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Home Tech Crypto How crypto fraud and security breaches are investigated

How crypto fraud and security breaches are investigated

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Summary (IA Generated)

It’s every exchange’s worst nightmare: Falling victim to a security breach.

Crypto companies have been ramping up their security measures in recent years, determined to ensure that malicious actors don’t get an opportunity to infiltrate their systems.

This is a step-by-step guide to investigating crypto fraud, security breaches and ransomware.

The first step is to identify a criminal’s crypto address as soon as possible.

This information can then be passed on to analytics software companies, which can immediately tag the address as high risk.

Next, it’s a race against time to start tracking bad actors who may begin to obfuscate the funds that they have misappropriated.

They may start sending transactions to other exchanges or use mixing services and darknet entities.

Analytics providers can offer transaction alerts to ensure that victims can be immediately notified when funds flow to or from an address.

A crucial step involves notifying exchanges that might end up receiving some of this crypto to ensure they are able to block stolen funds that flow into their accounts.

Visualization tools can play a role in illustrating how misappropriated assets are distributed — and show the addresses that may be directly or indirectly connected to the criminal.

The analytics software provider recently played an instrumental role in examining the aftermath of a hot wallet security breach that affected Eterbase in September 2020, which Cointelegraph reported on at the time.

Quickly, it became possible to piece together information about this address — including statistics on further transactions and connections.

Through Crystal’s All Connections tool, it was revealed that this address had indeed received funds from Eterbase, as well as other exchanges, which had been sent on to a plethora of unnamed entities.

15 — with its team asking exchange users to stop using old crypto deposit addresses that belonged to their accounts.

In an update at the end of January, the company said that an official investigation is still ongoing — and it stressed that affected users who are eligible for a refund will receive one as soon as possible.

The company recently released a map of security breaches and fraud within the digital assets sector over the past 10 years.

The interactive timeline tracks the number of incidents in every year since 2011, and also provides a total figure for the funds that were stolen.

The largest-ever crypto security breach remains the incident involving the Japanese exchange Coincheck in 2018, overtaking the Mt.


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