Digital Assets and Blockchain Forensics

Help mitigate the damage of digital asset fraud

BDO uses innovative crypto asset tracing and blockchain analytic tools, OSINT, and other resources to uncover and analyze financial crimes, market manipulation, asset misappropriation, corruption, terrorist financing, money laundering, and sanctions violations involving cryptocurrencies.

Our Forensic Investigations & Asset Tracing offerings are also called upon to assist in identifying, valuing, and recovering assets during bankruptcies, acquisitions, and other transactions.

In the course of our work, we:

• Investigate asset misappropriation, bribery, corruption, terrorist financing, and sanctions violations involving cryptocurrencies
• Conduct analysis of blockchain transactions through on-chain asset tracing, transaction mapping, and cluster analysis — work that includes cross-chain analytics, decentralized finance (DeFi) protocols, coin-swaps, and smart contracts
• Identify real-world entities linked to wallet addresses using attribution data and global corporate intelligence
• Identify high-risk wallet addresses by analyzing on-chain and off-chain activity
• Conduct corporate investigations in response to civil and criminal regulatory inquiries, including those involving fraudulent Initial Coin Offerings (ICOs), and Ponzi and pump-and-dump schemes.
• Conduct cyber-extortion investigations related to ransomware, theft, and fraud
• Support financial advisors in digital asset operations and asset tracing during bankruptcies
• Perform blockchain analytics and comprehensive big-data analysis to uncover insights, identify emerging patterns, and enhance operational efficiency
• Collaborate with VASPs to support their internal investigations, including processes such as asset tracing transaction analysis, fraud detection, data validation, and compliance framework assessment

Achieve fair and efficient results in complex digital asset disputes

BDO helps organizations engaged in contractual and economic disputes reach fair and efficient outcomes through valuations, calculation of damages, and strategic advisory services — all informed by our long experience with digital assets such as stablecoins, staked assets, DeFi, cross-chain protocols, and blockchain infrastructure.

Our work includes:

• Performing valuation of cryptocurrencies and digital assets
• Offering expert testimony on fraudulent conveyances, ownership disputes, and securities fraud
• Calculating damages from fraud, minor downtime, business disruption, and loss of funds due to hacks and thefts
• Analyzing contract disputes involving digital assets and developing strategic approaches for resolution, including mediation and arbitration support
• Providing restructuring, insolvency, and recovery services
• Improving financial reporting processes and internal controls
• Advising crypto asset founders and companies
• Valuing complex securities and financial instruments involving digital assets

Take a proactive stance toward digital asset compliance and risk management

The decentralized, global nature of digital assets does not mean that engaging with them is free of regulatory scrutiny. Instead, it means that organizations active in the industry can be subject to regulatory, legal, and compliance frameworks that vary widely in their specificity and comprehensiveness. And in some jurisdictions, particularly those in which digital asset regulation is incomplete, “regulation by enforcement” can be the rule — with clarity coming only after legal or compliance violations are detected. BDO helps VASPs, financial institutions, money services businesses (MSBs), and FinTech companies strengthen their compliance programs by establishing and helping enhance their compliance processes and internal controls, leveraging our international experience to define applicable regulations and appropriate compliance frameworks. Even in environments with evolving or incomplete digital asset regulations, we use a best-practices approach that accounts for any and all applicable regulations, in addition to your organization’s business strategies and corporate principles. This strategic redundancy helps create layered protections against regulatory risk. And, in the event of a regulatory or enforcement action, we can provide support including independent assessments, audits, model valuations, remediation, and lookback services.

Our services include:

• Conducting risk assessments, drafting policies and procedures, developing compliance training, and designing anti-money laundering (AML) and sanctions compliance programs
• Performing independent AML reviews and compliance program assessments
• Conducting blockchain wallet address screening, Know Your Customer (KYC) due diligence, AML transaction monitoring, and sanctions screening lookbacks
• Performing independent model validations and optimization services for AML transaction monitoring, customer risk rating, and sanctions screening systems
• System rule tuning and calibration of transaction monitoring
• Providing outsourced compliance program services to alleviate compliance resource burdens
• Assessing protocol design, economic models, governance, and regulatory due diligence for DAOs, DeFi, DEX, and CEX
• Performing customer due diligence (CDD) and enhanced due diligence (EDD) reviews
• Conducting Know Your Transaction (KYT) monitoring reviews
• Assisting with MSB reporting and filing
• Supporting compliance system vendor selection and system implementation

Evaluate and strengthen cybersecurity defense and deploy incident response

Increased growth and uptake in DeFi, DEXs, and decentralized autonomous organizations (DAOs), combined with the integration of protocols, smart contracts, and blockchain oracles, have created entirely new categories of cybersecurity risk. We work proactively, in collaboration with BDO Digital, to perform detailed reviews of your cybersecurity processes and protocols, including blockchain smart contract audits, source code reviews, and overall assessments of your network security, governance protocols, and regulatory compliance. The outcome of these reviews, which can also include penetration testing, threat emulation, and defense exercises, is the planning and deployment of new defenses and new controls to help mitigate digital asset cybersecurity risk. BDO can also support cybersecurity incident response, including incident response, business continuity, disaster recovery, and crisis management — engaging practitioners from across our service portfolio in coordinated response, including forensic investigations that can help claw back assets and value losses.

Our work includes:

• Performing cybersecurity reviews, including blockchain smart contract audits, source code reviews, and overall network security assessments, including regulatory compliance and governance
• Conducting security architecture and configuration reviews, including key management and access controls
• Reviewing protocol consensus and process quality
• Performing admin control and Oracle implementation reviews
• Reviewing web, mobile, API, and bespoke desktop applications
• Offering model validation, optimization, and rule tuning
• Developing cyber risk management and ongoing threat monitoring capabilities
• Developing access management and authentication, and identifying management capabilities to secure digital assets, streamline operations, and support regulatory compliance
• Providing vulnerability management services, including penetration testing and cybersecurity threat emulation and defense exercises to strengthen cybersecurity posture and increase resilience
• Developing IT reliability, resilience by design, and cloud-based recovery strategies
• Developing and implementing incident response, business continuity, disaster recovery, and crisis management capabilities
• Developing data protection and privacy capabilities, including regulatory monitoring and compliance management

Commission detailed pre-transaction advisory reports and investigative due diligence

For organizations operating in high-risk contexts such as the digital assets industry, or for those evaluating potential blockchain transactions, investments, or acquisitions, BDO develops comprehensive investigative reports that can help identify and quantify potential risks.

Our investigative services clientele includes investment funds, global financial institutions, law firms, and corporate clients with exposure to digital assets, as well as those considering moves into the sector. We use leading-edge technology and tools, including AI, to track and trace fiat and digital assets and evaluate publicly available data — including that from the internet, social media, news articles, public records, chat platforms, and more. And in situations in which additional information is needed, we use discreet source inquiry techniques and Open Source Intelligence (OSINT) tools.

For clients evaluating digital asset investments, mergers, or acquisitions, BDO can deliver rapid, summary assessments of public, on-chain, and other data sources, analyzing information on the backgrounds and reputations of parties involved in a transaction.

In addition, our practitioners explore regulatory and geopolitical issues that may affect potential opportunities.

BDO assists clients with:

• Business integrity support. Objective fact-finding to help organizations identify critical information and understand the backgrounds of parties of interest in the digital assets space.
• Digital assets investigations. Critical research and analytics of intel on key parties, including mapping of complex and indirect relationships of companies and individuals, using blockchain analytics tooling, OSINT, and cryptocurrency-specific sources.
• Digital Assets Investments and M&A. Support deal teams by gathering background information about the track records — and on-chain reputations — of parties involved in a prospective digital asset-related transaction.
• Third-party risk-management. Helping clients assess the risks inherent in relationships with third parties, including traditional financial institutions, exchanges, and on-chain counterparties.

Leverage deep experience and multidisciplinary capability in maintaining compliance and preserving value

When VASPs, CEXs, or other organizations active in the digital asset industry face enforcement actions such as consent judgments or settlement agreements, an independent monitor may be appointed to help ensure accountability in the organization while it returns to compliance and regains public trust. BDO is frequently retained by these monitors to provide forensic accounting and data analytics support. We can also provide detailed evaluation of, and enhancement for, compliance frameworks and processes. And we provide transaction monitoring and examinations to help reduce the risk of future violations.

In a monitorship setting, BDO can:

• Serve as an Independent Compliance Consultant (ICC)
• Provide forensic accounting and data analytical support to the appointed monitor or ICC
• Liaison with the monitor and regulatory authority on behalf of the monitored entity
• Design and implement remediation protocols
• Build or enhance compliance frameworks as dictated by consent orders
• Assess customer and third-party due diligence processes
• Review and test sanctions screening systems
• Provide SAR lookback support
• Conduct transaction monitoring and alerts and associated digital threads

In a receivership, BDO can provide financial and data analytics and strategic advisory services to an appointed receiver, applying our experience in the digital assets environment to help ensure compliance with legal and regulatory obligations, enhance transparency, and define and help preserve the value of distressed fiat and digital assets.

In a receivership, BDO can:

• Investigate and determine potential causes of action
• Provide debt restructuring and capital structure enhancements
• Provide other turnaround support
• Provide liquidity management and improvement strategies
• Provide operational diagnosis and cost reduction strategies
• Monetize or liquidate assets of entity in receivership as necessary
• Manage working capital
• Develop strategies for negotiations with interested parties