A Spanish Bittrex user filed a complaint claiming to have lost 1.3BTC that had been stored on the exchange. And the Court of Instruction number 2 of Santa Cruz de Tenerife ordered the Technological Crimes Group of the National Police to investigate the matter to find out if there could be a possible ‘computer fraud’ leading to the loss.

According to familiar sources, a man from Tenerife signed up for an account with Bittrex and transferred 1.3 BTC that was at the time equivalent to about €80,000. Then after receiving his security keys, one day the complainant could not access his account until after about 48 hours after which he noticed there were no funds in the account. And after realizing his bitcoins were missing, the complainant contacted a Bittrex representative, who suggested the incident could be a result of cybercrime.

And following the filling of the complaint, the judicial authority authorized that, Since there is not “sufficient data to know the identity of the author of the denounced events, it is agreed to officiate, ” the police should determine, “If possible, a line of technological research that allows the author to be identified, requesting from this Court how many steps are necessary for this purpose.”

Bittrex was also ordered to provide the “insurance policy for guarantee civil liability”.

An expert hired by the complainant pointed out that, “Bittrex allowed  four access attempts before the theft , on May 26, 2020, from different IPs, with different locations and with different operating systems, all inconsistent with what was used by the user until that moment and Bittrex did nothing to prevent it. ” 

And these four attempts were from different locations; a town in Minnesota, in the United States, Granada, France, and Madrid.

Security issues with exchange-based crypto wallets

If this issue was to be confirmed, it would underscore the security concerns that exist with crypto exchange-based wallets.

It is always advisable for traders and investors to always ensure that they have a cold wallet e.g. a hardware wallet like Ledger or Trezor where they can store their crypto assets away from an internet connection. And most exchanges allow traders to link their cold wallet extension to their trading accounts instead of depositing crypto-assets into the exchanges’ wallets.