Do investors become targets for hackers when they invest in crypto?

The topic of hacking is fascinating for many people. A few clicks and the right input in the command line and the hacker has gained access to the computer system. At least this is the image of the hacker that is propagated by movies. However, what contributes to the plot of a film and maintains the suspense has little to do with reality.

For investors who have invested in cryptocurrencies, the question arises whether they can become targets for hackers and how likely an attack is. In this post, I would like to straighten out the image of hackers a bit and show you where the risks lie and how they can be reduced.

White and Black Hats

Not all hackers are criminals. Most people who identify themselves as hackers follow a strict ethos. They do try to expose security vulnerabilities by breaking into hardware and software, but this is never done to cause harm.

In the media coverage of various incidents affecting IT security, however, a distinction is rarely made. This has led to people with little contact with professional IT equating hacking with something bad.

In practice, a distinction is made between so-called White Hats and Black Hats. The former abide by the law and harm no one, while the latter exploit their knowledge. This usually happens to the detriment of society and falls under the phenomenon of cybercrime.

How does one become a target of hackers?

Most people will never be a direct target of hackers. The reason for this is relatively basic. Attacking a single person digitally is cumbersome and usually not profitable. Only in very few cases is a private individual a worthwhile target, for instance, if they are prominent or it becomes known that they have an extremely high wealth.

Therefore, 99.9 percent of the population are automatically out, but not automatically safe. Because even here, hackers have discovered a method that makes "small fish" worthwhile prey. Phishing is suitable for attacking targets en masse and this is usually even automated. Whether through the sending of millions of emails or the injection of fake apps into the corresponding stores, they can reach the little man.

Admittedly, phishing attacks are not particularly sophisticated or technically complex when compared to attacks on critical infrastructure. These have increased in recent years, which is also due to the fact that many countries have simply slept through digitization.

What is the risk of holding cryptocurrencies?

Cryptocurrencies are attractive to hackers not only because they can steal cryptos through phishing. Exchanges and brokers are also regularly targeted by hacking attacks. They sit on gigantic fortunes and are therefore highly attractive. If a hacker manages to compromise the hot wallets of an exchange, then that is practically a jackpot for the criminals.

DeFi protocols are even more attractive. In recent years, several billion US dollars have been lost. Because the protocols are ultimately smart contracts that interlock complexly, one can exploit vulnerabilities in this system. Through such exploits, one can then literally empty the cryptocurrencies parked in a DeFi application. The damage is then borne by thousands of investors who have invested their savings in the DeFi protocols.

Other methods include so-called Rug Pulls, which represent a mix of investment fraud and hacking. Another advantage for the hackers is that they can directly change the ownership of the cryptocurrencies. They can cash out immediately and are not immediately stopped. After all, all transactions are final and irreversible.

How can one protect oneself from hackers?

As has been shown, one does not have to have immediate fear of hackers. Instead, it's about safe handling of technology. Because those who understand what they are operating and how to operate it do not fall for certain scams in the first place.

In addition, solid basic knowledge protects against the most common cause of loss, namely the loss of cryptocurrencies. Because often investors lose their seed or the wallet file and are thereby at a loss. To learn safe handling, self-study of various guides that are freely available on the internet is recommended. Especially the manufacturers of hardware wallets have built up a real library in recent years that is not only applicable to their products.

Although the use of a hardware wallet is recommended when storing larger sums, it is not necessary. The reference software of the respective cryptocurrency generally offers everything needed for operation.

I have become a victim of a hack – what steps can I take, and who can I turn to?

We frequently receive this inquiry at Crypto-Tracing. The first step is to act prudently and collect all available information and evidence. This includes communication histories and email correspondences with the fraudsters. If there have been phone calls with the fraudsters, it is advisable to create a written record from memory of these conversations. Particularly in the case of fraud at Bitcoin ATMs, the receipts are of central importance. They contain a QR code as well as all the transaction details and must therefore be kept secure. Any information that can be gathered in connection with the crime can serve as evidence and document the events. Therefore, if there are relevant aspects not mentioned here but could still be important, it is advisable to also include these in the documentation.

Our team at Crypto-Tracing specializes in the investigation of fraud cases and follows the digital trails in the blockchain. With the methods of blockchain forensics, we are able to trace where the fraudsters have transferred the bitcoins. Ideally, it is even possible to determine the location of the perpetrators, which is invaluable for criminal prosecution. In addition, we maintain a close cooperation with the lawyer Dr. Maisch, an expert in the field of IT law. Dr. Maisch is proficient in cases of cybercrime and investment fraud and works closely with Crypto-Tracing to effectively represent the interests of his clients. Supported by legal expertise, a detailed criminal complaint can be created that is specifically reinforced by the documentation from Crypto-Tracing. Furthermore, Dr. Maisch is available to assist at all stages of the investigation and any potential legal disputes.

Our team at Crypto-Tracing specializes in the investigation of fraud cases and follows the digital trails in the blockchain. With the methods of blockchain forensics, we are able to trace where the fraudsters have transferred the bitcoins. Ideally, it is even possible to determine the location of the perpetrators, which is invaluable for criminal prosecution. In addition, we maintain a close cooperation with the lawyer Dr. Maisch, an expert in the field of IT law. Dr. Maisch is proficient in cases of cybercrime and investment fraud and works closely with Crypto-Tracing to effectively represent the interests of his clients. Supported by legal expertise, a detailed criminal complaint can be created that is specifically reinforced by the documentation from Crypto-Tracing. Furthermore, Dr. Maisch is available to assist at all stages of the investigation and any potential legal disputes.

Please do not hesitate to contact us via our online form. We will get in touch with you promptly to discuss in an initial conversation which specific steps are recommended in your case. Keep in mind that the chances of success are significantly dependent on the speed of your responses after the fraud incident.