We have good and bad news for anyone wanting to recover stolen crypto. If hackers steal your crypto from your custodial wallet, things can get a little tricky – bad news. On the other hand, if you’re following crypto stolen from a cryptocurrency exchange wallet, there’s a chance you could get your funds back – good news. Ironically, the larger the amount of crypto stolen, the better the chances authorities and exchanges could pursue the thieves. In this article, we interrogate whether tracking down and recovering your stolen cryptocurrency is possible. Welcome on board!

Can Anyone Recover Crypto Stolen from a Cryptocurrency Exchange?

The crypto world is no stranger to infringements and hacks where billions of dollars’ worth of cryptocurrencies are stolen from centralized exchanges. Surprisingly, despite the massive amounts of money involved, incidents surrounding crypto theft from centralized exchanges rarely make mainstream headlines, lacking the drama of traditional bank robberies. This raises a crucial question: if your chosen crypto exchange gets hacked, will you get your money back?

How Cryptocurrency Exchanges Work

Cryptocurrency exchanges function similarly to traditional exchange bureaus. They set prices for different currencies and charge a commission to facilitate trades. Unlike traditional cash, cryptocurrencies are secured by encryption, offering a level of safety. However, exchanges can sometimes leave vulnerabilities that hackers can exploit. With human error combined with the volatile nature of the crypto market, centralized exchanges are prime targets for cybercriminals.

Exchanges generally store most assets in cold wallets, which are offline and safe from hacking attempts. However, they also keep a portion of funds in hot wallets, which are accessible online for user transactions. If a hacker gains access to an exchange’s hot wallet through methods like stealing private keys, they can steal crypto assets. Unfortunately, not all exchanges have insurance policies to reimburse users in the event of a breach.

Why is it Difficult to Trace Stolen Cryptocurrency?

Cryptocurrency, unlike traditional currency, is digital and intangible. It exists only on the blockchain, which makes tracing difficult. While governments and banks don’t control crypto, its decentralized and often anonymous nature makes it a challenge to track stolen funds. Cryptocurrencies are considered bearer assets, meaning the person holding the private keys is the rightful owner. This anonymity can make it hard to recover stolen funds unless ownership is proven.

Can You Trace Crypto Assets on the Blockchain?

Yes, tracing stolen cryptocurrency is possible to a certain extent. The blockchain allocates a unique hash to every transaction, similar to a fingerprint, which can trace the crypto through each block. However, even though blockchain transactions are transparent, changing the hash of a cryptocurrency block after it’s completed is no easy feat. It requires extensive technical expertise and computing power. While authorities can trace stolen crypto, the process is far from straightforward, and some stolen funds may remain unrecovered.

If Your Crypto Exchange Is Hacked, Will You Recover Your Crypto?

The most common scenario for stolen crypto is when you send your funds to a centralized exchange for trading. If the exchange holds your assets in a hot wallet and is hacked, the stolen funds can be moved to another address. If your exchange has insurance or emergency funds, you may be lucky enough to receive some reimbursement. Even without insurance, exchanges can work with experts and authorities to track down and pursue the stolen funds. Blockchain technology can help authorities identify and follow the path of stolen assets, especially in large-scale hacking incidents.

While recovery is possible, it’s still a complex process, and very few people have managed to get their stolen crypto back. This is why it’s crucial to use exchanges with strong security measures and insurance policies to minimize the risk of theft.

Some notable recoveries have taken place, including:

Bithumb, a South Korean exchange, lost $7 million in a 2017 hacking incident and recovered at least $1 million.

Coincheck, a Japanese exchange, lost $530 million in 2018 and managed to recover up to $400 million.

DragonEx, a Singaporean exchange, recovered about $1 million from $7 million lost in a 2019 hack.

In each case, the platforms hired cybersecurity firms and worked with law enforcement to recover stolen funds.

What to Do If Your Crypto Assets Are Stolen

Should you fall victim to crypto theft, here’s what you can do to try and recover your assets:

1. Contact the Exchange

If your funds were stored with an established exchange, they may already be aware of the situation and be working on a recovery plan. While insurance policies are not guaranteed, the exchange will likely attempt to track and recover your assets. However, if the funds aren’t fully recovered, you may not be the only victim.

2. Hire a Crypto Hunter

In addition to contacting the exchange, hiring a professional crypto hunter can significantly improve your chances of recovery. Crypto hunters specialize in recovering lost or stolen cryptocurrency from centralized exchanges. These experts use specialized software to generate millions of potential passwords and work with law enforcement agencies to trace and recover stolen crypto. Crypto hunters also assist in recovering lost private keys or forgotten passwords.

By utilizing advanced tools and collaborating with exchanges and authorities, crypto hunters offer a critical advantage in locating and reclaiming stolen assets.

Conclusion

While recovering funds stolen from a cryptocurrency exchange is a challenging task, it is possible under the right circumstances. The process involves not only the cooperation of the affected exchange but also leveraging advanced blockchain tracing technology and the expertise of crypto hunters. While recovery may not always be guaranteed, professional services like Puran Crypto Recovery significantly enhance your chances of reclaiming your stolen cryptocurrency.

As the crypto world evolves, so do the tools and expertise needed to track down stolen assets. By working with the right professionals, such as Puran Crypto Recovery, you give yourself the best chance to recover your lost funds.