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My cryptocurrency was stolen. What to do?
None of the largest sites has escaped hacker attacks, and users of crypto wallets are also at risk. The 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 Capital lost 78 NFTs from five collections, as well as tokens worth $1.7 million, as a result of a hacker attack.
Reports of cryptoservice hacks are received regularly. None of the largest sites escaped the attacks. Therefore, users need to pay special attention to the issue of storing funds in digital assets.
Experts do not recommend keeping large amounts of cryptocurrency on centralized services. Hardware wallets are considered to be one of the safest ways to store it.
Cryptocurrency assets stored on the exchange are highly likely to attract the attention of intruders, Daniel Gorkov, a lawyer at Criminal Defense Firm, agreed. He warned that in case of hacking and theft of cryptocurrencies from the account, the probability of a successful and full return of assets is low.
Currently, such methods of stealing cryptocurrencies as phishing and false promises of a quick and guaranteed increase in capital are the most common, which, from the point of view of criminal law, 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 the crypto assets will be returned to the rightful owner.
Action plan
Mikhail Bystrov, partner, head of the FinTech & Crypto practice at DRC law firm, named 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. Collecting the maximum possible evidence base. It includes, among other things, screenshots of transactions and uploads of transaction logs related to accounts.
3. Submitting an application to law enforcement agencies in order to investigate a crime.
4. If a criminal case is initiated, a request for assistance in conducting an investigation is sent to the exchange/wallet operator, including all transactions related to the movement of stolen funds and wallets of recipients of these funds. It should always be remembered that since the operators of the relevant resources hide as much as possible from all possible risks associated, including theft of funds, they will absolutely refuse to provide any assistance without a criminal case.
5. If you have the appropriate technical skills, use the available tools for self—tracking transactions. If you are a Russian citizen, then you can also contact Rosfinmonitoring (RFM) for these purposes, since both the RFM and the Ministry of Internal Affairs already use 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 new generation mixers that have appeared over the past couple of years can also make it very difficult to effectively investigate.
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, when directly contacting victims in such cases, initiate criminal proceedings much less often than when contacting 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 at both the legal and technical levels," the specialist noted.
