Why the Police Won’t Investigate Your Lost or Stolen Crypto

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If someone hacks into your bank account, steals your wallet, or uses your payment card without your permission, notifying the police is usually standard procedure. But if someone steals your cryptocurrency, will the police be able to help you? Can the authorities recover your stolen funds, or is it a lost cause?

Can the police find the stolen crypto?

It’s no secret that the police can find stolen crypto assets. In fact, there have been many instances where authorities have recovered stolen cryptocurrency.

In November 2022, the FBI seized over 50,000 bitcoins, which amounted to an incredible $3.36 billion. Bitcoin had been stolen years earlier by James Zhong from the infamous Silk Road market. It took more than a decade for the stolen funds to be identified and recovered by authorities, but this investigation was successful.

The previous year, in 2021, $2.3 million worth of crypto was recovered, which was previously paid as ransom in the Colonial Pipeline ransomware attack. The recovered crypto was around 85% of the total ransom paid, a big win for the US Department of Justice.

As you can see, these crypto recovery cases often involve millions or billions of dollars in crypto. So what about the average person who loses a few hundred or thousand dollars in a crypto scam or attack?

Why aren’t all stolen cryptos found? Image credit: Bybit/Flickr

While police recover stolen crypto in some scenarios, this is certainly not the case in all areas.

Cryptocurrency and traditional money work very differently. While traditional money comes in paper form, which is then represented digitally in online payments, cryptocurrency is and always has been completely virtual.

Cryptocurrency is more anonymous than traditional money. On the blockchain, transactions are not recorded with the names of the people involved. Instead, wallet addresses are displayed. Without the ability to immediately discover a trader’s identity, police must go through an additional process to link the wallet address to a name.

If the police are successful, they have a chance of locating the individual, which may result in the recovery of stolen funds.

But many police departments are still unfamiliar with cryptocurrency crimes or lack the personnel to deal with them. Although crypto has been around since 2009, it only reached the heights of its popularity in 2021. From there, the number of crypto-related scams skyrocketed, law enforcement authorities striving to understand this type of virtual asset so that crimes can be properly committed. investigated and resolved.

The police’s lack of cryptography proficiency is highlighted in a story reported by Wired in 2022.

In this story, an individual named Chris Golas was unable to get help from the police with his lost cryptocurrency. Golas encountered issues while trying to trade funds deposited on a platform named Digifox in April 2022. Shortly after noticing this issue, Golas was informed by Digifox that the platform was going to be shut down, but did not still could not withdraw his deposited funds.

Golas was eventually knocked down by Digifox’s customer service team, despite an initial response. When Golas reported this incident to the police, an officer told him that although they had heard of typical financial scams, crypto scams were like a “foreign language”. Even after explaining the incident in detail, Golas never received a follow-up.

This story shows how difficult it can be to get help when you are the victim of crypto theft.

This is not to say that small cases of crypto theft go undetected at all. In July 2023, an Iowa resident lost $6,600 in a Bitcoin ATM scam, and police opened an investigation into the incident.

Many other people have also been aided by the police in crypto crimes. What is important to note here is that many law enforcement agencies are not highly trained in dealing with crypto crimes and may not have the time or money to investigate these new types. of scams.

The Challenge of Privacy Coins

While Bitcoin, Ethereum, and many other cryptocurrencies are pseudonymous and traceable, privacy coins go against the grain.

A privacy coin focuses on user privacy, security, and most importantly, anonymity. They can still be traded like cryptocurrencies, but privacy coins have additional features to protect you.

Take Monero (XMR), which uses stealth addresses and ring signatures to hide crypto wallet addresses and avoid tracking. ZCash, Dash, Verge, and Decred are other examples of privacy coins that offer higher levels of privacy than typical cryptocurrencies.

While many like the added privacy of private coins, they present a problem for law enforcement. Many cybercriminals now use privacy coins to launder money because they are so difficult to track. Because the crypto addresses are concealed, the police find it difficult to start the tracking process, let alone find and recover the stolen funds.

Should you report stolen crypto to the police?

If you have been the victim of crypto theft, it is wise to report the incident to the police. This at least gives you a chance to have your case picked up and investigated.

But there is no guarantee that your report will be taken seriously here. Also, recovering your stolen crypto is not set in stone, even if the police investigate. If you’re dealing with a small police department or insufficient resources, your chances are probably even lower.

For this reason, you should not rely on the police to find your stolen cryptocurrency. There are other ways to find your crypto, including:

Contact your crypto exchange. Contact your wallet provider. Consultation of a crypto hunting service.

Even if you pursue all available avenues, you still don’t know if you will recover your stolen funds. Thousands of people have fallen victim to crypto scams, many of them never seeing their assets again.

Your stolen crypto can be a lost cause

It’s hard to recognize, but many cases of crypto theft are never solved, whether due to negligence, lack of resources, or the complex nature of the crime itself. This is why it is important to check the crypto platforms you want to use and opt for the most secure wallets you can find.

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