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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

#411

Post by rootusrootus »

kodah wrote: post #142
pavel_lishin wrote: post #129

Earlier quoted context omitted.

They're easy to hide as long as the federal government isn't trying to tie you to 4.5 billion worth of something.

Even with the fervor of the federal government they'd be easy to hide. A USB is tiny, and you can shrink it's footprint with USB-C. You can also buy USB keys with tamper-proof housings that will blow a fuse if opened to be physically compromised. Coupled with strong post-quantum crypto, that key is relatively secure, even if physically discovered. That's just the technical bit. You can also split the key in half and…

> If all that sounds a bit extra, circle back to that the perpetrator has 4.5 Billion worth of something.

It does sound like a lot of work. I think I'd go with the $5 wrench option.

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

#412

Post by [deleted] »

brewdad wrote: post #327
algorade wrote: post #310

Earlier quoted context omitted.

The cryptographic keys were stored on a cloud storage device. Law enforcement agencies gained access to these keys while executing a search warrant and used them move the funds. So by this logic, the government is now the rightful owner of these funds.

Correct. This is why crypto, at least in its current form, must fail. In the crypto world possession is 10/10ths of the law.

[deleted]

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

#413

Post by twox2 »

cobookman wrote: post #318
tyrfing wrote: post #225

Earlier quoted context omitted.

> 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.

If he instead started to draw NFTs, and sell it from his KYC account to his dirty wallet, could he still be convicted? What if only one out of every 100 NFTs his dirty wallet purchased was from his KYC account? Or what if he decided to create his own crypto-currency and it just so happened that his dirty wallet was an early investor of ETH to his fund. Seems like he could have done more to distance himself.

There wasn't a big NFT market until very recently.

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

#414

Post by kart23 »

gzer0 wrote: post #398

Here's how the fed caught them: "The DOJ said it was able to seize the funds after an FBI search warrant of one of Lichtenstein's cloud storage accounts found a file containing cryptocurrency addresses and their corresponding private key that granted access to funds stored within."

what the...

no way they just kept an unencrypted private key on the cloud.

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

#415

Post by wavefunction »

trhway wrote: post #400
CrazyStat wrote: post #388

Earlier quoted context omitted.

> Sidenote: one of the reasons i don't touch crypto is possible laundering charge/suspicion if the tokens happens to had passed through unsavory hands/situation A page recently posted here ([1], citing [2]) claimed that there's a market for freshly mined Bitcoin (i.e. with no history), with people paying as much as 20% markup for it to avoid such risks. I didn't make any attempt to verify this claim. [1] https://seth…

It still doesn't protect from possible future tainting of those tokens and thus suspicion of your participation. It may be even more suspicious as you would be the one who bought clean coins supposedly in order to minimize attention to whatever future crime the tokens may be involved.

or actually it is money launderers looking for tokens with no previous history they can use to evade some % of future scrutiny

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

#416

Post by tptacek »

sdenton4 wrote: post #391
tptacek wrote: post #336

Earlier quoted context omitted.

This is a pretty silly argument. I'm not opining on whether or not prosecutions are coercive; I'm certain they are. But a lower conviction rate would be a bad thing: it would mean the DOJ was bringing more cases they weren't certain they would win, and even exoneration comes with immense costs to the accused.

The argument around plea bargains is pretty simple. You have someone over a barrel: "Take the deal and go to prison for two or five years, or take a risk on a trial where you'll be put away for life. And btw, our conviction rate is 99.96%." You'd be crazy not to take the deal, even if you're innocent. Thus, the conviction rate doesn't actually tell us much about how strong the federal cases actually are.

That's not the structure of most plea bargains ("2 years vs. life") but more importantly, you don't have enough information in that hypothetical to determine how fair the system is, because you're not accounting for how liberally federal prosecutors bring cases. If they tend only to bring cases when they have overwhelming evidence --- which is the rap on federal prosecutors (not so much state) --- then you get the same outcome simply by dint of most people in plea negotiations being guilty. A good reason not to take a case to trial is your knowledge that you'll be destroyed at trial.

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

#417

Post by toomuchtodo »

cobookman wrote: post #318
tyrfing wrote: post #225

Earlier quoted context omitted.

> 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.

If he instead started to draw NFTs, and sell it from his KYC account to his dirty wallet, could he still be convicted? What if only one out of every 100 NFTs his dirty wallet purchased was from his KYC account? Or what if he decided to create his own crypto-currency and it just so happened that his dirty wallet was an early investor of ETH to his fund. Seems like he could have done more to distance himself.

> Seems like he could have done more to distance himself.

On a value system with an inherently public ledger that eventually has to hit a fiat off ramp with KYC/AML requirements? Nah. Everyone has quality opsec until they don't, and the record of your criminal activity is immutable and highly durable.

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