The crypto environment is not immune to threats, and once these hackings and thievings occur, there is truly not much wallet owners can do–except call people like Richard Sanders.
Specializing in blockchain forensics, Sanders uses unconventional techniques to uncover some of the biggest hacking cases in the crypto space. At one point, he joined the Discord server of a group of teen hackers to learn how they carried out the scheme that emptied out Ian Balina’s $2 million crypto wallet. Sanders is the genius behind CipherBlade, referred to by many as the 911 equivalent to crypto emergencies. With US consumers losing over $1 billion in cryptocurrencies to fraud between January 2021 and March 2022, it is apparent that Sanders is an indispensable and integral part of the industry.
Sanders is an Army veteran, and he formerly worked in psychological operations for the Army, where he learned to develop innovative solutions to unconventional problems. Although it was unclear how he ended up in blockchain forensics, it is noted that he built CipherBlade in 2017 after helping some friends who had been scammed or hacked in the crypto world. The company provides investigative services globally and has been working with the US government on several cases.
“There was no playbook for these types of investigations. We have made the playbook,” said Sanders. “Bottom line is this: We are not a rogue agency. We operate within the limits of the law.”
After years of navigating the dark web and analyzing the crypto exchange ecosystem, Sanders realized he could help the government develop an efficient system to make arrests.
“We basically hand these cases to law enforcement on a silver platter,” said Sanders. “We say, ‘We have done everything for this individual shy of doing things that we don’t have the legal power to do.”
While government officials have been relatively slow in the past, they are quickly redeeming themselves by getting better at investigating crypto cases. The narrative on the anonymity of crypto transactions was also debunked after online money laundering couple Heather Morgan and Ilya Lichtenstein showed the world how traceable digital transactions are, especially for experts like Sanders, who emphasized that the loophole comes when people start converting crypto to cash, usually done on major exchanges requiring people to verify their identities.
Tal Lifshitz, a lawyer focusing on crypto and digital assets, said, “As much as law enforcement is going to increase the amount of resources that it’s going to devote to this issue, it’s never going to catch up. There’s always going to be a space for private investigators, private lawsuits, and litigation to fill in the gaps for the cases that the government is just not going to pursue.”
On top of solving the crime of people scammed clean of their virtual wallets, Sanders partnered with the nonprofit Anti-Human Trafficking Intelligence Initiative. The seamless record keeping on blockchains also brought light to buyers and traffickers online, with people often leaving paper trails.
Even as a crypto skeptic and believer himself, having seen too many people over the years use the power of technology for the wrong reasons makes him wary. “I’m so frustrated because the technology behind this, the underlying technology, is fascinating, amazing. And I am a true believer in blockchain tech. If you look at the industry right now, the majority of the volume and participants are speculative investments. And that’s not a good look.”
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