How XREX Used TRM to Help Return Stolen Funds to Phishing Victim

XREX is a blockchain-enabled financial institution working with banks, regulators, and customers to redefine banking. Since its founding in 2018, the company has been on a mission to help cross-border merchants in emerging markets overcome issues in dollar liquidity shortage. By providing access to USD stablecoins and ensuring open and smooth fiat gateways by partnering with international banks, XREX hopes to empower merchants with the ability to receive and pay in stablecoins, other cryptocurrencies, and fiat currencies — leveling the playing field in the global trade market.

Today, XREX operates globally and offers clients a full suite of financial services — including digital asset custody, wallets, cross-border payment, fiat-crypto conversion, cryptocurrency exchange, asset management, and fiat currency on/off ramps. In May 2024, XREX made history as the first and only Taiwanese VASP to receive a Major Payment Institution license from the Monetary Authority of Singapore. 

The rewards and risks of a burgeoning crypto ecosystem

As the adoption of cryptocurrencies has expanded across Asia and the rest of the world, XREX has remained focused on investing in technologies to help them ensure the security and compliance of their client’s funds and prevent fraud. 

Led by its Co-founder and Group CEO, Dr. Wayne Huang — an internationally recognized cybersecurity expert with over a decade of experience — XREX has a strong culture for putting best cybersecurity practices in place. Since 2021, XREX has been among the first blockchain firms in Asia to implement TRM Labs’ risk intelligence platform, with modules including Forensics, Know-Your-VASP (Virtual Assets Service Providers), Wallet Screening, and Transaction Monitoring.

In February 2024, a real-life scam threw the importance and necessity of blockchain intelligence into sharp focus. A fraud group impersonating a Forbes media interview pitch contacted the victim, a Taiwanese national and professional trader who had been active in various cryptocurrency communities for many years. The scammers used highly convincing phishing techniques and fraudulent web pages to solicit information from the victim, who ultimately gave them access to his MetaMask wallet. The bad actors then drained all of his cryptocurrency assets and quickly moved the funds to an offshore exchange outside Taiwan.

For many victims of similar cybercrimes, the road to reclaiming lost funds often stops here. But fortunately, this victim immediately took to social media and quickly garnered support from various Web3 communities — resulting in the temporary freeze of the stolen ETH funds and giving authorities time to step in and carry out an official investigation.

Setting precedent in Taiwan: The use of blockchain intelligence in court

Because there was no formally accused party in this case, law enforcement — namely Taiwan’s Criminal Investigation Bureau — called for the intervention of a professional and neutral third party to help corroborate the victim’s ownership of the stolen ETH. XREX’s security and anti-money laundering (AML) teams stepped up to help.

The XREX team verified the victim’s ownership of the attacked wallet, as well as the details of the cryptocurrency flow. The team cross-analyzed blockchain asset flows and identified the flow of funds, submitting a complete cryptocurrency flow report with reliable evidence. 

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Ultimately, this deep on- and off-chain intelligence enabled XREX to submit a report with reliable evidence in court, which led to the seizure and return of almost all of the stolen assets. 

“TRM has a comprehensive set of address labels, making it highly suitable for crypto AML analysts in graph tracking. Having used TRM for three years, I've seen that they constantly update new features and user experiences, instead of remaining unchanged,” said Sun Huang, XREX’s chief security and information officer.

How stronger public and private sector partnerships lead to better outcomes for victims

The strong public and private sector partnership involved in this case not only set a strong legal precedent in Taiwan, but also serves as a blueprint that law enforcement, compliance analysts, and crypto businesses can follow in future investigations. 

Miffy Chen — who worked at the Judicial Reform Foundation at the time of the incident — assisted in organizing and compiling documents detailing the cryptocurrency’s flow, supporting the victim in filing a report, and cooperating with law enforcement agencies and prosecutors to apply to the court for a seizure ruling. Chen has since joined XREX as its first Blockchain Financial Crime Investigator.

The XREX team explained that open communication between law enforcement, VASP service providers, and blockchain intelligence partners is key to ensuring smooth and efficient collaboration in times of crisis. “Ultimately, we all share the same goal in wanting to ensure that the digital asset space is free from bad actors and that users are well protected to enjoy the benefits blockchain finance brings about,” said Huang.