My cryptocurrency was stolen. What should I do?

 

None of the largest sites has escaped hacker attacks, and crypto wallet users are also under threat. Lawyers explained the action plan in case of theft of digital assets and explained how to increase the chances of recovering stolen funds

Hackers regularly attack cryptocurrency projects, and users lose digital assets worth hundreds of thousands and millions of dollars. Even the most experienced participants are not protected from this. For example, last week, the CEO of the cryptocurrency investment company DeFiance Catital as a result of a hacker attack lost 78 NFT from five collections, as well as tokens worth $ 1.7 million.

Reports of hacking of crypto services come regularly. None of the largest sites escaped attacks. Therefore, users need to be especially attentive to the issue of storing funds in digital assets.

Experts do not recommend keeping large sums of money in cryptocurrency on centralized services. One of the safest ways to store it are hardware wallets.

Cryptocurrency assets stored on the exchange, with a high degree of probability, can attract the attention of intruders, agreed the lawyer of Criminal Defense Firm Daniil Gorkov. He warned that in the event of hacking and theft of cryptocurrency from the account, the probability of a successful and complete return of assets is low.

Now the most common ways of stealing cryptocurrency are phishing and false promises of a quick and guaranteed increase in capital, which from the point of view of criminal legislation are subject to qualification under Article 159 of the Criminal Code of the Russian Federation "Fraud". According to the expert, criminal proceedings increase the chances, but do not guarantee that crypto assets will be returned to the rightful owner.

Action Plan

Partner, head of the FinTech & Crypto practice of the law firm DRC Mikhail Bystrov called the sequence of actions of the user whose cryptocurrency was stolen:

1. Immediate notification of the exchange or the operator of the crypto wallet about the incident.

2. Collection of the maximum possible evidence base. It includes, among other things, screenshots of operations and uploads of transaction logs related to accounts.

3. Filing a statement with law enforcement agencies for the purpose of investigating a crime.

4. Subject to the initiation of a criminal case - sending a request to the operator of the exchange / wallet for assistance in the investigation, including all transactions related to the movement of stolen funds, and the wallets of the recipients of these funds. It should always be remembered that since the operators of the relevant resources are hiding as much as possible from all possible risks associated, among other things, with the theft of funds, without initiating a criminal case, they will one hundred percent refuse to provide any assistance.

5. If you have the appropriate technical skills , use the available tools for self-tracking of transactions. If you are a Citizen of Russia, then for these purposes you can also contact Rosfinmonitoring (RFM), since both rfm and the Ministry of Internal Affairs already use the appropriate transaction tracking tools. However, it is important to remember that almost all such tools are designed to track "classic" cryptocurrencies (ETH, BTC) and their derivatives, and are not designed to track cryptocurrencies that are anonymous by default (anonymous by design). Additionally, some of the new generation mixers that have appeared over the past couple of years can also greatly complicate the possibility of an effective investigation.

The independent conduct of these actions by the victims can be very difficult, the expert warned. This is due, among other things, to the fact that law enforcement agencies with the direct appeal of victims in such cases initiate criminal cases much less often than when lawyers already interacting with them, and also do not always have sufficient technical competencies to conduct a full-fledged investigation in order to find out where and to whom the stolen cryptocurrency went.

"For this reason, it is advisable to contact specialized law firms working with such cases both at the legal and technical levels," the specialist said.