Why Is Crypto So Hard to Recover?
Though it is becoming as easy to use as a credit card, it is important to understand that, unlike credit cards, cryptocurrencies feature no built-in consumer protection. For example, if a consumer notices a strange charge on a credit card or bank statement, perhaps signaling fraud, they can simply dispute that charge to get their money back. Unfortunately, with cryptocurrencies, there are no chargebacks, and disputes do not automatically replenish funds in an account.This is largely because crypto assets are not covered or insured by government-sponsored programs created to protect consumers and investors. The Federal Deposit Insurance Corporation (FDIC) covers all deposit accounts, including checking and savings accounts, for the standard amount of $250,000, in the event your financial institution becomes insolvent. However, this does not extend to cryptocurrencies. If your brokerage firm fails, the Securities Investor Protection Corporation (SIPC) protects the securities and cash in your brokerage account up to $500,000. Again, this does not include cryptocurrency. While individuals have come to trust several crypto wallets and exchanges to carry out transactions securely, if your crypto assets are lost, hacked, or stolen, there is usually no way to recover your funds.
The Pros and Cons of Bearer Assets
It’s important to understand that cryptocurrency is a bearer asset: Whoever holds the private key is considered the owner. This can make it extremely hard to demonstrate proof of ownership should a private key be stolen or lost, and is one of the reasons why recovering crypto assets can be nearly impossible. Furthermore, this status is perhaps one of the biggest reasons why institutional players have been slow to accept cryptocurrency, as it is nearly impossible to provide meaningful protection against the loss of these assets.
What To Do if Your Crypto Assets Are Stolen or Lost
So what can you do if you lose hold of your crypto? Here are the few areas of recourse typical consumers can explore:
Contact the Exchange
If your assets were held with a larger, well-known exchange, that exchange is probably aware of it and has most likely begun the recovery process. You may not have been the only victim, so, likely, they have mostly started working to understand the issue to try to recover assets on behalf of their clients. However, it is important to know that they are not insured by the government, so not all of your assets may be restored.
Hire a Cryptohunter
As their name implies, crypto hunters are individuals or businesses that seek lost or stolen cryptocurrency on behalf of victims. They may also help with recovering forgotten passwords and lost private keys. Cryptohunters work with both cryptocurrency holders and law enforcement agencies to search for and recover misplaced inaccessible or stolen cryptocurrencies. They use specialized software to generate millions of potential passwords and tend to charge a flat fee.
Record of Title: Another Level of Protection
At myretrieval, we’ve set out to create the first off-chain title registry of record for digital wallets, to create an additional layer of protection for cryptocurrency assets. We are building a comprehensive platform to empower individuals and businesses with the option to create a record of title for their crypto.