Blockchain analyst ZachXBT criticized the crypto industry for its inability to investigate hacks and recover stolen funds. According to him, the ecosystem has normalized theft and relies entirely on law enforcement agencies that themselves cannot cope with the workload. He listed dozens of unresolved problems that block user protection.
Problems With Investigations and Fund Recovery
ZachXBT called it shameful that an industry built on independence from the state now depends fully on it to investigate thefts. He pointed out that no other sector treats mass theft as a normal occurrence to such an extent.
Among the main issues is the lack of qualifications within law enforcement. More than 95,000% of police officers, he said, are unable to track even the simplest thefts or recover frozen funds from centralized exchanges. Crimes worth up to $100.000 often remain completely uninvestigated due to lack of resources.
Jurisdictions, Minors and Lack of Cooperation
Another problem, according to the expert, is territorial fragmentation. A victim may be located in one country while the attacker is in another that does not cooperate with international investigations. If the criminal is a minor, police often close the case. At the same time, project teams and exchanges themselves are unwilling to engage with the private sector.
Even when a user is ready to go to court, legal costs often exceed the amount lost, ZachXBT noted. Offshore exchanges ignore court rulings, citing unclear regulations.
According to the specialist, in the case of major hacks it is almost impossible to achieve a rapid response. For example, blocking stablecoin assets often requires a court order within minutes, which is not feasible in practice.
Some project founders earn millions laundering stolen funds and refuse to return them to users while still showcasing strong metrics and maintaining an active social media presence.
KYC and KYT Are Practically Useless
According to ZachXBT, KYC becomes a trap for regular users. Their personal data often gets leaked by hackers, and accounts can be purchased. Transaction monitoring systems, meanwhile, are easily bypassed and do not solve the problem.
At the same time, many DeFi protocols receive almost all of their volume from sanctioned jurisdictions such as North Korea and refuse to take responsibility. Centralized exchanges also do not always act quickly – even when laundering takes minutes, their response takes hours.
Systemic Crisis and the Role of the State
ZachXBT admitted that the Bybit hack exposed the full depth of the industry’s crisis. He spent many hours helping to freeze stolen funds and saw firsthand how poorly user protection is organized. In his opinion, without strict government intervention and new rules, the industry will not be able to resolve these problems on its own.
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