NFT company gets restraining order to freeze hacker’s online wallet

A British investment company announced Tuesday that it had obtained a restraining order against an online wallet holding assets a hacker stole from it earlier this year.

NFT Investments — a business that, as its name suggests, works with small companies developing non-fungible tokens (NFTs) — revealed on January 12 it had lost $250,000 of assets in a cyberattack.

The company initially disclosed the incident through the London Stock Exchange’s (LSE) Regulatory News Service, as its shares are listed on the Aquis Stock Exchange Growth Market. It did not specify what kind of assets were stolen.

In an update again shared through the news service, NFT Investments said that following the attack it “immediately engaged its legal team in the US and succeeded in obtaining a temporary restraining order in Delaware.”

“As a result, the online wallet containing NFT Investments' stolen assets is frozen, and the assets cannot be moved by the perpetrators,” the company said.

“There are a number of legal steps to be taken to allow the assets to be returned to NFT Investments and the Company is working with its lawyers to accomplish this,” the statement added.

Legal injunctions vary in their powers over cryptocurrencies and blockchain-based tokens, but have become an important technique to redress the cyber thefts and fraud that remain a recurrent feature of cryptocurrency systems and decentralized finance (DeFi) technology.

Bitcoin was originally designed to be resistant to any attempts to prevent currency transfers by a third party. But as the sector has matured, more-recognized entities have become associated with exchanges and wallet addresses, improving law enforcement’s visibility into who holds digital assets.

Actions against these assets can include court-mandated legal freezes on currencies and tokens, as NFT Investments achieved, although in some cases the legal entities holding the assets are based in jurisdictions where Western law enforcement has no reach.

Work to pursue cryptocurrency thefts depends on being able to trace the funds. While the Bitcoin blockchain is designed to be fundamentally traceable, a number of cryptocurrency mixing services — such as the sanctioned Blender.io service — have been used to launder the digital cash to conceal its true origin.

Other cryptocurrencies such as Monero are purposefully designed to be untraceable.

NFT Investments said the loss of around $250,000 represents “less than 1%” of the value of the company’s current net assets. In its unaudited interim results published in September reported just over £30 million ($36.6 million) in total net assets, including over £20 million in cash, alongside a £4.2 million loss for the six months ending June 30, 2022.

Among the most successful criminal groups working in this space is one associated with the North Korean government, which in December was blamed by South Korean intelligence for stealing more than $1.2 billion over the past five years, half of it in 2022.

The culprits behind many incidents remain unknown.

At the end of December, BIT Mining, one of the biggest cryptocurrency mining companies in the world, announced that it had lost about $3 million in a cyberattack. In September, the cryptocurrency company Wintermute said it was “hacked for about $160 million” according to its founder and chief executive Evgeny Gaevoy.

That followed $625 million being stolen from Ronin Network in March in a hack the U.S. later blamed on North Korea. More than $30 million of that heist was subsequently seized by law enforcement agencies, according to a report from blockchain research company Chainalysis.