Funds lost to bitcoin fraud are nearly impossible to recover because of the decentralized, untraceable nature of cryptocurrency exchange.
Cryptocurrency scams are very common, and users should be aware that fraudsters will pose as trustworthy investors, charities and other useful resources online to trick people into giving away their crypto funds.
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The more-than $110,000 that hackers collected on Wednesday after posing as prominent politicians and tech company CEOs, for example, will be “next-to-impossible to recover,” Muneeb Ali, founder of decentralized computing platform Blockstack, told FOX Business.
“While the movement of bitcoin funds can be traced on the public ledger, it will be next to impossible to recover the funds,” Ali said. “The bitcoin blockchain is permissionless, meaning that money can be sent to anyone in a way that cannot be clawed back. It’s the digital version of physically reaching into your pocket, taking out cash, and handing it to another person.”
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He added, however, that hackers have limited options when it comes to cashing out because exchanges that trade crypto for currencies like dollars or euros are monitoring the situation and will likely freeze the funds if they are moved to the top exchanges.
Additionally, victims of bitcoin fraud can hire support from companies or law firms that help people retrieve crypto funds lost to scams, but the sum should be worth the funds needed to hire such experts.
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Ali said Wednesday’s hacking incident highlights how ‘centralized websites and apps are incredibly risky.”
“A low-level bitcoin scam is nothing compared to the damage that could have been done by leaking private messages or even tweeting out information to manipulate the stock market or an election etc. This issue highlights a dire need to start transitioning towards a more decentralized version of the web,” he said.
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