Fraud in art, wine, and crypto

As alternative investments grow in popularity among high-net-worth individuals, so too does the risk of fraud. Whether acquiring a Rothko, a rare Burgundy, or a promising new cryptocurrency, private clients are increasingly exposed to sophisticated scams. Here, we explore how fraud manifests in the worlds of art, fine wine, and digital assets, and how victims have successfully used civil recovery to reclaim their losses.

Art fraud: The illusion of authenticity 

The art market, long prized for its discretion, is fertile ground for deception. Common schemes include:

• Forgeries and fakes: Counterfeit works passed off as originals, often with fabricated provenance
• Misattribution: Lesser-known works falsely attributed to famous artists to inflate value
• Fraudulent dealers: Galleries or intermediaries selling non-existent or misrepresented works

In one case investors who lost nearly £9 million in a fraudulent art investment scheme, (where the fraudster promised unrealistic returns on “limited edition” art prints stored overseas), were vindicated when liquidators of the fraudster’s company secured freezing orders against the company’s director and associated entities. Freezing tools are a powerful weapon to freeze assets until the conclusion of court proceedings, and often force the fraudsters into submission. The High Court found a strong case for fraudulent trading and misappropriation, enabling the liquidators to pursue recovery of misappropriated funds and assets.

In Smith & Partner Ltd v Sparkes & Others [2024] EWHC 2518 (Ch).

Wine fraud: Vintage deception

Fine wine is another asset class vulnerable to fraud, particularly as bottles age and provenance becomes harder to verify.

• Counterfeit bottles: Refilling or relabelling bottles to mimic rare vintages
• Investment scams: Fraudulent wine investment schemes promising unrealistic returns
• Storage and insurance issues: Misrepresentation of storage conditions or non-existent cellars

In one case, a victim of wine fraud obtained a “Norwich Pharmacal Order” against a bank who held some of the proceeds of the client’s investment and the wine storage facility where the misappropriated wine was stored. This order compels third parties to give you information to help unpack a fraud, to identify wrongdoings, and assist in finding out where your property has ended up. The information obtained allowed them to assert proprietary claims over specific wine stock and recover assets ahead of other creditors in the liquidation process. 

Crypto fraud: The digital wild west

The rapid rise of cryptocurrencies and NFTs has created new opportunities and new risks.

• Rug pulls: Developers abandon a project after raising funds, leaving investors with worthless tokens
• Phishing and wallet hacks: Cybercriminals target digital wallets to steal assets
• Ponzi schemes: Fraudulent platforms promise high returns, paying early investors with new money

A private client* who lost £80,000 to a fraudulent crypto investment platform used both criminal and civil proceedings to ensure recovery. She reported the matter to the police who were able to trace the stolen funds to Binance, who voluntarily froze the account. However, the police couldn’t assist further, as the fraudster was based in Nigeria. She then launched civil proceedings for fraud, and sought judgment in default (available when a defendant doesn’t engage in litigation), which the court granted, ordering delivery of her stolen funds. The court also permitted alternative service via blockchain messaging and email, allowing the victim to pursue recovery even though the fraudster’s identity was unknown. The decision illustrates how UK courts are adapting traditional remedies to the realities of digital fraud.

In Sutton v Persons Unknown.

Protecting your assets

For private clients, the key to avoiding fraud lies in proactive risk management:

• Engage trusted advisors: Legal, financial, and technical experts can help assess risk
• Document everything: Contracts, provenance, and insurance should be watertight
• Stay informed: Fraudsters evolve quickly—so should your defences

If you’re considering investments in these areas, or suspect you may have been targeted by fraud, our team can advise on due diligence, recovery, and litigation strategies.

What to do if you suspect fraud

If you believe you may have been the victim of fraud in any of these sectors, early action is critical. Here are the key steps to take:

1. Preserve evidence

• Retain all documentation: contracts, emails, invoices, certificates of authenticity, and transaction records
• Avoid altering or deleting any digital communications or files

2. Seek legal advice immediately

• A solicitor can help assess the strength of your claim, advise on recovery options, and liaise with law enforcement or regulators
• In some cases, urgent injunctions or other actions may be needed to freeze assets or prevent further loss

3. Engage experts

• For art and wine, independent appraisers or forensic analysts can help verify authenticity
• For crypto, digital forensic specialists may trace stolen assets or identify wallet addresses

4. Report the fraud

• Depending on the jurisdiction, you may want report to the police, Action Fraud (UK), the FCA, or other relevant bodies – but you don’t always have to
• In cross-border cases, international cooperation may be required.

5. Consider civil recovery

• Civil litigation may offer a route to recover losses, particularly where criminal proceedings are slow or unlikely
• Tools such as freezing orders, Norwich Pharmacal Orders, and proprietary injunctions can be used to trace and secure assets
• Recent UK cases show that victims can and do recover funds, even in complex or anonymous fraud scenarios