A new frontier for law

Neil Holloway, founder and CEO of L6 Recovery Law, on the rise (and rise) of crypto recovery

We are now a year on from the largest cryptocurrency heist in history, when Bybit CEO Ben Zhou authorised what seemed like a routine transaction, only to lose $1.5bn in a single stroke. Hackers intercepted the request, altered the code, and redirected the funds into their own wallets. The anniversary of this event serves as a chilling reminder that while cryptocurrencies may have matured into a credible alternative to traditional finance, they still lack many of the safeguards that underpin global institutions.

Blockchain data platform Chainalysis now estimates that in 2025, cryptocurrency scams received at least $14bn on-chain, a significant increase from the $9.9bn first reported in 2024. This figure is expected to exceed $17bn as the team at Chainalysis identifies more illicit wallet addresses in the coming months for 2025.

For legal professionals, regulators, and financial institutions alike, this trajectory underscores the urgency of building a framework not only for prevention but for meaningful recovery.

Increasing sophistication

Gone are the days of crude ‘send me your Bitcoin’ emails. Today’s fraudsters operate with a chilling sophistication.

‘Pig butchering’ scams, where criminals use large language models to conduct long, convincing conversations with victims, represent a new frontier in social engineering. Meanwhile, technical exploits such as unaudited smart contracts, address poisoning, or fake token approvals allow scammers to siphon funds with remarkable speed and precision.

The rise of artificial intelligence deepfakes has compounded the problem, with convincing audio and video impersonations of trusted figures luring even seasoned professionals into parting with their assets. For victims, the experience can be devastating. For the broader crypto ecosystem, such scams threaten confidence and adoption at scale.

The fightback

Too often, in my experience, victims of crypto crime simply don’t have the means to fight back, regardless of how strong their case is. Fortunately, the industry response to these challenges is maturing rapidly.

Specialist firms—such as L6 Recovery Law—deploy a mixture of crypto recovery and legal expenses insurance services to help victims recover losses once thought irretrievable. Legal costs of recovering your stolen cryptoassets can reach upwards of £250,000. However, the heartbreak of being deceived out of cryptocurrency can now have a happier ending, as victims no longer have to write off their losses as unrecoverable.

Crypto recovery is also no longer purely reactive. New services are emerging to flag suspicious counterparties before a transaction is completed. Such preventive measures reduce the likelihood of scams succeeding in the first place.

For the legal profession, the surge in crypto fraud is not just a challenge but an opportunity. Asset tracing, interim injunctions, and cross-border enforcement—once niche specialisms—are fast becoming core tools in recovery. As fraudsters exploit the speed and borderlessness of blockchain, lawyers are being called on to test the limits of traditional remedies in novel contexts.

The UK Law Commission’s recent work on recognising digital assets as property has given courts a stronger footing to treat stolen tokens as recoverable in law, and its reports on decentralised structures signal an ambition for the UK to lead globally in this field. For lawyers, the message is clear: crypto recovery will not just be an ancillary niche, but a defining feature of commercial litigation in the years ahead.

The crypto safety net

The rise of cryptocurrency has always been intertwined with the rhetoric of decentralisation and autonomy. Yet, as recent heists have shown, decentralisation without accountability leaves victims exposed. The rise of crypto recovery is not merely a response to fraud. It is a prerequisite for the sustainable future of digital assets. As institutional money flows in and traditional finance adapts, the work we do now will determine whether crypto achieves its potential as a legitimate, trusted pillar of the global economy, or remains a frontier defined by risk.