Why AFX Is Willing to Let the Attacker Keep Around $7.2 Million as Recovery Cost
After losing approximately $24.15 million, AFX proposed a 30% bounty arrangement, allowing the attacker to retain roughly $7.2 million if 70% of the stolen assets were returned. From a traditional financial perspective, this percentage appears significant, but it reflects the practical challenges of recovering crypto assets after an on-chain security incident.
Blockchain transactions are irreversible, while attackers can quickly increase tracking difficulty through asset swaps, transaction splitting, and cross-chain movements. At the same time, cross-border enforcement often requires significant time, while protocols face user compensation pressure, liquidity concerns, and reputational damage. For many projects, recovering most funds quickly may be more valuable than waiting for uncertain legal outcomes.
However, a blockchain bounty is not simply a financial settlement. The protocol must first verify that the negotiating address is actually controlled by the attacker and define the returned assets, deadlines, and legal conditions. It must also avoid transferring funds to sanctioned entities or other high-risk parties. Without reliable on-chain evidence, incorrect payments, repeated extortion attempts, and compliance risks may further increase losses.
Why On-Chain Tracking Becomes the Key Negotiation Advantage
Whether an attacker accepts a bounty often depends on how difficult it becomes to monetize stolen assets. KYT strengthens recovery efforts by continuously tracing fund flows, identifying related addresses, and distributing risk intelligence to exchanges, making asset conversion more challenging for attackers.
If stolen funds remain in freezable stablecoins, centralized bridge services, or exchange deposit addresses, the protocol generally has stronger recovery leverage. However, once assets move through complex cross-chain routes, privacy tools, or highly fragmented wallets, recovery becomes significantly more difficult.
A reliable monitoring system must also distinguish between different asset states, including voluntary attacker returns, temporary custody by white-hat researchers, and exchange freezes. This prevents recovered assets from being incorrectly classified as criminal proceeds indefinitely. Every transaction should preserve critical information such as timestamps, transaction hashes, asset amounts, and confidence levels of entity attribution, providing negotiation teams with a real-time, credible, and auditable case overview.
How Trustformer KYT Converts Emergency Recovery into a Standardized Process
Trustformer KYT helps protocols standardize post-exploit recovery through five key stages: confirming the attack origin and loss scope, continuously tracking asset conversions, identifying freeze points, verifying control of negotiation addresses, and archiving return transactions while updating risk labels.
In practical operations, the platform can generate tailored reports for exchanges, insurance providers, and law enforcement agencies, preventing different stakeholders from rebuilding the same blockchain evidence independently and improving incident response efficiency.
Even after funds are returned, protocols should continue monitoring remaining attacker-associated addresses and track whether bounty proceeds are later monetized through new wallets. A standardized recovery process does not replace legal judgment, but it ensures that critical decisions are based on a consistent and verifiable on-chain evidence foundation. This enables faster negotiations, more accurate freezing requests, and more complete post-incident audits.