Stolen crytocurrencies could be managed like this
I don't get it. There seems to me 3 possible solutions to stolen cryptocurrencies:
1) The Blockchain records what a legitimate transaction is and is visible to anyone. When the NiceHash wallat got raided for $60M in bitcoin, the destination wallet was there for all to see. You could go to the public blockchain and see the stolen bitcoins were still sitting in the destination wallet.
As transactions are committed when a miner solves the mathematical puzzle to prove the next block in the chain, and as miners are often part of large networks of miners working together and sharing the reward when one of them hits on the solution. Could not the exchange that was robbed submit a reversal transaction to the blockchain (effectively stealing it back) and as long as enough miners agreed to try to validate the transaction in that block, is it not possible to validate that transaction?
2) Again as the stolen currency in visible in the wallet address, could all the exchanges work with law enforcement to make sure that transactions out of that wallet are tracked, and where possible the recipients identified as handling / laundering stolen goods.
Basically you should be able to keep a track of where the money goes, because all transactions are public (at least bitcoin transactions are), and in the same way as if you buy a stolen car, that car isn't really yours, the stolen bitcoin etc could potentially be recovered, maybe bit by bit (pun INtended, haha).
3) Again because it's all public, exchanges around the world could agree to block any transaction from the wallet that's the recipient of the stolen currency, effectively freezing out those funds. Sure this would require considerable global co-operation, but it's doable. There could be a public black-list of wallets, and subsequent wallets, all of which are frozen out of the system for handling stolen goods.
Anyone then could check, or their software could check, any transaction against this public list, to flag up that they may be transacting for stolen goods. Ok this may not get the currency back, but if the people who steal currency suddenly discover that it's worthless because they can't use it for anything, that's a massive deterrent.