Getting back stolen cryptocurrencies can be an uphill battle, but there are some things you can do.
If you have invested in Bitcoin, Ether, or any other cryptocurrency, there are two truths: Your savings are a target for thieves, and it can be difficult to get your funds back if the worst happens.
Crypto exchanges are hacked surprisingly often. One of the biggest heists occurred in August, when cybercriminals stole $610 million in various cryptocurrencies from Chinese platform Poly Network. The hackers eventually returned the funds.
This is an unusual case. Mt. Gox, a Japanese exchange, was forced to declare bankruptcy in 2014 after crooks stole $450 million in bitcoin and other cryptocurrencies.
Recently, crypto exchange BitMart announced that cybercriminals stole the equivalent of $150 million as a result of a “large-scale security breach” stemming from stolen private keys. The exchange said Monday that it is investigating the theft and temporarily suspending withdrawals.
Individuals known to hold large amounts of cryptocurrencies have also been targeted. Canadian police announced in November that they had arrested a teenager from Hamilton, Ontario, in connection with the theft of 46 million Canadian dollars in cryptocurrency ($36.5 million). According to police, this is the largest known theft of cryptocurrencies from a single individual.
Hamilton police stated that the victim was the target of a SIM swap attack, in which the criminals manipulated wireless carrier employees to duplicate the victim’s phone number so they could intercept two-factor authorization requests and gain access to the victim’s account. So far, police have seized more than C$7 million ($5.6 million) in cryptocurrency in connection with the case.
According to a report by crypto intelligence firm CipherTrace, losses from crypto hacks, thefts, fraud and embezzlement totaled $681 million in the first seven months of this year. If losses continue at this rate, they would total $1.17 billion, although that would be a decrease from last year’s $1.9 billion.
Even if you store your cryptocurrency with one of the established exchanges, it could be difficult to recover your funds. After reportedly receiving thousands of customer complaints related to its customer service, Coinbase, one of the most popular exchanges, set up a live phone support hotline in September, which doesn’t seem to have pleased some of its unhappy customers.
Coinbase did not respond to a request for comment, but notes on its website that it takes out “crime insurance” that protects some of the digital assets held in its storage systems against losses from theft, including data breaches.
In addition, the company confirmed Wednesday that it has begun testing a new subscription service that allows customers to buy, sell and convert digital currencies without paying a fee for each trade. The Block website had previously reported that the service also includes features like additional account protection and “prioritized phone support.”
Of course, that doesn’t help if someone hacks your personal wallet – the software and sometimes hardware used to store cryptocurrencies – rather than the exchange itself. No one is responsible for cryptocurrencies, which are decentralized. You may want to complain, but good luck finding someone who will listen to you.
What’s worse than having your money robbed? Watching the money move around on the blockchain, the technology that powers cryptocurrencies by creating a public record of transactions.
The best thing to do, of course, is to make sure your cryptocurrency never gets stolen. That means moving as much as you can into “cold” wallets that aren’t connected to the internet. Secure any funds you leave in “hot” wallets that are hosted online as much as possible.
If something bad happens, don’t lose hope. Here are some tips from experts:
Protect what’s left
If there’s anything left in your compromised wallet, you should move it out. Delete the wallet and get a new one.
Any passwords related to your stock account should be changed as soon as possible. Change your email account. If you think the device you use to access your account may be compromised, reformat it or, preferably, stop using it altogether.
Call customer service.
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If your exchange is larger and better known, you are more likely to be helped. If you act quickly, your exchange may be able to freeze your funds, depending on how far along the theft is, Gunn says.
Keep in mind, however, that many money exchanges are not obligated to help you. Some exchanges are located in countries that have few regulations on cryptocurrencies. Some countries don’t consider cryptocurrencies an asset, which further reduces the chances of getting help from authorities.
Report the theft
It’s unlikely that a formal report will help with recovering stolen cryptocurrencies, but it doesn’t hurt to have a case number or documentation. You never know if there will be an insurance claim or lawsuit to get involved in. If you have proof that you took the theft seriously, you can prevail in such a case.
In some cases, the FBI and crypto-tracing companies have managed to recover cryptocurrencies. For example, in the case of the Colonial Pipeline ransomware attack, the FBI, with the help of tracing experts, was able to recover about $2.3 million of the $4.4 million paid in Bitcoin as ransom. However, it is unlikely that the feds would go to such lengths for the average person.
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