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Cryptocurrency, fraud

At the Round Table with Forensic Accounting Expert, Paul Sibenik

February 12, 2024

In this episode . . .

When drafting an expert witness report in a cutting-edge field like crypto, Mr. Paul Sibenik always summarizes key points by analogy, as often judges and other parties to the proceeding are laypersons. Additionally, he notes that not everyone will read the middle of a report, so it is crucial to have a solid introduction and conclusion which set the foundation for testimony.  

Check out the full episode for our discussion on setting up expectations during the initial interview and staying tuned in to your field of expertise. 

Note: Transcript has been lightly edited for clarity.

Host: Noah Bolmer, Round Table Group

Guest: Paul Sibenik, Founder & CEO, CryptoForensic Investigators

Noah Bolmer: Welcome to Discussions at the Round Table, I’m your host, Noah Bolmer, and today I’m excited to welcome our guest, Paul Sibenik to the show. Mr. Sibenik is the CEO of CryptoForensics Investigators, a blockchain forensic accounting firm, but he’s an experienced expert in areas ranging from investment fraud to ransomware with about five years of experience in expert witnessing. Mr. Sibenik, thank you so much for joining me here today at the Round Table.

Paul Sibenik: Thanks for having me, Noah.

Noah Bolmer: Absolutely. Let’s jump into it. You’ve made a career of forensic auditing in the blockchain segment. How did you get started and when did you first become an expert witness?

Paul Sibenik: I first got started in 2018. Initially I started doing it as a consulting related side gig specifically in divorce related matters just because attorneys in those types of cases didn’t really have any idea what to do nor did their clients and it kind of seemed to me to be very one sided and cryptocurrency being a very possible way that one could go about concealing assets in a divorce, and that has since kind of blown up to a large degree.

Noah Bolmer: Let’s talk about your vetting calls. When you get a call from an attorney who wants to bring you on for a possible engagement, what are the sorts of questions that they ask and what are the sorts of questions that you ask them to make sure that you’re appropriate for an engagement.

Paul Sibenik: Yeah, so I try to get an understanding of the situation because there are so many different types of perspective inquiries that I would field from some sort of hack to maybe it’s some type of romance scam, it could be talking about a business dispute, it could be the exploit of a network could be related to compliance, so there’s just so many different types of matters. I try to get a good understanding of the situation first and then assess how I might be able to help or if I can help in that regard, and what really needs to be done and then try to understand how much work would need to be done.

Noah Bolmer: How about in terms of your kind of vetting the attorney who’s calling you. What are the sorts of things that you’re listening for to help you understand whether or not this is going to be a good engagement.

Paul Sibenik: Making sure that they have reasonable expectations and understanding what can be done and what cannot be done or what is not realistic is important and that goes for all clients, not just attorneys. Sometimes attorneys come to you with a conclusion that they kind of already want you to attest to and they just want you to put your signature on it. And it’s important to me that I come to my conclusions independently. They can certainly ask if they happen to already know throughout a stage where they’re trying to just seek evidence or confirmation of what they are trying to put forward. That’s fine. But if they’re trying to pigeonhole me into the narrative that they’re trying to put forward. Well, that could be an issue.

Noah Bolmer: Do you have to turn down a significant number of engagements?

Paul Sibenik: I would say there’s not too many I would need to turn down. There’s somewhere, perhaps it’s not always suitable whereby there’s maybe not a lot that can be gained by further pursuing the matter, but I don’t think there’s a whole lot that I need to turn down for conflict-of-interest reasons. Usually, if people come to me seeking cryptocurrency expertise in a cryptocurrency related dispute, usually it’s something that I can assist with.

Noah Bolmer: Crypto and blockchain is a rapidly developing, rapidly changing milieu. There is a legal framework that is changing and it’s different to base [it] on where you are in the world or even what state you’re in. How do you stay on top of it? What does it mean for you to remain an expert in your field?

Paul Sibenik: It’s important to always stay up to date with what is happening. In my case, some of the things that I need to stay up to date with are how bad actors are stealing money, how they are attempting to launder money, what the relevant exchanges are or what are the pressing issues in today’s news? For example, enforcement action of cryptocurrency exchanges, [it is] very important for me to stay on top of that. Doing non expert work it is actually important to be able to stay on top of the expert works. If I just do expert work all the time, you don’t get that same level of exposure.

Noah Bolmer: When you are in a deposition or even on a stand, what are the sorts of things that the opposing counsel tries to do to your knowledge, your experience, your background as an expert in your area, and what do you do to counter those sorts of things?

Paul Sibenik: Sometimes they will say that I’m only an expert at tracing cryptocurrency and not an expert in other areas. For example, let’s say you’re talking about e-mail security. Well, e-mail security can be important in the context of a cryptocurrency theft, and in some cases, it can play a role in leading to that. They’ll try to narrow the area of my expertise to being specifically about cryptocurrency tracing. Sometimes they’ll say, “Oh, you don’t have a four-year degree in cryptocurrency tracing?” Which doesn’t really- yeah, I don’t think it exists. And if it did-

Noah Bolmer: Does that exist?

Paul Sibenik: I don’t think it exists and if it did maybe someone like me or a similar skill set would be teaching that, but certainly when I started it, it certainly did not exist and things are changing so fast anyways that by the time you finished the course, things would have changed in terms of the services and the entities that are being used. It’s just not practical to have that type of education and stay on top of things.

Noah Bolmer: Have you worked on both the plaintiff and defendant side?

Paul Sibenik: Yes.

Noah Bolmer: Are there significant differences in the job itself or how you approach being an expert witness for the plaintiff versus the defendant or is it largely the same?

Paul Sibenik: I think it’s mostly the same. Sometimes you’re just called in at different times when- if you’re acting for the defense, in most cases are acting as an expert for the defense. In a lot of cases, there might already be a complaint, or you might understand that, whereas in some cases with the plaintiff I might be engaged even before there is such a filing, and they’re still trying to figure out, “Hey, is there enough evidence or reason to believe to support a complaint being filed in the first place?” The underlying approach is the same, I think.

Noah Bolmer: Besides plaintiff and defendant, there’s also a couple types of expert witnesses. You can be a consulting witness where you’re not going to testify. Then, of course, there’s testifying witnesses. Sometimes one even becomes the other. Is that something that you’ve experienced? Have you ever been brought on as a consulting witness and then been asked to testify?

Paul Sibenik: I don’t necessarily assume it’s going to get to the stage where I testify, and the vast majority of expert engagements that I take on, I don’t- it doesn’t get to the point where I testify because the matter concludes or settles earlier on before you actually get and that’s- if you have a have an expert that is giving you insight it can help both sides in some cases understand the facts, but better and resolve it before you get to that stage where you’re actually being asked to testify. Only a minority of cases that I take on do I actually testify in.

Noah Bolmer: Experts can be brought in at a variety of times as you started to indicate earlier, you never know when you might get a call for a case that’s already in progress or well in progress or just at the very beginning. Do you typically feel that you have sufficient time to do your job as an expert witness or do you sometimes find yourself in a position where you’re really under the gun and in a rush to produce a report?

Paul Sibenik: I don’t usually feel under the gun. Usually, I have sufficient time and time is not really an issue. The work that I can do is relatively fast. What is not as fast is if you’re having to ask for discovery in some cases and going through the process of getting that and then getting it back, there might be some technical issues with what is produced. The legal bureaucracy takes longer than any type of work product that I would take to produce.

Noah Bolmer: Let’s talk about your work product a little bit. Do you have a specific strategy that you use when you’re writing reports? Do you like to outline things or index them, or do you have some other strategy that you like to employ to get yourself organized?

Paul Sibenik: I try to, obviously have all my research done and analysis done first and then I just try to generally think about how the report should be structured to make it easy to understand just because the nature of my line of work is that it’s very technical and you have to explain things in an easy to understand way, whether it’s- you’re talking about a cryptocurrency wallet or a transaction hash because the judge and sometimes the attorneys involved in the case, they won’t have a really good understanding of what that is. So, I try to make it simple and keep it structured in a way that flows and makes sense.

Noah Bolmer: Obviously, crypto really is a newer thing. Do you find yourself in situations typically where your own attorney doesn’t have a grasp of that and you really do have to get into some of the technicalities and make sure that they understand something that the case pivots on?

Paul Sibenik: Yeah, judges will almost never have a good understanding of that type of stuff. The attorneys can differ. Sometimes you have attorneys who understand the basics. Sometimes they understand very little. Obviously, they’ve hired an expert for a reason. You do want to provide some evidence showing how you came to your opinion, but you also need to conclude it and summarize it in an easy to understand way and use appropriate analogies so that someone who is reading that who’s a layperson doesn’t necessarily need to take the time to fully understand what you what you have said because the reality is when you’re drafting an expert report, not everyone reads the whole thing. They look at the introduction and the conclusion and not necessarily everything in between.

Noah Bolmer: Do you have any specific preparation methods that you use or that you do with your attorney? For example, mock cross examinations or anything like that and if so, are they helpful?

Paul Sibenik: Sometimes, the attorneys will want to do a cross examination or a mock-cross. It kind of depends on the situation. I’m pretty comfortable with cross examinations and directs now, so, it’s not something I usually need to do, but it can be helpful just to understand how the situation might unfold.

Noah Bolmer: You say that you’re pretty comfortable with them now, is there- was there a point that it became easier and easier, or is it something that you’ve always just been kind of good at? Do you have any strategies to kind of remain calm under- when you’re getting peppered with lots and lots of questions?

Paul Sibenik: No, I’ve never had really any issues with it. Yeah, sometimes attorneys like to kind of ask you the same question 10 different times in slightly different ways and see if you give a different answer. But yeah, I’ve never really had any issues with that.

Noah Bolmer: Yeah, yeah, of course. Before we wrap up, do you have any tips or advice for newer expert witnesses or attorneys working with experts?

Paul Sibenik: It’s a continual learning curve and it’s something you need to [do] if you’re involved in cryptocurrency. It’s an ever-evolving space so, just try to keep up to date with what is going on and stay active and that can help you a bit.

Noah Bolmer: Thank you so much, Mr. Sibenik for joining me here today at the Round Table.

Paul Sibenik: Thank you.

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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.

At the Round Table with Forensic Accounting Expert, Paul Sibenik

Paul Sibenik, CEO, CryptoForensic Investigators

Paul Sibenik is the CEO of CryptoForensics Investigators, a blockchain forensic accounting firm. He is an expert in numerous areas ranging from investment fraud to ransomware and has over five years of expert witness experience. Mr. Sibenik has a BA in Political Science from York University.