After years of vacillation over whether to invest in cryptoassets, BBC business technology journalist Monty Munford decided in mid-2017 to take the plunge, only to have it all stolen by hackers several months later.
Munford explains that the decision to invest in the “murky world” of cryptocurrency didn’t come easy.
After a decade as a tech journalist, I liked to describe myself as a “lunchtime-adopter”, somebody who acted faster than many, but would never be as smart as the early adopters.
He was very nervous about putting his money in – pulling out three times before completing his first transaction – but eventually in mid-2017 he took the plunge, and stored his assets – mainly bitcoin and ether – in an encrypted wallet from MyEtherWallet.
Key to the Problem
As any other Ethereum user he was given two keys – one private and one public. He was told to write down his private key and store it securely with other financial documents – never reveal it to anyone, and don’t lose it. He made the fateful decision, however, to store the number in his Gmail drafts for ease of copying and pasting when needed.
When the price of Ethereum rocketed, I was soon sitting on a decent pile of money. Then that decent pile of money disappeared.
Money on the Move
The thieves made away with £25,000 ($30,300), moving it to another private key address and there was nothing he could do about it and no-one to complain to. No safety net such as the Financial Services Compensation Scheme that protects UK bank account balances up to £85,000 ($103,000).
Munford now realizes he should never have stored his password anywhere on his computer, as certain types of malware can easily sniff out a private key password even if you chop it up into separate blocks and store it in different places. After consulting with experts in his network of contacts, Munford discovered his ether money had been taken to the Binance exchange – then, according to Binance, moved again within 60 minutes.
His story highlights how dangerous it can be to invest in the cryptocurrency space without properly securing your funds. The BBC reporter’s story is that of many cryptocurrency investors who choose convenience over security.
Trying to get information from Binance was a nightmare, he wrote, as he kept receiving automated messages that promised a response within 72 hours.
The exchange wouldn’t divulge more until contacted by law enforcement, so eventually he contacted specialist U.S. bounty hunters CipherBlade who work with the FBI to track down cyber thieves. While they discovered Munford’s money had been deposited in a “consolidation wallet”, it had then been divided into tranches and sent to four different deposit addresses on Binance.
While things are now moving forward in the hands of Sussex Police’s cybercrime unit, which has received “useful information” from Binance, Munford’s money is still missing. He concludes:
It’s bad enough realising that somebody’s nicked £25,000 of your hard-earned cash. It’s even worse when you realise there’s little chance of getting it back.