Cryptocurrency is no stranger to scams, hacks, and breaches; each resulting in investors and crypto enthusiasts losing their funds.
Unfortunately, some of the positive attributes of cryptocurrency, such as permanent transactions and pseudo-anonymity, also lend themselves to cybercrime and fraud. It’s challenging to track down a cybercriminal who carried out a crypto fraud scheme or hack, but it’s not impossible.
A crypto recovery agency is a specialized firm with experts in blockchain analysis, cyber intelligence, and legal processes. Combined, these firms are capable of tracking down and recovering stolen crypto in many instances.
The process of recovering stolen cryptocurrency can be a challenge to undertake alone, but a professional crypto investigator can go far in helping you recover what was lost. Read on to learn more about why working with the right crypto investigator matters.
What is a Cryptocurrency Investigation?
Over the years, we’ve seen everything from crypto Ponzi schemes to devastating hacks separate crypto holders from their coins. Even now, new forms of fraud and exploits emerge right alongside new developments in cryptocurrency and blockchain technology.
A cryptocurrency investigation is the process of tracking down the criminals behind stolen crypto and recovering lost funds. The primary goal of the investigation is connecting pseudo-anonymous blockchain data with the real-world identities of those behind the theft.
Accomplishing this task goal requires a blend of expertise in blockchains, cyber intelligence, and legal processes. Without the right expertise, the investigation will struggle to connect all the moving pieces while also being incapable of recovering the stolen funds.
The Significance of Hiring a Crypto Fraud Investigator
Individuals and organizations specializing in cryptocurrency fraud investigations have the right expertise to handle the complexity of this relatively new type of cybercrime. It can be a challenge for traditional investigators and even law enforcement to connect blockchain transactions to a real-world identity and then go about reclaiming the funds.
As such, hiring someone with the skills and experience necessary to reclaim stolen funds is necessary. Otherwise, you may not be able to reclaim stolen funds — hiring the right agency can make all the difference.
Why Cryptocurrencies and Illicit Activity Are So Common
Hacks, breaches, fraud, and scams are increasingly common as a result of the inherent attributes of cryptocurrency. These attributes are:
- Pseudo-anonymity: Cryptocurrency transactions are not anonymous, except for a few privacy-focused blockchains. Every other blockchain stores all transactions in full public view. As a result, most transactions related to criminal activity are in plain view — however, they are only visible as a wallet address and transaction ID. The real-world identity isn’t visible, making connecting the wallet address and legal identity extremely challenging, which enables this new type of fraud.
- Decentralization: There is no central authority for almost every cryptocurrency. Instead, the blockchains are operated by individual miners who process transactions. The lack of a central authority means that nobody can control potentially fraudulent transactions. All transactions are treated indifferently.
- Permanent transactions: Blockchain transactions are permanent, with the only exception being hard forking a blockchain or a 51% attack on mining (both out of reach for victims of fraud). This means that if you get scammed into sending someone your cryptocurrency and never see them again, you have no recourse to reverse the transactions.
- Global reach: Cryptocurrency is used globally, meaning the person who defrauded you may not live in your same legal jurisdiction. As a result, even if you do figure out who they are, it’s increasingly difficult to take any type of legal action to reclaim your crypto.
While these same characteristics are part of why people are drawn to cryptocurrency over traditional fiat currency, they also pave the way for illicit activity. Crypto fraud detection and investigation are of the utmost importance for both those who were scammed and the crypto market overall.
Key Steps in a Cryptocurrency Investigation
How do investigators work your case with the goal of ultimately recovering your crypto? Let’s drill down into the different steps and expertise necessary to go from start to finish.
Blockchain Analysis
Cryptocurrency investigations typically start with a thorough analysis of all related blockchain activity. Experts in reading and analyzing blockchain data will comb through all relevant transactions to determine two important things:
- How many wallet addresses were involved
- The final resting point for the stole funds
Some of these steps can be conducted by a savvy cryptocurrency user, but sometimes specialized knowledge in blockchain analysis is necessary to form an accurate picture of the theft and how the funds were moved around.
Open Source Intelligence (OSINT)
OSINT is a specific practice in cyber intelligence that uses a wide range of public information to track down the real-world identity of the criminal. The goal of this phase is to connect the wallet addresses identified by the blockchain analysts to the real-world identity of the criminal.
Many different tools and tactics are used during this step. Properly conducting this type of OSINT requires years of experience and can be incredibly challenging for someone without the right expertise.
Fortunately, new standards like Know Your Customer (KYC) that are integrated with many key touch points can help significantly. The task isn’t impossible, but it’s difficult and requires the right blend of blockchain knowledge and cyber intelligence expertise.
However, connecting the real-world identity to a wallet address is difficult even for normal crypto users. When dealing with criminal activity, most malicious actors will have taken extra precautions to obfuscate transactions and erase any data that may connect activity to their legal identity.
Legal Action
Once the previous two phases have been completed, the legal identity of those involved in the theft will be uncovered. However, there can still be quite a few hurdles in recovering stolen crypto.
This step can take many forms, ranging from sending a letter to the suspected criminal to involving local law enforcement.
It’s often necessary to contact local law enforcement, legal counsel in that jurisdiction and present evidence to authorities about the case. Then, the individual or group will need to be arrested and go through local courts before funds can be reclaimed.
The matter is further complicated when the victim and criminal are in different countries. It becomes an international concern, and it can take time for the stolen funds to be reclaimed. However, provided the first two steps provided enough evidence, it’s possible for funds to be reclaimed.
Partner with Lionsgate for Industry-Recognized Cryptocurrency Investigations
Crypto-enabled cyber crimes won’t likely stop anytime soon, so crypto users must practice caution with every transaction. Fortunately, cryptocurrency investigators are ready to help anyone who becomes a victim of this new wave of cybercrime.
You can see why teaming up with a qualified expert is crucial to recover your stolen funds. Working with the right crypto investigator is crucial to recover your coins, so it’s well worth exploring different options before making a decision.
Lionsgate is an expert in cryptocurrency investigations and recovery. Our range of expertise includes blockchain analysts, cyber intelligence professionals, and legal experts, allowing us to tackle a wide range of cases.
Are you ready to see how we can help your case? Contact us today for a free consultation with a crypto investigator to discover if we can help reclaim your lost crypto.
