[Case Sharing] What is the Logic Behind Asset Recovery in the Crypto Space?
Today, I want to talk about the track of digital asset recovery in the crypto space. Asset recovery does not include scams, theft, exit scams, or being trapped.
If you were scammed, it means the assets are in someone else's wallet or under their control. If stolen, it’s honestly very difficult, and many people use this as a pretext for scam-related fees. The same logic applies to exit scams. If you are trapped, it’s your own loss; you might as well apply for a minor refund.
There are two types of recoverable assets: technical and resource-based.
The technical category includes the following:
- Wallet cracking. This method can be attempted on any form of hardware or software wallet. Here are a few scenarios:
Mnemonic phrases are damaged, passwords are forgotten, device malfunctions, etc. It’s worth mentioning device reading, with a few common scenarios: the computer is broken, and the original wallet file is on the hard drive, which was quite common before 2017. The device has the mnemonic phrase or private key, but the device is broken, for example, the mnemonic phrase is stored on a phone that can’t be opened, or wallet information is deleted or lost.
In these cases, recovery is possible!
On-chain issues. The most common is transferring to the wrong chain, especially now that many public chains are emerging. This is quite simple; just restore the private key.
This year, there have been many on-chain freezes, including Tether's on-chain freeze, cross-chain bridge freezes, etc. In such cases, it depends on the specific situation; it’s not that it can’t be done, but the success rate is low and the duration is long, requiring sufficient patience from the parties involved.
Although this is an on-chain freeze, the resources needed are not something that can be solved by technology, leading us to the second category: resource-based. A very important aspect of resource-based recovery is unfreezing.
In addition to on-chain freezes, there are also exchange freezes, risk control triggers leading to account anomalies, and bank card freezes, all of which require corresponding resources to resolve. Resources refer to exchanges and lawyers.
Why is your exchange frozen?
It’s actually quite simple; you withdrew USDT from an online gambling platform, deposited it into a wallet, and then into the exchange. Big data companies have long monitored the platform's addresses. As long as the USDT from that address is sent to the exchange, a lawyer can directly send a letter to the exchange for freezing.
I have handled two cases of exchange freezes, which essentially means you have too much money, and your USDT is dirty, making you a target.
Another type of resource-based recovery is the recovery of old Huobi assets, which is purely resource-based.
Currently, there are not many people who can do this, and the old Huobi channel is likely to be shut down in the future. Most likely, it involves people who had assets on the old Huobi exchange before 2020, and after serving a 3-5 year sentence, they might think they can get rich overnight.
Of course, many people come in as intermediaries, so this business must be discussed with the parties involved, and they must provide their wallet addresses, etc. All business conducted will have a commission.
Lastly, I want to emphasize that regardless of the business or method used for recovery, it must be done within a legal and compliant framework.
To share a few cases for convenience, I will write in the first person:
Bitcoin Recovery:
Several years ago, the party involved transferred over a dozen bitcoins to OKCoin. They requested recovery several times but were unsuccessful and asked me if this case was operable.
After studying the case details, I found that the logic behind it was not complex. During the process of transferring bitcoins, the party sent the bitcoins back to the original route, but the coins did not return to the other party; instead, they ended up in OKCoin's hot wallet.
This is set by the exchange's mechanism; the address you see receiving your coins is actually the exchange's hot wallet address, not the other party's wallet address.
Everyone should know this rule by now, so they repeatedly check their receiving addresses, but many years ago, it was common for people to make mistakes, including myself…
For the exchange, this asset is considered a dormant asset. In theory, as long as a complete evidence chain is provided, it can be recovered, so we took on this business.
Because this case is classic and one of the few highly representative cases in the crypto space.
After signing the contract, a convoluted story began.
Since the party involved transferred to an OKCoin account, we needed to communicate with the original platform. So, with the guidance and support of OKX, we began formal communication with OKCoin.
After receiving a formal email from OKCoin, we started organizing the relevant materials according to their requirements. Since I had previously reviewed the party's materials, and they had preserved their wallet, emails, and even hardware quite well, we could provide the required proof materials relatively completely.
After organizing the logical explanation, I sent the email to OKCoin, initially thinking it would proceed smoothly, but unexpectedly, we hit a major snag—no hash.
Here, I need to add a situation explanation. Nine years ago, when the party transferred to OKCoin, they used the Coinbase exchange, which is quite strange. When retrieving the transfer records from that year, we could see the amount and time, but there was no hash value.
Therefore, OKCoin required us to provide the hash and record it completely.
We had to further supplement the materials as required, and when we received a reply at night, it was another setback: the video was not qualified.
Here, I need to explain the situation again. Although Coinbase was used back then, it stopped servicing that region last year, so the Coinbase exchange account is currently inaccessible.
It seemed like the situation was stuck here, halted by a hash value.
Later, the party thought of contacting Coinbase's Twitter support, and this move actually worked.
After providing verification information on Twitter, Coinbase indeed retrieved the hash value from that year, which gave us great hope.
But it still didn’t work; OKCoin said the hash was incorrect and did not enter our platform at all.
At this point, we reached a critical step: OKCoin asked us which account to process the recovery to.
Upon receiving this message, both the party and I were very happy, thinking we would soon get the coins back, but unexpectedly, this step also got stuck for a long time.
Remember at the beginning of the article when I mentioned that they had requested recovery several times without success?
Because this transaction occurred in 2015, when Bitcoin was not worth much, they requested recovery after the incident, but due to insufficient evidence, they did not get it back.
Subsequently, they requested recovery again in 2018 and 2020, even going offline, where OKCoin had dedicated personnel to assist, but still did not recover the funds.
Now, the person who assisted back then has left the company, and Bitcoin has become increasingly valuable, eventually making its way to my team.
Regarding why they were unable to recover it all this time, I first asked the party involved. They said they felt OKCoin thought the coins were now valuable and were unwilling to return them.
I said that’s unlikely; not long ago, OKCoin dealt with much larger issues and compensated accordingly, so they wouldn’t be trying to dodge this amount.
So, I asked a friend at OKCoin, and their response was that all the evidence provided back then was in the form of images, which could not prove the authenticity and validity of the evidence.
The authenticity of the images is debatable, and there were also some key pieces of evidence missing, such as the hash value that had just stalled us.
This is also one reason why my team dared to take on this nine-year-long difficult case.
Returning to the follow-up of this event, wasn’t it time to process to which account? Another issue arose.
OKCoin required authorization from the email that had been contacted back then, meaning that if all these emails were designated to process to your account, it would be considered valid.
If any of the emails had objections, it would be deemed invalid.
So, the party quickly contacted the other party involved in the transaction, which was quite fortunate. The other party was a woman in her fifties, who had maintained contact all these years, and the party had previously entrusted her to handle these matters since she was the other party involved and also a user of OKCoin.
In her reply to OKCoin on August 1, she requested that the recovery be processed to her own OKCoin-bound phone number, rather than to my party's account.
At that moment, my mind exploded. To be honest, during that time, my brain was already battered from repeated blows, facing seemingly impossible tasks that had to be pushed forward.
We worked hard for a long time, and just as we were about to succeed, a teammate backstabbed us?
What was even more frustrating was that the party had such an important situation but hadn’t detailed it to me until this moment, as they had always said there were no issues on the other side.
To be honest, at that moment, I was a bit at my wit's end. After all this time, both sides had a disagreement, meaning if these two people could not reach a consensus, the whole effort would be in vain.
However, the party had strong confidence in this woman. When I questioned whether she was trying to cause trouble, the party kept insisting it was impossible.
Later, I found out what was going on.
It turned out that the woman had no issues; she just misunderstood.
Because the previous agreement between both parties was to process the funds to her account, and then she would transfer it back to my party.
They also had agreements and distributions in place.
So, when the woman saw OKCoin's email, she thought the matter was settled and quickly left her email, which I misunderstood as a backstab.
Subsequently, the woman also reconfirmed this matter, unifying the processing account permissions to my party.
Initially, I thought the matter would come to a close, and we could finally confirm the final processing permissions.
If nothing unexpected happened, another unexpected event occurred. OKCoin said, now we have received approval from two emails, but there are still other emails.
Can you imagine our feelings at that moment?
It felt like Tang Seng was about to obtain the scriptures, and then there was another trial.
Not only I, but the party was also in despair.
The key to this problem is how you define "other."
One is other, two are other, a hundred are still other.
We had no idea how many emails had initiated this request. If someone we didn’t know got involved from another channel, we would never be able to recover this asset in our lifetime.
The party was getting heated, saying that OKCoin just wanted to take his money, claiming there were other emails, and this baseless situation was just a way to dodge responsibility.
At that moment, I interrupted him, saying, "Stop mentioning this. If what you say is true, there’s no chance of recovery, so let’s not proceed."
We could only believe that OKCoin wouldn’t do this and that cooperating with them to provide materials to prove our case was the only way to recover the funds.
Anger aside, we later asked OKCoin how many "others" there actually were.
Fortunately, OKCoin replied: just one.
After trying a few things, OKCoin finally gave a hint: an Outlook email.
The party then started frantically searching and indeed found one, but after sending it, they said it was not the right one, still no luck.
We were stuck again on this unknown Outlook email.
Later, we asked if they could give us a hint, even partially obscured, to help us recall.
OKCoin did not respond directly, only informing us that multiple people had initiated requests for this transaction.
To be honest, both the party and I were at our breaking point, so we confronted them.
At this stage, we were stuck again.
After resolving so many issues, any single problem could halt our progress.
Later, during a phone conversation with the party involved, the team suggested that since this matter was a transaction between both parties and the other party was willing to cooperate, and currently, the only issue was a missing email, why not come to China directly and do a video verification together?
Logically speaking, as long as both parties reach an agreement and provide valid identification documents for clarification, the issue with the email would be resolved.
I inquired with OKCoin, and they believed this approach might work, but it still required legal review.
It was essentially the same as saying nothing.
At that time, the party happened to have a business trip planned, so they decided to go ahead with it.
Thus, they made a trip to China, recorded a video with the woman offline, and even got it notarized.
This move proved to be effective.
On August 12, we received an email from OKCoin.
The next day, we received an email regarding the video verification for the refund.
This meant that the event had finally made significant progress.
Subsequently, the party provided the registered address, and OKCoin responded, leading to the wait for the coins to arrive. Ultimately, both parties achieved a satisfactory outcome.
This matter was handled from mid-July to August 23, taking about a month, resulting in a profit of a million.
In fact, this case is complex yet simple; it follows the same logic as unfreezing a bank card, unfreezing assets on an exchange, or unfreezing a bank account. It’s all about following the procedural rules, with the prerequisite being that you must provide strong, flawless evidence.
I plan to hold weekly spaces to welcome inquiries about unfreezing cards, legal issues, freezes, and anti-fraud matters. Please don’t ask me about trading cryptocurrencies.
If you really want to learn about trading knowledge, I have many clients who have been withdrawing USDT from me for a long time; I can analyze for everyone the true big players who only withdraw and do not deposit.
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