They claimed that crypto is extremely secure as it’s so trusting yet so secure. You are your own financial institution. Maybe someone managed to hack into your crypto exchange account and emptied it, or you transferred crypto to someone posing as someone else, and there’s also a chance that the company you’ve invested with is a scam.
In that case, you’re not alone, as a lot of people have said they’d been hacked on exchanges, and others said they’d been victims of crypto fraud. It is no surprise that crypto crime has been on the rise, particularly since the pandemic outbreak. How are these crimes carried out? What can you do to stay one step ahead of scammers? What happens to all of the stolen cryptos? Keep reading to find out.
Acting Fast If It Happens
The sooner you act, the better because if you wait any longer, robbers will have more time to withdraw assets to cold storage, transfer money to less favourable exchanges, or send them through tumblers to break them up to make the funds harder to trace.
If the funds are in an exchange, you should contact it immediately and request that it freezes the account. If you’re lucky, the exchange may act quickly to protect your assets. But you’re just as likely to have to deal with lawyers and court orders, which is a pesky business. As Erasmus put it, ‘prevention is better than cure.’ It’s best to avoid getting in this situation in the first place. That’s why many traders have flocked to services such as Immediate Edge and the like, which vet brokers in advance to create a safer trading environment.
Asking Customer Support For Help
You are more likely to receive assistance if your exchange platform is relatively large and more well-known. Act quickly, and your exchange may be able to freeze your funds, depending on the level of the theft. However, keep in mind that many exchanges aren’t obligated to assist. Some exchange platforms are located in places with few cryptocurrency regulations as some countries do not consider cryptocurrency an asset, reducing the likelihood of government assistance even further.
Understand How To Protect Yourself
The story of digital asset theft has become so common that it may have discouraged some investors from participating in the digital currency landscape at all. As the crypto space evolves and changes at an incredible rate, so do the methods thieves and hackers use to snatch tokens and coins. Investors who are vigilant and prepared, on the other hand, can take preventive measures to protect their digital holdings.
The Key Is Using Wallets
Keeping a digital wallet secure is one of the best ways to safeguard your assets. Even though new designs are constantly being introduced, there are two primary types of digital wallets. Hardware devices are perhaps the better option of the two as these physical or “cold” wallets resemble USB drives and serve as physical storage for tokens or coins.
Each hardware crypto wallet is associated with a private key, which is a passcode or bit of code that allows you to decrypt the wallet and gain access to the coins or tokens inside. While hardware wallets are extremely effective against internet thieves, there is a risk of losing your password key; you will never be able to recover the contents of the wallet.
Choosing The Right Exchange
The majority of cryptocurrency transactions take place through a crypto exchange. These platforms are typically accessed through a web browser or a web app and involve users making purchases and sales using either fiat currency or a different crypto asset. Some of these exchanges, like any bank, provide FDIC insurance for the initial $250,000 deposited or held in US dollars.
For two main reasons, crypto security experts advise against keeping any virtual currency holdings on an exchange. For starters, if the exchange is compromised, you may lose your investments. Second, the exchange keeps your cryptocurrencies as an IOU, so if the exchange fails for any reason, you may not be able to recover your holdings.
At the end of the day, learning how to protect yourself from future attacks should be your first primary concern when investing in crypto assets. What happens to all of the stolen cryptocurrency? If your assets are also stolen, the best thing you can do is work hard to find a way to recover the funds.
Experts also advised separating your funds into “cold” and “hot” wallets. The “hot” wallet should contain a small amount for daily use, and access to it is automated. However, 95-99% of your funds are recommended to be kept in a cold wallet that is not connected to the internet and is not automated. In this case, unapproved remote access to your wallet and the compromise of private keys are ruled out.