"My first loss was with CoinsMarkets. It happened when the exchange was closed with our funds. I did not even try to contact anyone or alert the police. "
These are the words of a fearless crypto investor – one of the many who responded to a tweet asking questions about the lack of recourse that people face when their assets are stolen during a piracy, an exit scam or a Ponzi scheme.
According to Pawel Kuskowski, CEO of the blockchain TV firm, Coinfirm, there are about $ 10 billion worth of crypto volts on the market. And he wants to give victims a chance to recover their funds.
Exclusively disclosed at CoinDesk, Coinfirm has partnered with international law firm Kroll, a division of the consulting firm Duff & Phelps. The joint initiative launched is called ReclaimCrypto. It combines the latest judicial techniques of the chain of chains with a world of judicial investigation and well-established asset recovery.
Kuskowski told CoinDesk:
"Up to now, there is no place where victims can go for help. It's almost as if they begged to interest their case. In the end, they must solve it themselves; see to get a lawyer, maybe in another jurisdiction. "
The numbers on what is recoverable vary. For example, CipherTrace, another analytics company, recently announced a $ 4 billion crypto loss this year. Kuskowski's estimate includes historical (and still unresolved) events such as Mt Gox, which today would be worth about $ 1 billion.
It goes without saying that Kuskowski and his team do not do it just for the sake of humanity. Success fees are charged on a case-by-case basis, he told CoinDesk, adding:
"In doing the market analysis for this product, we started by calculating the type of key cases, where we know we could succeed and recover funds, which represented about 200 cases."
These cases alone account for about $ 1.5 billion, Kuskowski added.
How it works
Coinfirm's bread and butter is about fighting money laundering in encryption networks by analyzing transaction history using a variety of smart tools and big data analytics. Similar to Chainalysis and Elliptic, it operates with about fifty exchanges and has constituted a vast database in this field.
Coinfirm's partner, Kroll, takes a more "traditional" approach, which may involve the production of court orders for an ISP to reveal details of an IP address, or the use of former FBI and CIA agents to search the black web for any activity involving stolen funds. .
It should be noted that Kroll is not new in the field of cryptography: the company worked with the US Securities and Exchange Commission (SEC) last year on fraudulent offers of coins. Kroll also told CoinDesk that he had helped locate the authors in Europe of a $ 27.8 million theft in bitcoin.
If victims of the loss wish, Kroll can potentially align the funding of a dispute with a third party. This means that companies that provide specialized funding to the legal market, such as Burford Capital or Therium, will bear the cost of litigation. For this, they use about 30% of the funds recovered and return the rest to the victims.
Benedict Hamilton, CEO of Kroll, told CoinDesk:
"From the victim's point of view, when the police have not been able to recover that money, they have nothing to spend on getting anything. And no one recovers funds on their behalf without their permission. This makes the economy of stolen funds recovery very different – which is very exciting. "
Speaking of Coinfirm as "a flashlight lighting the blockchain," Hamilton said Kroll could extend this process into the dark depths of the dark canvas. Kroll Cyber runs a specialized malicious websites unit in Pittsburgh, Pennsylvania, under the supervision of Keith Wojcieszek, former head of the Criminal Investigation Division of the cyber division of the US Secret Service.
This operation fragments petabytes of dark web data from peer-to-peer sites, Hamilton said, adding:
"Keeping in mind the ReclaimCrypto initiative, we were able to reuse it so we could access this database with a portfolio chain and look up all the identifiers associated with that portfolio name – maybe a conversation about selling stolen credit cards or someone offering criminal services and providing that wallet as an address. "
Follow the money
Hamilton explained that there are two possible routes for a cryptographic investigation: determining who made it or following the money.
The main goal of ReclaimCrypto is asset recovery, first and foremost, since that's what the customer pays for. But ultimately, both roads lead to the same place, said Hamilton, adding:
"It is inconceivable that the investigation process will end without us providing all the details to the competent law enforcement agencies so that they can then take advantage of the work and lock up the thieves."
The main focus of ReclaimCrypto will focus on bitcoin and ether, but will also cover the XRP, BCH, LTC, NEO and DASH domains. Unhappy people who have lost assets can learn more here.
As for those who have had stolen pieces, some remain philosophical about it. "It's life," said the aforementioned investor, adding:
"It made me grow a lot and it's part of my cryptographic adventure."
Image of cybercrime via Shutterstock