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London Blockchain Conference 2024: Digital asset recovery is not a lost cause
The second day of the London Blockchain Conference 2024 brought together leading experts in the fields of blockchain and asset recovery to address the challenges, methodologies and opportunities for recovering lost or lost assets. stolen digital assetsincluding the most common scams to be aware of and what to do when you fall victim to one.
The ExCel center in London was the venue for this timely discussion, which took place, fittingly, in the context of the United Kingdom, where a new regulation allowing for the confiscation and recovery of digital assets recently became official: Economic Crime and Corporate Transparency Act 2023, Which has entered into force on April 26.
The fact that regulators are clearly aware of the problem and actively seeking solutions must have formed part of the impetus behind the London Blockchain Conference panel.
The lively discussion centered on the proposition that legitimacy and mass adoption of blockchain technology depends on the industry’s compliance with regulators, which includes recognition of property rights. In other words, companies must respect and assist the work of regulators in the area of digital asset recovery.
One such company is Token recovery, which operates within the BSV e blockchain ecosystem goals to “provide confidence in the tokenization of financial instruments and real assets and enable the enforcement of legal and regulatory compliance within the industry that can be trusted.”
The CEO of the company, Marcin Zarakowskiand head of investigations, Roman Biedamade up two-fifths of the panel and discussed their mission to “empower digital asset owners” with several other industry experts.
Zarakowski, who hosted the panel, began by asking the panelists to outline the issue at hand.
Scams, frauds and romance
In terms of how digital assets are commonly “lost,” the most popular reasons given by the panel seemed to be fishing, the hijacking problem, and “romance scams,” where scammers insinuate themselves into the victim’s personal life in hopes of convincing them to send digital assets or blackmail them later.
“It can happen to anyone,” he said Federico Paesanoformer investigator for the Italian Financial Police and now head of training and investigations at Crystal Intelligence, a company that provides blockchain intelligence and compliance solutions for financial institutions, governments and regulators.
He went on to outline the first obstacle to recovery, specifically “the lack of knowledge that exists in law enforcement. It’s a problem.”
Despite the lack of experience in many law enforcement agencies, Paesano suggested that victims should still seek out police and report losses “because even if you trace the funds, there’s nothing you can do without reporting the theft of the funds”.
The next step in the process, Paesano said, is to “seek assistance from blockchain analytics providers. One of the reasons law enforcement doesn’t work isn’t because it’s lazy; it’s because they don’t have the tools. Analytics providers can track funds and help law enforcement recover assets.”
Bieda agrees, suggesting that “the problem is that in most cases law enforcement is not well equipped technically… the main goal of law enforcement is to find the perpetrator, not recover the assets, so analytics companies can step in and help recover the assets while law enforcement deals with the offender.”
That’s, he said, where companies like Token Recovery come in.
The recovery process
Once contacted, companies like Token Recovery, Crystal Intelligence, and GlobalLedger.io can step in and provide expertise that law enforcement currently lacks, including asset tracking and subsequent freezing.
“If it’s on the stock market you can freeze the accounts and seize the assets,” Paesano explained. This is especially true for centralized ones stablecoins.
“In the case of centralized stablecoins, funds can be frozen. The difference is huge when it comes to recovery and what can be done,” Paesano said.
Bieda agrees, saying: “With proper action, we can request the freezing of stablecoins. There is a legal process that needs to be carried out, which involves a forensic report, but it can be done.”
Another speaker, Lex FisunEven , CEO of GlobalLedger.io, agreed that “stablecoins can be locked to any wallet,” but explained that in some cases recovery is made more complicated by other services.
“One of the biggest obstacles is mixing,” said Fisun, who advises victims and law enforcement when expertise is lacking.
Digital Asset Mixer they are platforms that obfuscate the origin of digital assets, ostensibly for privacy reasons, but more often than not for criminal money laundering.
Fisun pointed the finger at “privacy activists” in the digital assets industry who support the existence of such services, saying: “I would encourage the crypto community not to create obstacles for themselves.”
However, on a more optimistic note, he highlighted other paths to recover assets, including those on decentralized blockchains.
“Another thing is that miners act on the user’s side, not on the hackers’ side,” Fisun said. “It’s not common, but we saw it in the case of the DAO, where the miners who restored the hack of the DAO, were actively on the side of the victims.”
THE DAO (Decentralized Autonomous Organization) was a smart contract platform built on Ethereum, essentially a venture capital fund in the form of a smart contract. In 2016, a cyber attack led to the theft of approximately $50 million worth of ETH.
In response, the Ethereum community chose, rather controversially, to reverse the transactions associated with the hack, which led to the creation of two separate blockchains: Ethereum (ETH) and Ethereum Classic (ETC). Ethereum continued with the hard fork, reversing the hack and returning the stolen funds, while Ethereum Classic remained on the original blockchain.
So, as Fusan says, it’s possible. However, he also noted that “last year we had two billion cyberattacks on DeFi and the miners did not intervene.”
He went on to predict that laws and regulations may begin to require miners to take such measures, which they have been shown to be able to do but are reluctant to do out of goodwill alone.
Pending
Concluding the panel, Zarakowski asked the speakers to reflect on future measures and directions to take in asset recovery.
To whom Matthew DenyerChief Technology Officer of Asset Reality—a company that bills itself as “introducing the world’s first platform to seize, manage and liquidate assets”—suggested that the focus must remain on “taking the assets, not just the criminals, of that we need.” make committing these crimes less valuable.”
He also stated that “the way people interact with cryptocurrencies is different than how they interact with things like banks,” this applies to both consumers and law enforcement. This is a mindset that may need to change to advance digital asset recovery.
Providing something positive to walk away with to the packed auditorium, perhaps unsurprisingly, Paesano suggested that the recovery of digital assets the situation is slowly changing for the better:
“The entire ecosystem is working towards this goal. Awareness among users and law enforcement is increasing. The apps are getting better, and from a regulatory perspective there are frameworks and international cooperation… the percentage of illicit activity on the blockchain is decreasing, we are getting better.”
The message is: don’t give up hope, but stay vigilant. And in case of emergency, call the professionals.
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