How do I recover my stolen Bitcoin?

How do I recover my stolen Bitcoin?

During the summer of 2021, an anonymous hacker stole approximately US$600 million in cryptocurrencies from Poly Network, a decentralized financial network that many outside the cryptocurrency world had probably never heard of. The hacker then returned the loot.

Four months later, hackers stole at least US$150 million from cryptocurrency exchange Bitmart. According to an analysis, the unidentified hackers used a private key they had stolen to open two storage wallets, or "hot wallets," to extract their funds.

Security incidents of this type are not new in the cryptocurrency world, but the scope of these hacks is growing every day as cryptocurrency prices continue to fluctuate unabated.

Five of the 10 largest cryptocurrency thefts on record occurred in 2021, according to data compiled by the consumer website Comparitech. And these incidents are likely to continue due to the increased use of cryptocurrencies, according to financial technology experts.

What's happening with cryptocurrency thefts?

The two main targets of cryptocurrency hacks are currently on centralized exchanges and decentralized financial services DeFi, says Tom Robinson, chief scientist at Elliptic, a London-based cryptocurrency firm.

Centralized exchanges have been a prime target for hacker groups for several years now. These exchanges store users' assets in hot wallets, or digital wallets that are connected to the internet, making them more accessible to users, but also potentially more vulnerable to hacker attacks.

The BitMart hack was one such example. Another is the 2018 Coincheck attack, in which approximately US$530 million was stolen, making it the largest cryptocurrency fraud in history, until the Poly Network incident, according to Comparitech data.

DeFi software applications eliminate exchanges, as they run directly on top of blockchain platforms, and hacks of these services are often due to coding errors or problems with application design. 

Prime examples include Poly Network and the most recent hack of Badger DAO, a platform that offers users vaults to store bitcoins and make a profit. The Badger DAO hack resulted in the loss of $120 million.

"What is clear from most of the attacks this year (2021) is that it is often a vulnerability that is being exploited" said Rebecca Moody, head of research at Comparitech.

With an industry growing at an exponential rate and relying on open source technology, vulnerabilities in platforms that are exploited by hackers able to find a weakness in the code are always a possibility.

This may interest you: How do I apply for a crypto loan?

What are you really at risk of losing?

Just because an exchange suffers a hack doesn't necessarily mean you lose all your money.

Each cryptocurrency service has different levels of resources to cover these attacks. BitMart, for example, pledged at the time to vouch for all stolen assets.

According to cryptocurrency analyst Joe McGill of TRM Labs, if an entity cannot compensate affected users, there is still a chance that law enforcement, such as the IRS Cyber Criminal Investigations Unit, may be able to recover stolen funds.

But there is no guarantee. While many banks often offer deposit insurance up to a certain amount, there is no such promise when handling cryptocurrencies on a third-party service. Some companies may have insurance to cover losses, but the level of coverage (if any) varies by platform.

As for stolen cryptocurrencies, they could be gone forever, as most of the time, hackers manage to get away with stolen funds because cryptocurrency is virtually untraceable and can be easily camouflaged by laundering it through wallets in a matter of minutes.

How can cryptocurrency owners protect themselves?

When using a cryptocurrency wallet or exchange, experts say users should examine the scale and professionalism of the company behind it.

"Do they have people responsible for cybersecurity? Does the company have a good track record? What is the size of the company? How many employees does it have? These are all indicators that give you confidence that that company is going to protect your assets responsibly," says Tom Robinson, chief scientist at Elliptic.

There are also basic security measures users can implement when accessing their cryptocurrency account. McGill recommends two-step authentication or hardware keys, which are passwords stored on offline devices. He also recommends requiring approval for all cryptocurrency withdrawals, as well as creating a whitelist of addresses, which only allows certain addresses on your contact list to receive these types of funds from your account.

"There is no 100% guarantee of avoiding cybercrime," McGill warns, making it clear in turn, that it is important to understand the exchanges you use, their history with cybercrime, and the response systems in place.

Another way to protect one's cryptocurrencies, according to Morris, is to use a hardware wallet, known as a "cold wallet," rather than storing them with a cloud service.

While this is considered the most secure method of storing cryptocurrencies, it often creates problems for users who misplace their private keys. If those keys are stolen or lost, it will take a lot of help to get the funds back.

But there is hope, what is ReclaimCrypto?

ReclaimCrypto

ReclaimCrypto is an initiative launched on October 31, 2019, that combines modern forensic techniques linked to the blockchain, with legal investigation and asset recovery tactics.

In essence, ReclaimCrypto is a professional service specialized in fraud investigation, used especially to reclaim stolen cryptocurrencies from victims of scams.

ReclaimCrypto stems from the alliance carried out between:

Kroll, the world-renowned investigations firm, is a division of U.S. consulting firm Duff & Phelps.

Confirm, a global AML (Anti-Money Laundering) and blockchain-related analytics company working in the regtech sector (companies that develop solutions to comply with regulatory frameworks) for the case of cryptocurrencies.

Who can recover stolen Bitcoin with ReclaimCrypto?

While their service is more geared towards businesses or owners of large amounts of funds, the company claims that they cater to "all victims of cryptocurrency-related fraud," including cases of:

● Large entity hacks
● Scams
● Phishing
● Ponzi schemes
● Shutdown and/or hacking of exchanges
● Ransomware - ransomware
● Fake ICOs
● Or even Bitcoins lost because they were sent to the wrong address.

However one of the most requested services, the recovery of lost private keys, is not part of ReclaimCrypto's services and as far as is known, it doesn't look like they will be offering that service anytime soon.

What does ReclaimCrypto do to recover stolen Bitcoin?

The process carried out by ReclaimCrypto depends on the type of fraud, but usually includes searching for evidence of embezzled funds, contacting victims, filing a class-action lawsuit, and opening investigations of all kinds with the use of technologies aimed at tracking and recovering digital assets.

Their cost varies depending on the value of the stolen cryptocurrencies, their location, and the jurisdictions involved, as well as the degree of cooperation from other relevant parties, among other factors.

According to the company, they have developed "the world's most extensive structured database of blockchain transactions and off-chain data."

Kroll, meanwhile, is in the business of issuing court orders, for example, for an ISP provider to display details about an IP address, as well as calling on former FBI and CIA agents to scan the deep web for activity associated with stolen funds.

As the company told CoinDesk, Kroll has helped track down thieves in Europe who stole $27.8 million worth of bitcoins.

Benedict Hamilton, managing director of Kroll, explains that there are two possible and almost always complementary paths: finding out who did it or following the money trail.

The main idea of this company is to work in partnership with the authorities to hunt down unscrupulous hackers and bring them to justice so that they can be punished.

How to recover stolen Bitcoin with ReclaimCrypto?

If you can pay for the service, which is charged according to the amount stolen, and you meet the company's requirements to request their help, then it is necessary to fill in some data at ReclaimCrypto that are requested through a form on the official website.

After a preliminary evaluation of the case, one of the company's officials will contact you and if the case is approved, ReclaimCrypto will let you know the estimated fee they will charge for recovering the lost money.

If all goes well and after a successful investigation favorable results are obtained, the stolen funds will be returned to the owner's wallet.

In short, it is not an easy task to recover stolen money from a digital wallet, but it is a task that some people are willing to undertake, in most cases, successfully.

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