A Crypto-Crime report in 2019 showed that $11.5 billion of cryptocurrency transactions have been lost globally. This is equivalent to the government budget of Latvia. The report predicted an even higher number in 2021.
Though blockchains are secure and cryptocurrency exchanges protect their accounts, thefts still happen. Even more heartbreaking, is the fact that the stolen assets are rarely recovered. Law enforcement agencies can do little when investigating stolen crypto because the crypto sphere is largely unregulated.
But do not give up hope. Recovery of stolen crypto is uncommon but can still be done. This article teaches you how to recover stolen cryptocurrency in a few steps.
Steps To Recover Your Stolen Crypto
The chances of never recovering your stolen coins are quite high. The lack of proper regulations guiding cryptocurrency exchanges makes it a major problem. There is not much that can be done legally against an exchange if your assets are stolen.
Here are a few ways you can recover your stolen cryptocurrency:
Contact the police
There is still difficulty regulating the crypto sphere and there is not much the police can do when your funds are stolen. However, crypto frauds must be reported to the police immediately. This will help the police respond better if you bring any valuable information that could lead to the arrest of the scammer.
Notify The Cryptocurrency Exchange
Once you discover that your cryptocurrency has been stolen, maybe through the hacking of your account, you need to act as quickly as possible. Delaying the tracing process could give the hackers enough time to transfer your coins to a cold wallet and then send them to other exchanges that could hide their trail.
Benjamin Sauter, a crypto theft expert said to Decrypt:
“The quicker you act, the better…the more experienced you are, and the less experienced the thieves are, the better chance you have”.
If you store your cryptocurrency in an exchange, you should let them know about the hack. Exchanges have information that would be useful in investigations.
Call Your Bank
If there were bank-related costs during the transaction such as transaction fees, inform your bank.
When a fraudulent transaction is reported to a bank, the bank begins the process of securing the defrauded account. This could prevent the hackers from inflicting more damage to your finances.
Follow The Money
In blockchains, all transactions leave a ‘money trail’ that can be traced. It is also quite easy to find the hacker’s wallet address.
You can keep a tab on the wallet address that your assets were transferred to and monitor its transactions. If the scammer attempts to transfer the coins from the wallet to a cryptocurrency exchange, report to the crypto exchange immediately. When cryptocurrencies are moved from a wallet to an exchange, it is usually changed to fiat currency.
On most exchanges, a trader has to submit KYC (Know Your Customer) information, such as names and addresses, before they can trade crypto as fiat currency. The exchange, if you report the transaction, can help you track the scammer. This is why a police report needs to be filed.
You can follow the trail of your funds through blockchain explorers like Blockcypher. The site would provide you with the user’s bitcoin address. The bitcoin address is then checked on www.bitcoinwhoswho.com to find its owner.
London-based blockchain analysis company Coinfirm recently launched ReclaimCrypto, a venture that would investigate cryptocurrency theft.
Hire A Bounty Hunter
On Bitcoin bounty websites, you can post a bounty that will get you the services of an experienced blockchain expert. The expert will then investigate and try to recover the funds.
These experts charge quite a lot and most times, only provide public information that does not help in getting back your assets.
How to prevent Crypto theft
Do not talk publicly about owning cryptocurrency
This is simple but important advice. Hackers will only target those that will yield returns. You become a target if your social media activity reveals too much about your assets.
Use Multi-factor Authentication
Multi-factor authentication can be your safest bet if you use a hot wallet. It makes anyone need multiple verifications before they can access your wallet.
It is advisable that you use a multi-factor authenticator app rather than using the SMS option.
You can disable the SMS option if it exists.
Set up an account with a new email and password
Create a new email account to use with your crypto wallet. This reduces the odds that you will be scammed through your email.
Set up a strong email password. Use sentences and Leetspeak converter for your password, to make it harder to crack.
Use a cold wallet
A cold wallet is a cryptocurrency wallet that is used to store cryptocurrency offline. This is the opposite of a hot wallet.
Storing your bitcoins offline makes it more secure because hackers cannot penetrate a cold wallet as easily as a hot wallet.
Spread your investment across exchanges
A lot of exchanges have been hacked in recent times and no exchange is 100% invulnerable. Use multiple exchanges for trading to spread your investments. This will divide your funds and minimize the impact of a hack.
As cryptocurrency grows in prominence, methods for hacking and defrauding crypto owners improve. The best approach to prevent theft by protecting your wallet. Check your phone regularly for malware threats and stop unauthorized access to your account. Also keep your account information like username and password well secured.