AML Blog

Investigation of stolen funds in the crypto industry

Investigating stolen funds in the cryptocurrency market can be difficult due to the decentralized and anonymous nature of many cryptocurrencies. Transactions on blockchain networks are recorded on a public ledger, but the identity of the individuals or organizations behind these transactions is often hidden. In addition, many cryptocurrencies, such as bitcoin, can be easily converted into other cryptocurrencies or fiat currencies, making it difficult to trace the movement of stolen funds. Law enforcement and regulators may have trouble tracking down and recovering stolen funds, and victims of cryptocurrency theft may have limited options to seek help.

The amounts of stolen funds in the cryptocurrency market can be huge due to the high value of many cryptocurrencies and the ease of transferring them around the world. This has led to an increase in large-scale cryptocurrency theft and scams such as exchange hacks, phishing attacks, and Ponzi schemes.

One of the largest cryptocurrency heists was the hack of the Japanese cryptocurrency exchange Coincheck in January 2018, when hackers stole over $500 million worth of NEM cryptocurrency.

In addition, in 2019, a hacker managed to steal $40 million from the Binance cryptocurrency exchange.

These major thefts and scams could have a significant impact on affected individuals and businesses, as well as the wider crypto market. It could also deter new investors from entering the market and potentially undermine public confidence in the security and integrity of cryptocurrency transactions.

However, in order to help the cryptocurrency industry become more understandable and secure, it is necessary to promote wider adoption of cryptocurrencies and build confidence in the market.

There are several ways to help achieve this goal:

Regulation: Governments and regulators can create and enforce laws and regulations that protect consumers and prevent fraud and money laundering in the cryptocurrency market.

Cybersecurity. Cryptocurrency exchanges and other industry actors can implement robust cybersecurity measures to protect against hacking and other forms of theft.

Education: Informing consumers and investors about the risks and potential rewards of investing in cryptocurrencies can help them make informed decisions and avoid scams.

Self-Regulation: Industry organizations can create best practices and standards to ensure transparency, security and trust in the marketplace.

Technical Developments: The crypto industry can continue to develop new technologies, protocols, and security measures to improve security, transparency, and trust in crypto transactions.

And most importantly, the use of outsourcing organizations, whose goal is to find the stolen funds, which will help to correctly build a scheme and patterns of behavior of a thief, so that in the future the organization will help prevent theft in the future to provide it.

Ultimately, the combination of these efforts can help make the cryptocurrency industry more understandable and secure for all involved.