We all make mistakes, but in cryptocurrency there are no safety nets
It’s never funny when someone is scammed or robbed of their cryptocurrency. It’s especially bad when the victim is at the mercy of attackers and seemingly can’t do anything to get their money back.
That’s the situation tech journalist Monty Munford has been left in after losing over $30,000 (£25,000) worth of cryptocurrency. The writer and journalist shared his account with the BBC as a warning to Bitcoin beginners who might be thinking about making their first step in to, as Munford put it, “the murky world of cryptocurrency investment.”
How Munford lost his cryptocurrency is painfully simple and it boils down to breaking the first law of holding cryptographically secured digital assets. He did not take adequate precautions to secure his private key.
Munford decided to use myetherwallet.com to store his cryptocurrency, in this case Ethereum. While he did make a physical copy of his private key, he also stored it in his Gmail drafts so it was always to hand.
This was strike one, and sadly, it was the only strike he’d be granted. After letting his Ethereum investment mature to around £25,000 he logged on to check his wallet only to find it was empty.
It’s not immediately clear how crooks made off with Munford’s cryptocurrency. But given that he stored his private key on a cloud service from his computer, it’s possible this was illicitly obtained and used to drain his funds.
Despite contacting the authorities, enlisting the help of numerous friends, and working with specialist cryptocurrency bounty-hunters CipherBlade, his funds are still nowhere to be found.
As Munford points out, there are no organizations like the UK‘s Financial Services Compensation Scheme which guarantees £85,000 held in UK bank accounts.
When it comes to cryptocurrency there are no safety nets. You, the investor, the holder, the individual, are solely responsible for the safe-keeping of your coins. Your private key and seed phrase are incredibly important, no key means no coins.
Of course, it can be a pain having to write out a private key, but when there’re large amounts of money at stake, always take the necessary precautions.
Sadly this isn’t the first time something like this has happened. A crypto YouTuber lost $2 million during a livestream after “securing” his private keys in Evernote.