In modern times, more people are embracing web3 and decentralization, buying, and investing in digital assets. However, like other tangible assets, digital assets are at the risk of bad people who try to take ownership of other people’s property, and this is a growing problem with cybercriminals honing in on the digital currency market.
Crypto theft is a modern nightmare for any digital asset owner. Imagine coming home to find your front door unlocked and ajar. Anyone whose crypto wallet has been hacked before can relate to the gripping sense of loss, frustration, and helplessness. However, knowing the immediate steps to take can save your remaining assets and reduce the likelihood of further compromise. Here are five steps you must take upon discovering that your crypto wallet has been compromised.
Carry Out an Account Takeover (ATO) Investigation
When you realize your wallet has been hacked, it’s essential to first identify the attacker’s entry point: whether it was due to downloading malicious software, weak password, phishing, unsecured passkey or recovery phrase, or other exploits in the crypto platform. This process, often called an account takeover investigation, involves carefully combing through your recent account activity, device logins, and transaction history to understand when and where the hack occurred.
Carrying out an ATO investigation while dealing with the emotional stress of having your crypto wallet hacked can be a bit much. You can seek legal guidance to help you conduct a thorough ATO fraud investigation and recover lost assets, determine the extent of damage caused, and create a better understanding of how to protect your other digital assets in the future.
Freeze or Transfer Your Remaining Assets
After assessing the situation, take immediate steps to prevent further losses by freezing or transferring any remaining assets. If your exchange platform provides a means to temporarily “freeze” your account, do so immediately.
If the freezing option isn’t available, you might consider moving your assets to a new wallet. However, take caution and avoid using any devices that may have been compromised to set up this new wallet to prevent the hackers from accessing your new wallet. Also, be wary of transferring out any tokens left behind by the attacker, as they might compromise your new wallet.
Report the Incident to Authorities and Relevant Institutions
Check if the crypto exchange platform you’re using has a fraud reporting process. Platforms like Coinbase, Binance, and others have dedicated teams that can help flag suspicious transactions. In some cases, they may work to freeze stolen funds or assist in tracking down perpetrators.
Informing authorities about your stolen crypto might not help you to recover it. Still, it is an excellent step to take, as the information you provide can help law enforcement improve cybersecurity within the cryptocurrency ecosystem and combat cybercrimes.
And, if you’re dealing with a significant amount of lost assets, consider reaching out to legal or financial recovery services. Some firms specialize in digital asset recovery and can help you when dealing with complex cases, especially if international entities are involved.
Monitor Your Accounts and Stay Vigilant
It is important to stay vigilant in the days and weeks following a crypto hack. Regularly monitor all accounts connected to your crypto wallet. Turn on notification services for new logins or transaction attempts to help you spot unauthorized actions early. Regularly check in on your bank, email, and any social media profiles.
Set up a formidable line of defense by ensuring you stay updated about account security and crypto wallets’ best practices for security. Keep your passwords and seed phrases safe, and where possible, use hardware wallets for storing large amounts of cryptocurrency. Routinely update your software to maintain a secure environment. And if you’re unfamiliar with ways to increase account security and monitor for breaches, follow informative and educative media to help you navigate the digital world. Staying updated on cyber threats can empower you to make informed decisions about your crypto assets.
Change All Related Passwords and Increase Security Measures
After freezing or safely transferring your assets, an essential step to prevent hackers from re-entering your account is to change the password of your new wallet and all other related accounts like your email and authentication apps. When creating new passwords, go for strong password combinations and don’t use personal information or repetitive sequences. If managing several complex passwords feels daunting, use a password manager to help keep your credentials organized and secure.
Adding two-factor authentication (2FA) is another essential security step. Most platforms offer various forms of 2FA, such as SMS-based codes and app-based authentication, like Google Authenticator. Choose the app-based methods if possible, as they are generally more secure than SMS, which can be susceptible to SIM-swapping attacks.