If someone hacks your bank account, steals your wallet, or uses your payment card without your permission, notifying the police is usually standard procedure. But if someone steals your cryptocurrency, will the police be able to help? Can the authorities recover your stolen funds, or is it a lost cause?

Can the Police Find Stolen Crypto?

It’s no secret that the police can find stolen crypto assets. In fact, there have been many cases where the authorities have recovered stolen cryptocurrency.

In November 2022, the FBI seized over 50,000 Bitcoin, which amounted to an incredible $3.36 billion. The Bitcoin had been stolen years earlier by James Zhong from the infamous Silk Road marketplace. It took over a decade for the stolen funds to be identified and recovered by authorities, but this was a successful investigation.

The year prior, in 2021, $2.3 million in crypto was recovered, which was previously paid as a ransom in the Colonial Pipeline ransomware attack. The recovered crypto was around 85% of the total paid ransom, a big win for the US Department of Justice.

As you can see, these cases of crypto recovery often involve millions or billions of dollars in crypto. So, what about the average person who loses a few hundred or thousand dollars in a crypto scam or attack?

Why Isn’t All Stolen Crypto Found?

Image Credit: Bybit/Flickr

While the police recover stolen crypto in certain scenarios, this certainly isn’t the case across the board.

Cryptocurrency and traditional money work in very different ways. While traditional money comes in paper form, which is then represented digitally in online payments, cryptocurrency is and always has been completely virtual.

Cryptocurrency is more anonymous than traditional money. On the blockchain, transactions aren’t recorded with the names of the individuals involved. Rather, the wallet addresses are displayed. Without the ability to immediately uncover a trader’s identity, police have to go through an additional process to link the wallet address to a name.

If police are successful, they stand a chance of tracking down the individual, which can result in the recovery of stolen funds.

But many police departments still aren’t well-versed in cryptocurrency crimes or don’t have the personnel to tackle them. While crypto has been around since 2009, it didn’t reach the heights of its popularity until 2021. From here, the number of crypto-related scams skyrocketed, with law enforcement scrambling to understand this kind of virtual asset so that crimes could be correctly investigated and solved.

The police’s lack of crypto fluency is highlighted in a story reported by Wired in 2022.

In this story, an individual named Chris Golas could not get the police to help with their lost cryptocurrency. Golas ran into trouble when trying to swap deposited funds on a platform named Digifox in April 2022. Soon after noticing this issue, Golas was notified by Digifox that the platform would be shutting down, but still could not withdraw his deposited funds.

Golas was eventually blown off by Digifox’s customer service team, despite initially getting a response. When Golas reported this incident to the police, he was told by an officer that, while they had heard of typical financial scams, crypto scams were like a “foreign language.” Even after explaining the incident in great detail, Golas never received any follow-up.

This story shows how challenging it can be to get any support when you experience crypto theft.

This isn’t to say that smaller crypto theft cases don’t get picked up at all. In July 2023, an Iowa resident lost $6,600 in a Bitcoin ATM scam, and police have launched an investigation into the incident.

Many other people have also been aided by the police in crypto crimes. What’s important to note here is that many police departments are not highly skilled in tackling crypto crimes and may not have the time or money to investigate these new types of scams.

The Challenge of Privacy Coins

While Bitcoin, Ethereum, and many other cryptocurrencies are pseudonymous and traceable, privacy coins go against the grain.

A privacy coin focuses on user privacy, security, and, above all, anonymity. They can still be traded like cryptocurrencies, but privacy coins have additional features to keep you safe.

Take Monero (XMR), which uses stealth addresses and ring signatures to mask crypto wallet addresses and ward off tracking. ZCash, Dash, Verge, and Decred are other examples of privacy coins offering higher privacy levels than typical cryptocurrencies.

While many love the added privacy of privacy coins, they pose a problem to law enforcement. Many cybercriminals now use privacy coins to launder money because they’re so tough to track. With crypto addresses being concealed, police have a tough time starting the tracking process, let alone finding and recovering stolen funds.

Should You Report Stolen Crypto to the Police?

If you’ve fallen victim to crypto theft, it’s wise to report the incident to the police. It at least gives you some chance of having your case picked up and investigated.

But there’s no guarantee that your report will be taken seriously here. Moreover, the recovery of your stolen crypto is not set in stone, even if the police do conduct an investigation. If you’re dealing with a small or under-resourced police department, your chances are probably even lower.

Because of this, you shouldn’t rely on the police to find your stolen cryptocurrency. There are other ways you can track down your crypto, including:

  • Contacting your crypto exchange.
  • Contacting your wallet provider.
  • Consulting a crypto hunting service.

Even if you pursue every avenue available, there’s still no knowing if you’ll get your hands back on your stolen funds. Thousands of people have fallen victim to crypto scams, with many of them never seeing their assets again.

Your Stolen Crypto May Be a Lost Cause

It’s tough to acknowledge, but many crypto theft cases go forever unsolved, be it due to negligence, lack of resources, or the complex nature of the crime itself. This is why it’s important to vet the crypto platforms you want to use and opt for the most secure wallets you can find.

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