Coinfirm: Authorities Ignoring Forked Coins Worth Millions

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  • Blockchain analytics firm Coinfirm as revealed that authorities worldwide are missing out on recovering millions of dollars in stolen cryptocurrencies
  • Coinfirm says that law enforcement agencies are ignoring forks of stolen coins, which should be just as easy to access as the originals
  • The recent Silk Road haul ignored almost $400,000 worth of forked coins from the 69,370 recovered

Blockchain analytics firm Coinfirm has revealed that authorities worldwide are missing out on recovering millions of dollars in stolen cryptocurrencies. A recent report highlights that authorities who seize stolen Bitcoin are missing out on forked tokens that sit in relatively easily accessible wallets and could amount to a great deal of illegally obtained money. Coinfirm claims that there have been several instances of authorities missing out on collecting illegally obtained coins from criminals’ wallets.

How Forks Can Earn Money

Forks happen when the code from an existing project is used to create a semi-related project under a different name, often with different features. Usually, anyone holding the original coin is also entitled to the same amount of the forked coin, which appears in the user’s wallet (or a new wallet supporting that token) at the time of the fork.

A classic example is in 2017 when the Bitcoin code was adapted into Bitcoin Cash, which was itself then forked into Bitcoin SV a year later, leaving three projects all operating on their own blockchains but who are all related to each other.

Coinfirm Identifies “Dozens of Cases” Where Forks Have Been Ignored

There have been 105 Bitcoin forks to date, but not all of these have resulted in holders receiving the new coin. Coinfirm uses the recent acquisition of 69,370 by the U.S. Treasury from the Silk Road hacker known only as Individual X as an example of such an oversight. While the $14 million windfall was welcome, U.S. authorities failed to follow up on the forked coins that were in associated wallets, coins they could easily have accessed. According to Coinfirm these include:

693,701 Bitcoin Diamond (BCD), currently worth approximately $310,000
69,370 Super Bitcoin (SBTC), currently worth approximately $66,000
69,370 Bitcoin Private (BTCP), currently worth approximately $11,000

This is just one example of such an oversight, with Coinfirm claiming that their tracing efforts have identified “dozens of cases in which law enforcement authorities may have unknowingly left substantial funds accessible to suspects instead of properly accounting for and seizing those assets.”

Perhaps as cryptocurrency law enforcement agencies become more au fait with the ins and outs of blockchain technology, such oversights will be reduced and eventually eliminated.