This is the worst nightmare in all stock markets: falling prey to a security breach. An accident can disrupt a trading platform for weeks, impact customer confidence and damage a carefully honed reputation, and in some cases even lead to the collapse of cryptocurrency markets.
Crypto companies have stepped up security measures in recent years in an effort to ensure that attackers are not given the opportunity to infiltrate their systems. This forces hackers, scammers and scammers to rely on more sophisticated technologies.
An important weapon has emerged that helps trading platforms to act quickly in the event of a compromise of their infrastructure: analytical software. But how do these companies investigate whistleblowing? What tools can you rely on to follow in the footsteps of thieves?
This is a step-by-step guide to investigating cryptocurrency fraud, security breaches, and ransomware.
Search for intruders
Whether the cryptocurrency is stolen through a scam or a scam – as ransomware has become a popular way of defrauding victims – investigation methods often follow a similar pattern.
The first step is to determine the cipher’s encryption address as quickly as possible. This information can then be passed on to analytics software companies, who can immediately classify the title as high risk. If you do this quickly, it will make it easier to track your device. There are times when there is little information about the address hash, but this does not mean that this is a dead end. This is because transaction and history filtering can be used instead.
Then there is a race against the clock to start tracking down bad guys who may start hiding money they misused. They can start sending transactions to other exchanges or use the mixing services and dark web devices. While this often happens immediately after a cryptocurrency is taken, sometimes it can take months or years before mining starts – when the culprit thinks that no one is watching it. Analytics service providers may offer transaction alerts so that victims can be immediately notified of the receipt of funds to and from the address.
These transaction alerts need to be handled urgently as the business begins to follow the path. An important step is to alert exchanges that may eventually receive some of these cryptocurrencies in order to prevent the stolen money from flowing into their accounts. Visualization tools can play a role in demonstrating the distribution of illegal assets and showing headlines that may be directly or indirectly related to criminals.
Investigation at work
Crystal Blockchain shares an example of how research works in practice. The analysis software provider recently played a significant role in investigating the aftermath of the wallet hack that hit Eterbase in September 2020, which Cointelegraph then reported.
In the immediate aftermath of the theft, Eterbase took action by publicly announcing the address that the Bitcoin thief was using. This allowed Crystal to instantly designate this wallet as a high risk device.
It quickly becomes possible to collect information about this address, including statistics on further transactions and contacts. It soon became apparent that this suspicious wallet had links to 16 other addresses.
Through the Crystal All Connections tool, it was revealed that this game was already receiving money from Eterbase as well as other exchanges that were sent to a number of unnamed individuals.
The company said it was able to go beyond one jump – and included indirect references in the results. Based on this, it was determined that 80% of all stolen money was sent to the mixing service.
Etherbase was relaunched on January 15 – the team asked exchange users to stop using the old encrypted deposit addresses belonging to their accounts. In an update in late January, the company said an official investigation was still ongoing and confirmed that affected users eligible for compensation would receive it as soon as possible.
Crystal Blockchain claims that cryptocurrency crime is growing in parallel with the cryptocurrency markets. The company recently released a map of security breaches and fraud in the digital asset sector over the past 10 years.
The interactive timeline tracks the number of incidents each year since 2011 and also shows the total amount of money stolen. The data shows that $ 1.48 billion was seized in 28 incidents in 2020.