It can be difficult to recover stolen cryptocurrency, but there are certain steps you can take. And here’s how to recover your stolen Bitcoin, Ethereum, or other cryptocurrencies.
Here are two facts to consider if you’ve invested in Bitcoin, Ethereum, or any other cryptocurrency:
- Your money are a target for criminals, and
- Recovering your funds if the worst happens might be difficult.
Surprisingly frequently, cryptocurrency exchanges get hacked.
In August, fraudsters stole $610 million in various cryptocurrencies from the Chinese platform Poly Network, making it one of the largest heists ever.
The funds were eventually refunded to the hackers.
That is an unusual circumstance. After hackers stole $450 million in Bitcoin and other cryptocurrencies, Mt. Gox, a Japanese exchange, was forced into bankruptcy in 2014.
BitMart, a cryptocurrency exchange, recently announced that cybercriminals stole the equivalent of $150 million from it as a result of a “large-scale security compromise” caused by stolen private keys.
The exchange announced on Monday that it was investigating the incident and that withdrawals had been temporarily halted.Individuals with a history of holding big quantities of cryptocurrency have also been targeted.
In November, police in Hamilton, Ontario, announced the arrest of a teen in connection with the theft of 46 million Canadian dollars ($36.5 million) in bitcoin.
According to investigators, this is the largest known theft of cryptocurrency from a single person.
The victim suffered the loss through a SIM-swap assault, in which criminals duped wireless-carrier staff into replicating the victim’s phone number, allowing them to intercept two-factor authorization requests and gain access to the victim’s account, according to Hamilton Police.
So far, the case has resulted in the seizure of more than C$7 million ($5.6 million) in cryptocurrencies.
According to a research from crypto intelligence firm CipherTrace, losses from crypto hacks, thefts, fraud, and misappropriation reached $681 million in the first seven months of 2021.
If losses continue at their current rate, they will total $1.17 billion, down from $1.9 billion last year.
Even if you store your cryptocurrency on a well-known exchange, recovering your assets may be difficult.
Coinbase, one of the most popular exchanges, launched a live phone help line in September after receiving thousands of consumer complaints about its customer service, which did not appear to please any of its disgruntled customers.
Coinbase did not respond to a request for comment, but it does state on its website that it has “crime insurance” in place to cover a percentage of the digital assets kept across its storage systems from theft and data breaches.
Furthermore, the company announced on earlier this month that it has begun testing a new subscription service that would allow clients to buy, sell, and convert digital currencies without having to pay a fee for each transaction.
According to The Block, the service also provides “prioritized phone help” and “extra account protection.”
Of course, if your personal wallet — the software and sometimes hardware used to store cryptocurrency — is hacked rather than the exchange itself, that won’t help.
Cryptocurrencies, which are decentralized, are controlled by no one. You may wish to vent, but good luck finding someone who would listen.
What could be worse than having your money stolen?
Observing the movement of money on the blockchain, the technology that underpins cryptocurrencies by generating a public ledger of all transactions.
Your stolen funds are right in front of your eyes, but there’s no way to recover them,” said Don Pezet, co-founder of ITProTV, an online IT training firm.
“It’s as if your car was stolen and parked right in front of your house.” Of course, the greatest strategy is to ensure that your cryptocurrency is never taken.
That means putting as much of it into “cold” wallets that aren’t connected to the internet as possible.
Any money you put in “hot” wallets, which are housed online, should be kept as safe as possible.
Why Is It so difficult to recover crypto?
Despite the fact that it is becoming as simple to use as a credit card, it is crucial to remember that, unlike credit cards, cryptocurrencies do not come with built-in consumer protection.
For example, if a customer observes an unusual transaction on their credit card or bank statement that may indicate fraud, they can simply dispute the amount to get their money back.
Regrettably, there are no chargebacks with cryptocurrencies, and disputes do not automatically replenish funds in an account.
This is largely due to the fact that crypto assets are not covered or insured by government-sponsored consumer and investor protection schemes.
In the event that your financial institution falls bankrupt, the Federal Deposit Insurance Corporation (FDIC) protects all deposit accounts, including checking and savings accounts, for the standard amount of $250,000.
This does not, however, apply to cryptocurrencies.
If your brokerage firm goes out of business, the Stocks Investor Protection Corporation (SIPC) can protect your securities and cash up to $500,000.
This, once again, excludes cryptocurrency.
While many people have come to trust a variety of crypto wallets and exchanges in order to conduct secure transactions, there is usually no way to reclaim your crypto assets if they are lost, hacked, or stolen.
Don’t give up hope if something horrible happens. Here are some professional recommendations:
1. Defend what’s left
Pezet advises transferring any remaining funds from your hacked wallet. Remove the wallet and replace it with a fresh one.
According to Andrew Gunn, senior threat intelligence analyst at ZeroFox, all passwords associated with your exchange account should be changed as quickly as possible.
2. Change your email accounts
If you believe the device you used to access your account has been hacked, reformat it or, better yet, stop using it.
3. Please contact customer service
You’re more likely to receive assistance if your exchange is larger and more well-known.
If you act quickly, your exchange may be able to freeze your cash, depending on the stage of the theft, according to Gunn.
However, keep in mind that many exchangers aren’t obligated to assist. Some exchanges are based in nations where cryptocurrencies are subject to little restrictions.
According to Pezet, several governments do not consider cryptocurrency to be an asset, thus lowering the chances of government assistance.
4. Theft should be reported
Although a formal report is unlikely to aid in the recovery of stolen crypto, having a case number or paperwork isn’t a bad idea. You never know if you’ll be involved in an insurance claim or a lawsuit.
If you need to prove standing, having evidence that you took the theft seriously can help.
The FBI and crypto-tracing businesses have been able to retrieve cryptocurrency in some circumstances.
For example, in the case of the Colonial Pipeline ransomware assault, the FBI was able to retrieve around $2.3 million of the $4.4 million paid in Bitcoin as ransom with the help of tracing experts.
However, it’s unlikely that federal authorities would go to such efforts for the typical citizen.
5. Pay attention to the money
When it comes to a crypto investigation, Hamilton noted that there are two options: figure out who did it or follow the money.
The primary goal of ReclaimCrypto in this case is asset recovery, as this is what the client is paying for.
“It is unimaginable that the investigating process would complete without us giving all the facts to relevant law enforcement for them to then enjoy the benefit of the work and jail the crooks up,” Hamilton added.
ReclaimCrypto will mostly focus on bitcoin and ether, but it will also cover XRP, BCH, LTC, NEO, and DASH.
Those who have been unfortunate enough to lose assets can learn more about their options here.
Some people who have had coins stolen are philosophical about it.
“That’s life,” the aforementioned investor explained, adding, “It helped me grow a lot and it’s part of my crypto story.”
6. Engage the services of a cryptohunter
Cryptohunters, as the name implies, are individuals or corporations who search for lost or stolen cryptocurrency on behalf of victims.
They could also assist in the recovery of forgotten passwords and private keys.
Cryptohunters look for and retrieve misplaced, inaccessible, or stolen cryptocurrencies in collaboration with cryptocurrency holders and law enforcement organizations.
They charge a set cost and utilize specialized software to generate millions of possible passwords.
How to defend yourself against cryptocurrency hacks and theft
Now that you have a better understanding of how to recover your stolen Bitcoin, Ethereum, or other Cryptocurrency, and how to protect yourself from future assaults, what are the next steps?
Aleksey Malanov, Malware Expert, Kaspersky Anti-Malware Technologies Development, shares some suggestions you might not have considered.
Divide your money into “cold” and “hot” wallets, according to Malanov.
The “hot” wallet holds a tiny amount of cash that you’ll need on a daily basis, and it’s completely automatic.
However, Malanov recommends keeping 95-99 percent of your money in a cold wallet—a hardware wallet like a Ledger or Trezor, or a “paper wallet”—that isn’t connected to the internet and isn’t automated.
“Unauthorized remote access to this wallet is excluded in this situation, as is the compromising of private keys,” Malanov told Decrypt.
Malanov recommended using a multi-signature wallet, such as CarbonWallet or Xapo, in conjunction with a cold wallet.
A multi-signature wallet, such as CarbonWallet or Xapo, requires multiple people to authorize a transaction before it can be completed.
You can use an algorithm to prevent a single person from siphoning your cash in the same manner that numerous persons must authorize a nuclear missile strike at the same time for it to be launched.
“The compromise of just one key does not result in a loss of funds,” Malanov explained.
And what counsel would you give to a crypto thief? “Stop taking crypto,” urged Sauter, the attorney. You heard it first right here.
