Step by step: How crypto fraud and security breaches are investigated

Step by step: How crypto fraud and security breaches are investigated

What’s an exchange’s next move after falling victim to a security breach? This is a step-by-step guide to following a crypto thief’s tracks through analytics software.

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It’s every exchange’s worst nightmare: Falling victim to a security breach. An incident can disrupt a trading platform’s operations for weeks, affect customer confidence and damage a carefully cultivated reputation — even causing crypto markets to fall in some cases.

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 has prompted hackers, scammers and fraudsters to rely on more sophisticated techniques.

One crucial weapon has emerged that helps trading platforms take speedy action in the event that their infrastructure is compromised: Analytics software. But how do these companies go about their investigations whenever a breach is reported? What are the tools that can be relied upon to follow a thief’s tracks?

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

Hunting the hackers

Irrespective of whether cryptocurrencies are stolen through fraudulent activities or scams — with ransomware becoming an increasingly popular method for swindling victims — investigation techniques often follow a similar pattern.

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. Doing this quickly can ensure that the entity is easier to track. There can be times when there’s little information about an address hash, but this doesn’t mean that there’s a dead end. That’s because transaction and date filtering can be used instead.

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. Although this commonly happens immediately after crypto has been taken, it can sometimes take months or years for obfuscation to commence — when a criminal may think no one is looking. Analytics providers can offer transaction alerts to ensure that victims can be immediately notified when funds flow to or from an address.

These transaction alerts need to be acted upon as a matter of urgency, as work begins to follow the trail. 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.

An investigation in action

Crystal Blockchain has shared an example of how investigations work in practice. 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.

Immediately after the theft took place, Eterbase sprang to action by publicly announcing the address that was used by the Bitcoin thief. This enabled Crystal to immediately tag this wallet as a high-risk entity.

Quickly, it became possible to piece together information about this address — including statistics on further transactions and connections. It soon emerged that this suspicious wallet had connections to 16 other addresses.

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.

The company said it was able to look further than a one-hop distance — and include indirect connections in its results. From here, it was established that 80% of the total funds that were stolen had been sent to a mixing service.

Eterbase went live once again on Jan. 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.

Keeping track

Crystal Blockchain says crypto crime is growing in parallel with the crypto markets. 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. Its data suggests that $1.48 billion was taken across 28 incidents in 2020.

Users who visit this article can also use a spinning globe to find out the total volume of funds that have been stolen in countries around the world — with the hardest-hit nations colored in the darkest shade of red.

According to Crystal, the most common locations for exchange breaches include the U.S., the U.K., South Korea, Japan and China. The largest-ever crypto security breach remains the incident involving the Japanese exchange Coincheck in 2018, overtaking the Mt. Gox incident back in 2014.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.


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What’s an exchange’s next move after falling victim to a security breach? This is a step-by-step guide to following a crypto thief’s tracks through analytics software.

Bitcoin breaches $14,000 on election day, up 1,900% compared to 2016

Bitcoin breaches $14,000 on election day, up 1,900% compared to 2016

The price of Bitcoin rose more than 2% in two hours as poll workers in US states began to count ballots.

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The price of Bitcoin (BTC) rose by more than 2% in two hours to briefly top $14,000 as the polls were starting to close across many U.S. states on Nov. 3. At the time of writing it was just under the key mark.

Today is election day in the United States and many crypto leaders are predicting Bitcoin could be the big winner in a highly contentious race. At the time of publication, officials have counted more than 400,000 ballots.

Bitcoin has only been around for two U.S. presidential elections, but the price has risen significantly with each successive race. In November 2012, 1 BTC was valued at roughly $12, while in 2016 the price was more than $700. With the coin now reaching $14,309 at the time of publication, it represents a rise of 1,900% in four years, or roughly 140,000% in eight years.

This is the second time BTC has peaked above the $14,000 barrier in just one week, with influencer The Crypto Lark noting that the daily candle had just closed above $14,000 for the first time since January 2018.

Source: Lark Davis

Non political factors, including increasing institutional interest and PayPal’s decision to offer crypto services, may explain the price rise. Engagement on social media has also increased this month.

According to analytics platform The Tie’s weekly report, the volume of tweets mentioning Bitcoin rose by 15% in October to reach 835,000. The Tie reported BTC saw positive returns of 30% in October compared to 10% returns on Ether (ETH).

Source: The Tie

As ballots continue to be counted across the U.S., many are predicting volatility among cryptocurrencies and the stock market.


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The price of Bitcoin rose more than 2% in two hours as poll workers in US states began to count ballots.

Bitcoin Price Breaches $7,400 Mark as Most Top-20 Coins See Gains

Bitcoin Price Breaches $7,400 Mark as Most Top-20 Coins See Gains

Bitcoin approaches the $7,400 mark again as most of the top 20 cryptocurrencies report moderate gains

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Sunday, Dec. 22 — most of the top 20 cryptocurrencies are reporting moderate gains on the day by press time, as Bitcoin (BTC) is breached the $7,400 mark again. Tezos (XTZ) is the only cryptocurrency among the top-20 that is seeing losses.

Market visualization courtesy of Coin360

Market visualization courtesy of Coin360

Bitcoin price is currently up by 3.36% on the day, trading at around $7,422 at press time, according to Coin360. Looking at its weekly chart, the coin is up by about 4.1%.

Bitcoin 7-day price chart. Source: Coin360

Bitcoin 7-day price chart. Source: Coin360

As Cointelegraph reported earlier today, multiple analysts suggest that Bitcoin is headed for a big dip before the next bull market.

Ether (ETH) is holding onto its position as the largest altcoin by market cap, which currently stands at $14.4 billion. The second-largest altcoin, Ripple’s XRP, has a market cap of $8.5 billion at press time.

Coin360.com data shows that ETH has seen its value increase by about 3.48% over the last 24 hours. At press time, ETH is trading around $132. On the week, the coin has also lost about 7.04% of its value.

Ether 7-day price chart. Source: Coin360

Ether 7-day price chart. Source: Coin360

XRP is up by about 2.37% over the last 24 hours and is currently trading at around $0.195. On the week, the coin is down about 10.55%.

XRP 7-day price chart. Source: Coin360

XRP 7-day price chart. Source: Coin360

Among the top 20 cryptocurrencies, the only one reporting double-digit gains is Tron (TRX), which as of press time is up by 10.79%. Also Litecoin (LTC), is seeing better-than-average performance, with 5.45% of gains registered over the last 24 hours. Tezos, on the other hand, is the only cryptocurrency of the group that is seeing losses and has seen its value decreased by up to 1.67%.

At press time, the total market capitalization of all cryptocurrencies is $195.6 billion, about 0.62% higher than the value it reported a week ago.

Keep track of top crypto markets in real time here


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Bitcoin approaches the $7,400 mark again as most of the top 20 cryptocurrencies report moderate gains

Bitcoin Price Breaches $12,000 As Analysts Declare ‘Bear Trap’ Complete

Bitcoin Price Breaches $12,000 As Analysts Declare ‘Bear Trap’ Complete

Bitcoin’s fresh gains lead to suggestions downturn was bear trap

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Bitcoin (BTC) continued defying expectations to retake $12,000 on July 4 as analysts increasingly compare its performance to 2017’s parabolic rise. 

Market visualization courtesy of Coin360

Market visualization courtesy of Coin360

Data from Coin360 showed BTC/USD retracing slightly to $11,680 after hitting $12,025, continuing a rebound which began on Tuesday. 

Bitcoin’s behavior had surprised most earlier in the week, after a bearish move downwards to just $9,700 suddenly U-turned, mushrooming into fresh growth. 

Now, charts are looking increasingly like a repeat of bitcoin’s progress in the second half of 2017, regular trader Filb Filb says. 

Despite uploading what he described as a tongue-in-cheek chart, its prophecy – $14,000 – would nonetheless likely come true, he explained, noting bitcoin must first clear resistance around $12,100. 

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: Coin360

“Last couple days were a bear trap (in my opinion) and Bitcoin continues to look strong,” fellow trader and investor, Josh Rager, continued

“Lots of buyer interest at $10k and see a move up over $12ks this coming week[.] One step at a time, will look to new yearly highs after $12k/$13k reclaimed.”

Bitcoin’s 2019 high so far resides at just over $13,800. In future, prediction models suggest, a year-end price of $21,000 would be appropriate, eclipsing the 2017 all-time high of $20,000.

Bitcoin meanwhile also continues to climb in overall market dominance, currently accounting for just under 63% of the total cryptocurrency market cap — the highest since the 2017 price peak. 

The figure spells out ongoing pain for altcoin investors, with major tokens failing once again to match bitcoin’s growth performance. 

Against 6% gains for BTC/USD, ethereum (ETH) remained stagnant, so far only briefly reclaiming the $300 mark. 

Ether 7-day price chart

Ether 7-day price chart. Source: Coin360

Most others in the top twenty exhibited similar flat performance or modest moves up or down of up to 2.5%.

The exception was chainlink (LINK), which shed around 10% in the 24 hours to press time.


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Bitcoin’s fresh gains lead to suggestions downturn was bear trap