In this episode…
On this episode of our podcast Discussions at the Round Table, host Michelle Loux talks with Rich Sanders about his experience as a blockchain expert witness and what it is like filling a very in demand niche role. He shares his advice for up-and-coming blockchain experts and how they can approach their work given the massive demand and limited supply of experts in this space.
Note: Transcript has been lightly edited for clarity.
Host: Michelle Loux, Assistant Project Manager, Round Table Group
Guest: Richard Sanders, Co-Founder and Lead Investigator, CipherBlade
Announcer: This episode is brought to you by Round Table Group, the Experts on Experts®. We’ve been connecting attorneys with experts for over 25 years. Find out more at roundtablegroup.com.
Michelle Loux: Welcome to our show, Discussions at the Round Table. I am your host, Michelle Loux, and today I have guest, Richard Sanders, Lead Investigator and Principal, CipherBlade. He’s a blockchain forensics expert and cryptocurrency cybercrime investigator.
Rich, thank you for joining me today to discuss your role as an expert witness. Can you share with me what exactly that you do?
Rich Sanders: We are mostly well-known for basically tracing cryptocurrency. We present truth through blockchains. We are most well-known for our scam and hack investigations. If somebody has cryptocurrency stolen from them or is defrauded, it oftentimes comes to us to additional law enforcement. We provide other services such as solvency, audits for cryptocurrency exchanges and services, AML insights, and best practices escrows with OTC’s, that sort of thing. Naturally because of all the disputes that would be associated with such things, failed OTC transactions, ICO investments, or a popular one, unsurprisingly, is divorce. Any situation where somebody might be dishonest about the nature of the assets and what happened to them. We have become the go-to, high-demand resource on the expert witness side. Far more than I ever would have anticipated. When I launched CipherBlade with my two co-founders, we never thought that there would be such a high demand for expert witnesses in this area, but it just makes sense. I mentioned the divorce thing earlier and then actually it turns out that not only did we not think of that but there is an under-saturated market for it where we cannot even keep up with the demand. Some might say it is a good problem to have but it is overwhelming. I have seen one person testify from CipherTrace. That is not their focus. We are the company that does this. We need competition that is healthy for the industry, but what you have is effectively a monopoly, that is the time to skill. My suggestion to other experts is to minimize their caseload. Do the opposite of what I did when I launched CipherBlade because it was just non-stop. We are constantly getting cases. I worked myself into the ground, which had an impact on my personal and professional life. If I had Instead of taking on 33% more cases, put that time into growing the company. I would have been better off both in my personal and professional life.
Michelle Loux: That is very insightful. You mentioned that the competition is not there. Do you do national cases or international cases? Are you all over?
Rich Sanders: Both. I am not resting on our laurels. I know inevitably people are going to try to get into this. All things considered we are not cheap. There are people that might try to get into this, and for the majority of the expert cases, you do not need to be a wizard at blockchain analytics like my company. That is what we are known for. We do the super complex investigations involving North Korean laundering networks. And I can promise you that some random dude that is trying to hide, a couple of million dollars in Bitcoin from his wife is not as sophisticated as that. So, there is tons of room for competition. That being said, it is one of those things where we are scaling it again. I just cannot emphasize that enough. There is also another good lesson, I think for experts that are a niche in a field like ours this probably would not apply. I am speculating here because I have not served as a generalist expert or an expert in other fields, and I never will, but I would imagine experts like that might be doing a lower rate or might not be in as much demand. They might have more bandwidth to do pre-engagement phone calls. So, this advice might not apply to most experts, but the ones that are in a real niche do not do pre-engagement phone calls. They are not worth it. That sounds so counterintuitive, but we have more people that are able and willing to hire us. It must be 2-3 emails back and forth then getting on. It is never just a quick call. There is no such thing, at least in my experience as a 5 minute or a 15-minute call, and it is rarely oh, I will make an exception for this. Then there is another call and just it is this constant sunk cost policy. So have some firm boundaries and do not make exceptions.
Michelle Loux: You mentioned that you need to be more selective with your cases, even though you get so many. Do you now turn away cases?
Rich Sanders: We do, but the thing is that you want to be respectful of the person’s time too. You do not want to say it in a way where it leaves a bad taste in their mouth, so it is a bit of a balance of both. You want to be respectful to them while giving them a minimal amount of time. And that sounds harsh, but that is the nature of business. An example of what that looks like is if somebody comes to us and they say I think my husband has like $70,000 in Bitcoin that he is hiding from me. I am going to tell them it is probably not worth your time to engage us because you are looking at a minimum $6,500 retainer on something like that and that is the best-case scenario where the husband decides not to drag everything out. It becomes a time where we have to ask these questions out of the gate. What is the transaction data? That is another reason why we have a policy not to do pre-engagement phone calls because it is going to result in, please send us via email the transaction data. I cannot give somebody a retainer estimate unless I have that because that is just the nature of blockchain transactions you might give me one transaction and say, this is a withdrawal from my husband. Coinbase tells me where it went and it could take ally take me 2 seconds or it could take me 2 days, so that is another reason why after getting some copy for that is probably some of the best advice I could give. Not having to type that out every single time it adds up, even though it is just a few minutes to tell them I need this. 2-3 minutes twenty times a day adds up over a week, over a month.
Michelle Loux: You also work with the federal government. Do you see a difference on how you prepare being an expert witness vs. private litigation?
Rich Sanders: I will be limited on what I can share on specific cases, and it depends upon the government agency. That is probably the best insight I could give. I have noticed that there is a distinct difference between, for example, a regulatory and a law enforcement agency. With anything thing within the United States government, you must go through all these convoluted systems like the system for award management. My personal experience is that we became known in the industry without namedropping a particular agency. There was one particular agency that had seen something I was doing for an unrelated case as an expert, and they had met with me. During that, there was an internal recommendation within that agency for an unrelated case that they reach out to us. It was a direct recommendation. I am not sure if that is the norm for other experts. One thing that I think they should do in the future, and I do not know whether this is good advice for other experts, might be to get set up on government contracting sites. I am still learning about all that. How does the government acquire experts? But our experience so far because we are not within those systems soliciting contract work, and running the store, it has all been direct referrals. That is not isolated to United States government. We have seen that with a couple of legal aid cases in other countries. That is why I will not get into too much on anything as an expert for the federal government on the United States side. One thing that normally would just be non-starters for us because the amount is lower. That applies to and is also why I will not get into too much on anything as an expert for the federal government on the United States side. One thing that is related to that would be how do you become an expert in more stringent jurisdictions? I will tell you this from my experience, and this would be advice I would give to an expert in a niche field or not. If there is a possibility that they are going to testify in the United Kingdom, their requirements for those courts are stringent. Anything like relying on evidence and meticulous attention to detail in reports, which is important in the United States, but English courts are bonkers with that. It is a night and day difference.
Michelle Loux: Is there any advice you’d like to end with about how to be a great expert witness?
Rich Sanders: The last piece of advice I can give is do not rest on your laurels. We are effectively a one-trick pony. If a privacy by default solution like Monero, or some data at Bitcoin that could be integrated natively, such as [Cojoin or Mass Adopt It] the blockchain analysis we do go out the window and we could still make a livelihood doing training for law enforcement, teaching them things like tactical site exploitation, but I think across the board with experts you have niche. Again, this is my anecdotal experience. You would have a much better insight on this than I would, but my anecdotal experience with experts is that they are either extremely niche, like us, or they are generalists. What I mean by that is the IT guy that could do a little bit of cyber or a little bit of crypto. Maybe to strike a balance in between. That is the advice I have. This is interesting.
Michelle Loux: I appreciate that. Hopefully, we will call you soon for some cases that will not be too overwhelming. I know you are busy.
Rich Sanders: The good news is that I have been scaling back aggressively the past few months. I might have been working 68-hour weeks the majority of the year, but my past week was a cool 40 hours.
Michelle Loux: Keep enjoying that life-work balance. Thank you, Rich. You have a good rest of the day.
Rich Sanders: Thank you.
After a quarter century helping litigators find the right expert witnesses, Round Table Group’s network contains some of the world’s greatest experts. On the Discussions at the Round Table podcast, we talk to some of them about what’s new in their field of study and their experience as expert witnesses.
Rich Sanders is widely considered to be one of the only “seasoned” experts that is qualified to opine on cryptocurrency-related cybercrime. Rich is seen as a subject-matter expert by the FBI and at the “top of the Rolodex” for Special Agents who have questions concerning blockchain-related cybercrime. Rich maintains extraordinarily strong working relationships with various law enforcement and regulatory agencies both in the U.S. and around the world and helps advise them on best practices, and events that are unfolding in the industry.
It is estimated that by 2021 cybercrime will account for $6 trillion in damages. There are ransomware attacks every 14 seconds, and on average it takes companies over 6 months to notice a data breach. Computer forensics experts are able to reconstruct digital information in order to analyze and solve computer-related crimes.
In 2020, American consumers reported losing more than $3.3 billion to fraud, up from $1.8 billion in 2019. Fraud is the act of wrongful deception for the purpose of financial or personal gain. It occurs when an individual acquires something of value from a victim by deliberately making false claims.