One of the strengths of crypto is that the blockchain, which powers it, is immutable. However, that is a major problem for victims of crypto criminals. Once BTC is stolen from your crypto wallet, you cannot simply call the exchange and ask for a reversal like you would do with your traditional bank accounts.
Tracking Down Stolen Crypto
While crypto was designed to be anonymous, it’s designed to allow users to move their wealth without the use of banks, but experts have figured out how to track it. Various forensic firms have emerged in the era of crypto. They have various tools and methods, which they use to track down criminals who steal crypto. The end goal of tracking down crypto criminals is to recover all stolen crypto. Thus far, millions worth of stolen crypto have been recovered. One of the firms leading this effort is CipherBlade, which is a firm that specializes in crypto forensics.
How They Track Down Crypto Criminals
According to the head of CipherBlade, the company has a staff of 30 to 40 white hat hackers who help them in their efforts to track down stolen crypto. He revealed that some of their targets were greedy exchange owners who stole customer funds and sent them to mixers, cheating spouses trying to hide their crypto from their partner, and people who steal their friend’s crypto after they left their seed phrase lying around.
One of their most prominent cases was that of Ian Balina, who lost $2 million worth of crypto to hackers in 2018. According to the CEO, they tracked down the hackers to Discord. He joined in on their conversation posing as a 19-year old female. After a few weeks, they revealed to him that they had bought databases of leaked emails and passwords. The hackers then checked the names against records of crypto accounts and that is how they found Ian Balina’s crypto.
How People Lose Their Crypto
The CipherBlade CEO revealed that most losses of crypto are not due to complex hacks. Instead, people simply make mistakes. For instance, people will store a seed phrase on Google Drive. Besides that, some people fall for simple scams. The scams include ones that promise to send them 10 BTC if they send the hackers 1 BTC. Another issue is that people tend to use the same email and password for all their accounts. Consequently, this makes it easy for hackers to track down such accounts and steal any crypto they find.
How They Recover Funds
The company tracks down crypto through several complex tools. The most common one is using blockchain explorers. However, using a blockchain explorer can be difficult if the hackers use mixers. Other tools they use to track down funds are those developed by Chainalysis and CipherTrace. As previously reported by Visionary Financial, the use of crypto mixers surged in Q1 2020. Mixing services will essentially break the connection between a users sending and receiving address, which ultimately makes the transaction difficult to track.
The team will use a variety of tools to discover if the funds have been sent to a crypto exchange. If so, they simply call the crypto exchange and ask them to freeze the funds. In most cases, crypto exchanges will work with them to help victims recover their stolen funds.
The CipherBlade CEO noted that they usually made recoveries much faster than agencies such as the FBI. According to him, an agency such as the FBI would find it too much of an unnecessary hassle to track down a small gang of criminals across international borders who steal an amount such as $5,000. Besides that, he noted that users of the FBI cybercrime reporting tools usually receive an average response time of 3 months.
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