Losing a large amount of money to a hacker is a bad enough experience on its own. Imagine if a court seriously entertained an exchange’s request not to return the looted funds to the individual.
After a senior citizen in Saskatchewan fell victim to an insidious scam involving cryptocurrency and the hacking of a personal bank account, such a scenario unfolded, adding insult to injury.
Saskatchewan Crypto Trader Loses Fortune in Scam
According to a CBC News report, the unnamed victim of the scam resides in the small town of Cabri, Saskatchewan. He opened an account with online crypto exchange HoneyBadger Enterprises. Thereby granting the exchange access to his bank account for the purchase of crypto that he could trade.
A hacker got inside the victim’s personal email account. Then, the bad actor set in motion the buying of more crypto on HoneyBadger. The bad actor then absconded with the newly purchased crypto.
Upon learning of the unauthorized activity, the victim promptly reached out to his bank, the report continues. Innovation Federal Credit Union was able to recover $240,000 from HoneyBadger.
That may sound like an at least partially happy outcome, but the story is not over. HoneyBadger filed a request to the Saskatchewan Court of King’s Bench to place a hold on the funds. And not return them. The victim must have found it infuriating when the court granted HoneyBadger’s wish. The exchange has since obtained two extensions on its request.
As HoneyBadger sees it, the exchange should not suffer any loss for trading activity. Regardless of whether it flowed from legitimate actions or not. The victim just wants the stolen money back.
Learn more about the prevalence of crypto fraud in Canada and the efforts to combat it.
The prevalance of crypto-related hacking, of the kind that befell a Saskatchewan citizen, makes technological safeguards of personal data all the more urgent. Source: Chainalysis
Findinga Technology-Based Solution
People tend to get quite upset over even low-level misappropriations and misuse of their funds. Losing hundreds of thousands of dollars, and then hearing that your bank recovered the stolen money but will not return it to you because of a complex legal process and questions of who bears ultimate responsibility, is not an easy prospect to contemplate.
Fabio Galdi, CEO and co-founder of Vyvo Smart Chain, a blockchain infrastructure network, shared his thoughts on data security with BeInCrypto.
In Galdi’s view, breaches and the compromising of personal data, as occurred in the Saskatchewan hack, are sure to continue until firms and financial institutions adopt better technological safeguards.
Legislative proposals in Japan, Singapore, and elsewhere that aim to protect user privacy are well and good. But they are unlikely to accomplish their goal without technological advances, Galdi told BeInCrypto.
“There are so many famous cases where the problem is not the legislation, but the centralized systems fraught with bad actors. Inevitably, the access and malevolent usage of personal information are always possible, evidenced by the Facebook Cambridge Analytica scandal,” he said.
The Case for DeFi
Such ongoing and widespread problems may constitute the most persuasive argument for decentralized finance (DeFi), in Galdi’s view.
“The solution is to have a technology that prevents bad actors from interfering in many different ways. And this technology exists. Decentralized, trustless, permissionless systems that, by design, are not controlled and violable by single persons or entities,” he added.
Bank accounts may be highly vulnerable to hacking. But keeping data on an InterPlanetary File System (IPFS) network is a potential solution. It can ensure that the data are always detached from a user’s profile, Galdi said. There is no sharing of information with bad actors.
The encryption of data is a further safeguard. Without control over the entire blockchain network and its validation nodes, there would be no way to alter or violate the data, said Galdi.