Since Bitcoin (BTC) started gaining popularity in recent years, governmental departments around the world have been keeping a close eye on cryptocurrency. Originally, the danger associated with Bitcoin was often described as “speculative risk.” The lack of regulation and reliable information in the crypto market, coupled with the rapid increase in the value of cryptocurrencies and the desire to make money, have made way for bad actors to enter the space. In fact, cryptocurrency fraud is now a mainstream issue on a global scale.
According to a Customer Protection Data Spotlight published by Federal Trade Commission (FTC), cryptocurrency investment scam reports have increased quickly with nearly 7,000 people reporting losses of more than $80 million from these scams since October 2020, which is about 12 times the number of reports compared to the same period a year earlier. Reports to the FTC Consumer Sentinel Network also suggest scammers are “cashing in on the buzz around cryptocurrency by luring people into bogus investment opportunities in record numbers.
The importance of crypto risk control measures
Maintaining the security and safety of users’ assets is the main priority of the Huobi risk management team. As such, if a user is a victim of fraud, theft or other criminal activities, the Huobi team works diligently with the user to implement the appropriate risk control measures.
The following case study is based on a real-life incident that occurred on Huobi’s platform. Please note that it is a single example and risk control measures vary based on the individual case at hand. The name of the victim has been replaced to protect their privacy.
In March 2020, Bob, a Huobi user, logged on to a website for a PC wallet through a Google search and imported his keystore. However, he did not know that the website was fake and actually a phishing scam.
The system prompted an error when he entered the password for the first time, so he entered it again and was finally able to open the wallet’s web page.
The next day, when Bob logged into the wallet’s official website, he found that all his assets were stolen. When he checked the transfer records, Bob realized that the assets in his wallet were transferred within 10 minutes of him entering the wrong password the day before.
Because the amount stolen was significant, Huobi was notified immediately. The Huobi team then analyzed the addresses linked to the stolen assets, tracked the latest inflow addresses of the assets, and added the relevant address information to the business security chain tracking system and monitoring system to automatically track the assets on the chain.
Four days later, the Huobi system detected the inflow of the suspected stolen assets and the platform automatically imposed withdrawal restrictions on the user who deposited the assets, thereby the user could not withdraw funds through the Huobi channel.
Since Bob reported the incident to the authorities, the police contacted Huobi after learning that the company had restricted the accounts linked to the stolen assets. Huobi cooperated with the authorities to provide them with the information they needed. In the end, Bob’s stolen assets were recovered.
“As a major participant in the global cryptocurrency trading market, Huobi will continue to optimize and upgrade its risk control system to ensure that it has strong anti-fraud capabilities. This will enable us to continue combating cryptocurrency crime and creating a sound market development environment,” commented Mei.
Source: Huobi press release, published on Cointelegraph.com, August 16th 2021 – https://cointelegraph.com/press-releases/how-huobi-fights-against-cryptocurrency-risk
