used yet effective method fraudsters use to entice unsuspecting users into freely giving up their access credentials. They use highly sophisticated forgery skills to create exact replicas of legitimate crypto trading websites that are impossible to discern from the real thing.

In a bid to be even more convincing, these cybercriminals send phishing “confirmation emails” or emails notifying the user of a “potential hack.” These emails contain malicious links to the fake replica sites that prompt users to input their authentication information which is then stolen from them and used to access the real site.

The best way to avoid falling victim to this is to pay close attention to the spelling of the site’s domain name. They often contain some inconsistencies that are hard to spot at first glance. For instance, instead of (https://www.coinbase.com/), the fake site’s domain name would read something like (https://www.coinbaze.net/).

2. Compromised Two-Step Authentication

This technique specifically targets individuals involved in crypto transactions. Since most (if not all) of these platforms require users to have two-factor authentication enabled on their accounts, fraudsters focus on intercepting these verification SMS texts. It can be done by SIM-card cloning, wiretapping, or voice phishing (also referred to as “phishing”), to “recover” access to the user’s digital wallet or confirm fraudulent, unauthorized crypto transactions.

3. Malware Infection

This one is an oldie but goodie in the crypto hacking world. Cybercriminals infect the user’s device with keylogging software to steal their PIN and password when they enter them.

Fraudsters may also use cross-scripting injections into the user’s web pages to redirect them to malicious websites that, in most cases, the browser fails to pick up. Unbeknownst to the user, these sites steal sensitive user details or install malware on their devices.

4. Mobile Apps

Unfortunately, not all cryptocurrency trading mobile apps are secure. This can be attributed to security loopholes resulting from poor architecture and open backdoors. As a result, they leave the users vulnerable to man-in-the-middle attacks and data breaches involving the leakage of API keys and other sensitive user information derived from unencrypted databases.

In other cases, hackers may employ methods such as PIN guessing and brute-force attacks to gain access to your wallet and perform unauthorized transactions. If the attackers gain access to a sufficient number of accounts, they can manipulate the market to drive up demand or create a supply shortage, effectively increasing or decreasing the positions of certain cryptocurrencies.

5. Unsafe Security Keys

To perform any crypto-related transaction on the blockchain, you need a public key and a private key.

A private-key functions as a digital signature and is only available to the owner of the cryptocurrency. The user needs it to authorize any transactions they do. A public key is used as a confirmation tool for the private one when receiving transactions.

Users store their private keys in their crypto wallets. If you lose it, you will permanently be locked out of the platform and will no longer be able to access your assets. In the same breath, if anyone other than you obtains your private key, they can use it to transfer all your funds and crypto assets to their wallets.

Since crypto transactions are anonymous, identifiable only by their respective keys, it becomes impossible for you to track your money and assets without the help of law enforcement agencies. It’s your best bet if you hope to recover your stolen assets.

Hackers employ a host of methods to steal crypto owners’ private and public keys. Some of these include using compromised apps with spell checkers browser extensions and exploiting the existing system vulnerabilities. Hot wallets are a popular target for hackers since they run on a centralized system and are always connected to the internet.

On the flip side, cold wallets are a much safer alternative. They are maintained on separate hardware storage devices and are not connected to the internet. The hacker would need physical access to the device to obtain the keys. The downside to them is that if the device in question gets damaged or lost, you can also kiss your crypto assets goodbye.

Seed Phrase vs Private Key – Understanding the Difference

hand holding a paper containing a seed phrase

What is a private key, and how is it different from a seed phrase? As mentioned in the previous section, every cryptocurrency wallet, such as Bitcoin, consists of a private key and a public key. Simply put, private keys are used to send transactions on the blockchain, while public keys are used to receive transactions.

You can think of a private key as the equivalent of an ATM PIN that grants you access to your bank account. By using your unique PIN to access your account, you’re essentially proving to the ATM that you are indeed the account owner. If someone else knows the code, they too would be able to spend the money in your bank account.

In the same way, a private key proves to the crypto network that you own the Bitcoin, Ethereum, and all other crypto assets in your wallet. Private keys come in the form of a 256-bit number that consists of random values between 0 and 2256 which can be expressed as 115,792,089,237,316,195,423,570,985,008,687,907,853,269,984,665,640,564,039,457,584,007,913,129,639,936.

You wouldn’t want to enter such a number every time you need to transact crypto assets. That’s where a seed phrase comes in.

What Is a Seed Phrase?

A seed phrase is a mnemonic representation of the randomly generated 256-bit number that makes up the private key. It can either take the form of a 12-word or 24-word phrase consisting of a combination of random words picked from a 2,048-word list.

An example of a 12-word seed phrase would be:

Young plastic lumber board quote invite history skull dove kit robust regular

If someone gets a hold of this phrase, they essentially have access to your wallet.

Can I Sue if Cryptocurrency Is Stolen?

The rise in cases involving stolen crypto assets has seen a proportional increase in the number of crypto litigation against digital wallets and exchanges. If you’ve fallen victim to cybercriminals gaining unauthorized access to your crypto wallet and transacting your assets on a crypto exchange, the general answer is—yes, you can sue if your Bitcoin or any other cryptocurrency is stolen.

The next logical question would be: Who is the defendant in a cryptocurrency lawsuit? In most cases, civil action is taken against the crypto exchange and the digital wallet. You can do this individually or join a class action suit if you can prove that the actions (or lack thereof) of the exchange or wallet you use to transact resulted in the loss of your crypto assets.

Additionally, there are some civil suits that have been introduced against the coin companies.

How to Sue for Cryptocurrency Loss

Cryptocurrency transactions cannot be reversed. The only way you can recover your funds is if the recipient refunds the assets.

The first step is to file a formal complaint with the following government agencies:

You can then pursue litigation by joining a class action suit or sue the defendants individually in a single suit.

How to Serve a Defendant in a Foreign Country

If the entity you want to sue is based outside US borders, you’re probably wondering how to serve a foreign corporation in such instances. First, you’ll need to establish whether the country in question is part of an international treaty on service. Second, you’ll also need to establish whether the country is opposed to a specific form of service.

There are generally two options you can use:

  1. Service by the US Postal Service
  2. Service by an international express-mail firm

Regardless of the method you use, it will need to be in the form of restricted delivery with a request for a return receipt.

Alternatively, you can serve a foreign defendant under the provisions of the Hague Convention. With this option, you, through your lawyer, will send a request for service to that country’s “Central Authority.” This is the department that handles and executes requests for service.

First, you’ll need to file a motion with a US court for the Issuance of Request for Service Abroad. The court will then execute Form USM-94 and embed its official seal. Next, the court may send you the executed form and leave it to you to forward it to that foreign country’s Central Authority or deliver it directly without your involvement.

Need help from a legal expert? Chat online with a Laws101 attorney right now.

scam with Bitcoin cryptocurrency

What to Do if You Are a Victim of a Crypto Scam or Fraud

Legal AssistantAdministrative Law, Business Law, Criminal Law, Regulatory Law, Resources

It’s no secret that cryptocurrencies like Bitcoin, Ethereum, and several others are a highly sought-after commodity in the digital world of online trading. Many smart investors have made massive profits, with many others becoming millionaires overnight.

Unfortunately, there is a dark side to it all that people hardly ever talk about – Crypto fraud.

That’s right. The prospect of overnight riches can make many investors blind to some of the risks that come with online trading, which, in turn, allow fraudsters to lure them into crypto scams. If you’ve fallen victim to crypto fraud, this guide explores some of the steps you can take.

Common Types of Cryptocurrency Scams

According to a 2021 report compiled by the Federal Trade Commission (FTC), more than 7,000 people fall victim to crypto scams every year, reporting losses of more than $80 million cumulatively. Those numbers are projected to rise in the years that follow. To avoid becoming the next victim of a crypto scam, here are some warning signs to keep an eye out for.

1. Establishments That Demand Crypto-Only Payments

If you encounter a seemingly credible establishment or individual claiming that they do not accept any other form of payment other than cryptocurrency such as Bitcoin, that’s a glaring red flag that you’re likely looking at a scam.

It is entirely unlikely that a credible institution would not accept payment in the form of US dollars by normal means via cash, credit or debit cards, checks, or wire transfers but instead insist on crypto payment.

The reality is that any person or institution demanding that you pay them in crypto might have plans to hoard the digital currency to capitalize on its skyrocketing value.

Unfortunately, blockchain does not have the usual know-your-customer (KYC) protocols you would ordinarily find in banks. It means that any person can open a crypto wallet without having to provide a valid form of government-issued ID, Social Security Number, contact details, or address information.

While blockchain is essentially a public ledger that creates permanent and freely-accessible records, individuals can transact on it anonymously, which makes it easy for someone with sinister motives to take your cash and run.

2. Fake or Anonymous Identities

As mentioned before, the glaring absence of KYC protocols leaves behind a major gap despite its widespread use. The fact that cryptocurrency operates on a decentralized platform also means that it lacks safeguards to differentiate the good actors from the bad.

Despite these inefficiencies, blockchain does provide a different form of transparency since the information embedded in it cannot be deleted or modified. Every transaction is logged on the public ledger.

In June 2021, investigators from the US Department of Justice were able to trace the 63.7 Bitcoin that Colonial Pipeline paid in ransom to anonymous hackers. At the time, the cryptocurrency amount was valued at more than $2.2 million.

The transparency built into blockchain alongside the sophisticated tracking tools currently being developed by coders allows law enforcement officers to analyze specific on-chain transactions and track down the culprits.

That said, there’s still a long way to go before these tools become available to municipal-level law enforcement agencies to be able to investigate blockchain scams that occur at a smaller scale and uncover the anonymous identities of bad actors.

3. Digital Games and Collectibles

If the infamous Squid Game crypto scam is anything to go by, one thing is for sure: The next crypto token fraud could be a viral Netflix show away from becoming a reality. Sophisticated cybercriminals have the skills to create new games and fake blockchain worlds fast to cash in on whatever might be trending at the time.

Some of the methods crypto fraudsters are using to scam individuals who are new to the world of blockchain involve getting them to buy a new type of freshly minted token or coin for a game or collectible. If enough excited investors drive up the price through demand and supply, the original token/coin creators (read scammers) can then sell their holdings and vanish in a classic rug-pull move.

Keep in mind that federally-regulated currency has fraud protection and protection from the Federal Deposit Insurance Corporation (FDIC). Unfortunately, these safety nets do not exist on the blockchain. The only way to recover your stolen money would be to get the recipient to refund your cash, which is highly unlikely on a decentralized exchange.

Although you’ll find more robust security measures on mainstream cryptocurrency exchanges, there’s no guarantee that you’ll be able to recoup the funds stolen in a fake blockchain scam. Crypto exchange fraud is more prevalent in smaller, niche platforms.

4. Crypto Investment Schemes

New types of cryptocurrency are constantly being minted. When they hit the blockchain, the process is referred to as an initial coin offering (ICO). While ICOs provide potentially lucrative investment opportunities, they’re also an opportunity for cybercriminals to defraud unsuspecting investors. Here’s how.

An individual or a company may tell you about a new form of cryptocurrency that’s hit the market. They’ll tell you that it represents a once-in-a-lifetime opportunity to invest in it and that you’ll be cashing in on some major returns in the not-so-far future. They may use phrases like 800-1,000% returns. Convinced, you proceed to purchase several new coins and deposit them into a digital wallet.

What you don’t realize is – the wallet in question has been compromised. Alternatively, they may buy up a bunch of coins as demand for the coin increases (driven by new investors like yourself) and promptly sell them when the price goes through the roof in a classic case of “pump and dump.”

5. Romance Scams

According to insight from the 2021 FTC report, the amount of money lost in romance crypto scams accounted for a whopping 20% of the money lost over a six-month period. There’s no shortage of crypto scams in dating apps and usually involve long-distance relationships.

In the scam, one party convinces the other to give them money to purchase a promising new cryptocurrency. The unsuspecting party, who would at this point be love-struck, would then send money to the scammer to purchase the crypto assets. The fraudster would then disappear and cut off all communication with the victim.

6. Phishing Scams

The internet is rife with phishing scams. Unfortunately, crypto adds new and potentially harmful repercussions to conventional attacks.

In your run-off-the-mill phishing scam, a bad actor would send an email in an attempt to bait the recipient into clicking the link. The link would then direct the victim to a fake website, created as an identical replica of the original one. They would then enter their login credentials to the site.

The problem with crypto phishing is that the victim would be directed to a fake site, which they believe hosts their crypto wallet, and proceed to enter their private key information. Once the fraudster has this information, they can then use it to access your wallet and deplete all the NFTs, tokens, coins, and every other crypto asset stored in it.

Unfortunately, blockchain wallets only provide one key to the user. Although the decentralized design of the blockchain ensures that no single entity can control your information, you can see how this would be a problem if you ever needed to change your key.

7. Counterfeit NFTs

NFT is short for Non-Fungible Token. It is a unit of blockchain data that can be traded and sold and is usually associated with digital files, including audio, video, pictures, art, etc. Counterfeit NFT scams involve a scammer stealing an artist’s work and then opening a fake one on an NFT marketplace. They then put the counterfeit art up for auction for unsuspecting buyers to bid on the work. The highest bidder then purchases an NFT that is essentially worthless.

Biggest Crypto Scams

person holding silver Bitcoin

Below is a compilation of some of the biggest crypto scams in the recent past based on the amount of money that victims were collectively defrauded of.

Squid Game Crypto Scam

Squid Game was no doubt the most streamed Netflix show of 2021. While riding on the show’s success, the fraudsters launched the Squid Game Token, a crypto asset that went from being worth a few bucks to a whopping $3,000 in a matter of weeks.

The token was so popular that it was widely covered by major media outlets, including Business Insider, Forbes, and CNBC, despite the fact that the creators of the new token used the name “Squid Game” without authorization from the show’s creators.

Individuals who purchased the tokens quickly realized that they were unable to sell them off when the price soared. This, of course, was intentional since the creators of the tokens secretly embedded an anti-sell mechanism right into the crypto.

Some people were allowed to sell, though. The token’s creators had a huge payday in their “pump and dump” scheme. Retail investors were left reeling from their losses.

FaZe Clan Crypto Scam

In June 2021, FaZe Clan members, a group of well-known social media influencers, began promoting a cryptocurrency dubbed SaveTheKids, which was widely touted to be charity-based. These influencers devoted time to shooting promotional videos to push the token and even lent their photos to the charity’s website.

The idea behind it was to get individuals to invest in it because of its affiliation to one of the largest global Esports brands, and proceeds from the project would go towards raising money for the children’s charities.

Shortly after the crypto token was launched, the initial investors sold off their tokens, taking off with unsuspecting victims’ funds. The token was rendered completely worthless thereafter.

Bitconnect Scam

At its ICO, Bitconnect was touted as an open-source cryptocurrency that guaranteed investors up to 40% returns. Unfortunately, the whole thing turned out to be a well-orchestrated Ponzi scheme that scammed investors out of a cumulative $3.45 billion.

Pincoin Scam

Pincoin was a Vietnamese cryptocurrency that attracted a cumulative investment of $870 million from 32,000 people. When investors attempted to sell their investment and redeem their profits, they were instead rewarded with a different token known as iFan. The creators of Pincoin disappeared with investor funds shortly after.

ACChain Exit Scam

When ACChain was first launched in Shenzhen, China, the cryptocurrency token appeared to be a highly lucrative venture. Thousands of investors got themselves a piece of this lucrative pie, raising a total of $80 million at the ICO. Shortly after, it became apparent that things weren’t as they seemed.

A photo of what was supposed to be the ACChain headquarters was leaked online and went viral in a matter of days. The photo showed nothing more than an empty room, and the company disappeared shortly after with investor funds.

Where to Report Crypto Scams

If you or someone you know has fallen victim to a crypto scam, you first need to report that and any other suspicious or fraudulent activity to the crypto exchange you used to carry out the transaction in question. Once you do, you need to make reports to the following government agencies:

If you were defrauded using blackmail or extortion, you also need to file a report with the FBI.

Once you’ve reported the scam to the relevant authorities, you’re now probably trying to figure out how to find out who scammed you so that you can recover your stolen crypto. It’s important to mention at this point that there are several recovery scams on the internet. Ensure you don’t fall for them only to end up losing more money than you already have.

That said, the chances of finding out who scammed you and subsequently recovering your stolen funds are slim. The only real possibility of this happening is if you work with law enforcement agencies to help track and seize your money.

These agencies employ sophisticated blockchain analysis tools to “follow the money” and find out exactly where your coins, tokens, NFTs, and other crypto-assets went. You may be able to recover your funds even if the perpetrator is in an entirely different cryptocurrency jurisdiction outside the United States.

Need help from a legal expert? Chat online with a Laws101 attorney right now.