Crypto hacking theft is on the rise, nearly doubling from a year ago. Jordan Matyas is a former official at the Illinois Department of Financial and Professional Regulation, who now represents Crypto theft victims. We asked Jordan some questions about this growing threat to crypto holders and what they can (and cannot) do about it.
First of all, what are we talking about when we say “crypto hacking theft?”
Fundamentally, it is any time someone’s cryptocurrency, whether it’s Bitcoin, Ethereum or something else, is stolen from their account without their authorization. The theft can be the result of phishing attacks, malicious code, stolen wallet keys, or a number of other strategies.
One of the most common thefts involves the SIM card in mobile phones. A sim-swap is when a thief gets your mobile carrier to port your phone number over to their SIM card. By transferring incoming messages, scammers can access your most sensitive accounts by completing text-based two-factor authentication and get access to your bank account, crypto account, or other financial accounts.
Can the crypto be recovered?
Unfortunately, the answer is usually no. Thieves often transfer the funds through exchanges that are outside the jurisdiction of U.S. courts and in some cases utilize multiple wallets which make it difficult to trace.
What can be done?
It depends upon the type of hack. In the cases of a SIM-swap, the mobile carrier and/or the crypto exchange may be liable for the loss. The exchanges may also have liability in instances where passwords were stolen, or scammers pretend to be support from the crypto company. Unfortunately, mobile carriers and crypto exchanges will not typically cover losses without legal action.
It is important to note that, even when there is a legal cause of action against a mobile carrier or crypto exchange, victims seldom recover 100% of their loss.
What if someone was not hacked, but was tricked into transferring crypto currency and it was stolen?
There are many different types of scams involving crypto: Ponzi schemes, romance scams, blackmail, investment scams, fake exchanges…and the list goes on and on. In such cases, recovering such funds is difficult, and the liability of the crypto exchanges is much less straightforward. Although some victims have had success recovering some of their loss, many more have not.
What should someone do if they were hacked?
I usually recommend the following steps:
- Download the transaction history if you still have access to your cryptocurrency exchange. Be sure to download the complete history that shows the date, time, and the address any crypto was transferred from your account.
- If you think your sim card was compromised, contact your phone carrier and verify if there was a sim swap.
- Report the incident to law enforcement agencies. This will likely not lead to identifying and prosecuting the scammer or criminals, but it is required for litigation.
- Talk to a lawyer.
