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Feds arrest couple, seize $3.6B in hacked Bitcoin funds

washingtonpost.com

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Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#221

Post by kyleee »

zozbot234 wrote: post #94
AlexanderTheGr8 wrote: post #64

> “After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein,” the press release said. “Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and rec…

A good guess is that "laundering" billions of dollars is inherently a non-trivial problem, and perhaps not feasible at all without cooperation from shady real-world actors outside the whole cryptocurrency ecosystem. This is actually good news for small-scale users who just want to keep their microtransactions reasonably private - the usual mechanisms might actually work well enough for that case.

with that amount one would be wise to get in touch with HSBC, they provide laundering services (but don't market it to the general public)

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#222

Post by lordnacho »

AlexanderTheGr8 wrote: post #189
paulpauper wrote: post #144

Earlier quoted context omitted.

you would only need to memorize one seed to spawn infinite key pairs

can you elaborate? I find this very interesting. We can't choose which private key we get. So is it possible for 1 seed to generate all of them? Doesn't that break information theory (Shannon's compression limit)?

Have a google for BIP-32, about Hierchical Deterministic Wallets. A secret key is nothing but a number, so it's not too hard to generate more numbers from that seed. If you have the seed and the parameters for the child numbers, you have all the private keys you want.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#223

Post by d23 »

tiffanyh wrote: post #186
albroland wrote: post #6

fwiw, it appears one of the named here is a YC Alum: https://news.ycombinator.com/user?id=il https://www.linkedin.com/in/unrealdutch/

Let's be fair to these individuals and not presume guilt. In the US, it's "innocent until proven guilty". Media is so quick to assume the person is guilty just because of an allegation.

That's the standard for our criminal justice system, not for us as individuals. It sounds from the release that the justice department has a boatload of compelling evidence against them.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#224

Post by PKop »

bastawhiz wrote: post #177
notch656a wrote: post #159

Earlier quoted context omitted.

Why anyone would use BTC and not some privacy coin for this kind of scenario escapes me.

Is it practical to convert literal billions of dollars between currencies? And even if you did, wouldn't liquidating it so you can actually spend it on things in the real world prove to be almost impossible? Billions of dollars worth of currency is more than I'd expect most privacy coins to deal with over the course of months.

But in this case, accessing the billions in BTC was impossible too, so for all intents and purposes, that number wasn't real, since it wasn't usable.

The question is perhaps what is the most one can use and how to do it. Privacy coins probably play a part in this equation.

You maybe could slowly, and methodically convert it out of the privacy coin into a spendable form when needed.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#225

Post by tyrfing »

danso wrote: post #3

The statement of facts is linked to from the press release, and describes generally how the Feds were able to trace the stolen funds (they found a file listing private keys, after gaining access to the suspect's cloud storage) https://www.justice.gov/opa/press-release/file/1470186/downl... > The 2017 transfers notwithstanding, the majority of the stolen funds remained in Wallet 1CGA4s from August 2016 until January 3…

> they found a file listing private keys, after gaining access to the suspect's cloud storage

That's backwards. It's how they wrapped it all up. The real trail is pretty clearly AlphaBay 2016/2017 transactions (under gov control around that timeframe), to KYC-flagged accounts at an exchange, with a web of accounts with real info linked together past there.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#226

Post by d23 »

JoeAltmaier wrote: post #176

With so much money involved, I wonder if we can ever really know anything. Enough money, and you can make black == white. E.g. these two were fallguys

Thankfully we have a legal process intended to figure this exact thing out via a process of presenting and considering evidence.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#227

Post by AlexanderTheGr8 »

mdoms wrote: post #57

> “Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. How is this not a total death blow for bitcoin? If the justice department c…

It took them 6 years to catch these perps. And these perps were extremely sloppy (storing keys in cloud, weak encryption)

Justice must give the perception that they are doing enough. They can't really say that it's really hard to catch people committing crimes in cryptocurrencies.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#228

Post by [deleted] »

xtracto wrote: post #219
notch656a wrote: post #159

Earlier quoted context omitted.

Why anyone would use BTC and not some privacy coin for this kind of scenario escapes me.

If you read the original DOJ filing, they actually did that. They used : > anonymity-enhanced virtual currency (AEC), in a practice known as “chain hopping”; and using U.S.-based business accounts to legitimize their banking activity. Their problem was that they "closed" the money circle by sending it to real bank accounts. That's how they caught their trace. It seems that laundering billions of dollars is not as eas…

[deleted]

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#229

Post by Gasp0de »

jrav wrote: post #136

Probably stupid question: Why not just exchange it to zcash or monero or some other coin that hides transaction details? Then you can send it to a new wallet; theoretically 100% untraceably. Is this not a valid approach?

They did that apparently, it is mentioned in the article. There are still ways to trace it. For example, if they do it in a short timeframe or in just two transactions you can match the amounts. Not many people send 100k$ in zCash around.

Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds

#230

Post by austincheney »

codespin wrote: post #216
robgibbons wrote: post #180

Earlier quoted context omitted.

Technically they were charged with conspiring to launder money, completely unrelated to any mention of theft or hacking. From TFA: "Court papers filed against the couple did not accuse them of the hack itself; officials declined to say if the pair are suspected of stealing the money."

Interesting point, but if the government considered whoever had control of the coins the rightful owner and not stolen, would it be laundering then? It doesn't sound like a problem of taxes.

Laundering is any process to legitimize illicit income. It does not matter who owns the coins or other assets in question. What matters is if the coins represent any vehicle of fund transfer that originate from any form of criminal enterprise or other unreported financial activity.
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