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

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

#621

Shouldn't all true crypto believers hate this news? It's the government trying to enforce their opinion of who should own those Bitcoins, thereby taking power away from the owner that the network has decided on, which would be "whoever has the cryptographic keys".

As a crypto unbeliever I hate this too. Legal enforcement legitimizes crypto as property. It expands the definition of property by institutionally conferring the status of "owned" to a functional configuration of bits distributed over thousands of computers. Do we have this concept for other things? yes. But I'd rather like to contract the space of property rather than expand it.

> Legal enforcement legitimizes crypto as property. It expands the definition of property by institutionally conferring the status of "owned" to a functional configuration of bits distributed over thousands of computers.

9/10ths of law is property ownership. I find hilarious that anyone would want less of this concept, not more. My interpretation is that crypto enthusiasts want the "trust of the crowds" not a centralized government. Which doesn't mean the trust system becomes contracted per se, but rather under a different set of rules (i.e. purely direct democracy vs centralized republic).

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

#622

So Bitfinex is worth at least $3.6bn or is it all customers BTCs? Were people made whole back then? Is it some MtGox thing where people who lost money back then will now have it? In BTC? Or in USD at the worth of BTC back then? Or in USD at today's BTC valuation?

USD at today's BTC valuation. Would be approx $70m at the time of the hack.

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

#623

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/

That's wild, I think we were Facebook friends for awhile after I interviewed and hung out over there on a few occasions.

I was doing an onsite with Ilya and the folks at MixRank (in 2012) and talking with the team, and I mentioned something about cryptography and some basic codes that I learned as a child in gifted class. They had no idea what I was talking about - not the codes but "gifted class". I was telling them it was pretty common in public school systems - once a week or a few hours a day where you took advanced topics in another classroom with other kids that had tested into the program. They had no idea.

I started asking the founders if they went to public school. They never had. And then they were curious and started asking the other employees. Not a single one had ever set foot in a public school for elementary, middle, or high school. Then one guy in the back piped up - "you know, I think $devname went to Berkeley."

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

#624

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/

It would be ironic if the "cloud storage account" the feds accessed was Dropbox. "YC company helped indict YC founder"

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

#625

Earlier quoted context omitted.

But that's not the way real contracts work. Contracts are an agreement between parties. If there is later a disagreement about what was agreed to, a judge sorts it out.

> If there is later a disagreement about what was agreed to, a judge sorts it out. Only because human language leaves a lot of room for interpretation. Computer output doesn't, or at the very least not nearly to the same extent. If your smart contract is itself legal (you are legally allowed to formalize those terms), and produced an output as a function of it's actual internal operation (and not a random, accidental…

> and produced an output as a function of it's actual internal operation (and not a random, accidental bit flip) then it should stand even in front of a judge.

Honest questions to people who are familiar with SmartContracts/Ethereum - how do disputes and adjudicating work in this example then?

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

#626

Earlier quoted context omitted.

> Of course innocent until proven guilty applies but the justice department knows that and still brought charges. At the very least, they believe they've proven beyond a reasonable doubt his guilt. No, if following general DoJ policy, they believe that the evidence is sufficient that they will be able to prove the charges beyond a reasonable doubt, but that's not the same as them already having proven that. > High pr…

> Usually, I think the opposite is the case: generally, the DoJ is more careful in high-profile cases, not more cavalier. I'm not sure Rittenhouse would have been charged at all and, based on how the trial went and how weak the evidence was, he should have, at best, been charged with something much more minor. But that's just one example. I somewhat agree with you, they are more careful but I think they are more care…

This highlights two very different sets of cases.

In the Rittenhouse case, both prosecution and defence agree that Rittenhouse was a person who had a gun in his arms and fired it, resulting in death. The thing the prosecution needed to prove is that in doing so, he committed a crime. Prior to the trial, it was not necessary to express agnosticism about whether he had a firearm, fired it, or firing it resulted in anyone's death, even if there was some sense in which he was "innocent until proven guilty" of the conduct being criminal.

In this case, there is essentially no room for dispute that stealing $71 million, engaging in a vast money laundering conspiracy is in fact illegal. If these people actually had these accounts and actually used this money in this manner, there is no chance they will not be found guilty. The affidavit is not compatible with a set of the same basic facts leading to a different legal conclusion.

So the question is whether or not you think there's any possibility that the feds cavalierly misidentified the people in possession of these accounts. That seems pretty unlikely, given the affidavit suggests withdrawing small amounts of the stolen money to use Uber under their actual names, buy stuff on PlayStation under their actual names, etc; and that the private keys were taken from a cloud storage account actually belonging to the guy; and that the woman contacted various exchanges and talked about the actual company she actually owns, and the guy actually has a documented record of talking extensively about cryptocurrency including on this site using his actual name.

It is, of course, possible that the entire affidavit is a lie, made up whole cloth and all of this evidence is totally fake and the accused were minding their own business working on their gourmet cupcake business in Kansas City, and they don't understand anything about no crypto-whatsit. But I don't think that's a scenario that really requires much investigation, and it instead is a level of solipsism on par with "we can't actually know if gravity will cause us to fall" or "what if this is a simulation".

What I'm saying is that not all uncertainty is equal, either in kind or in probability, and so it makes more sense to be honest about that than equivocate across very dissimilar cases.

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

#627
post #408

Earlier quoted context omitted.

As a crypto unbeliever I hate this too. Legal enforcement legitimizes crypto as property. It expands the definition of property by institutionally conferring the status of "owned" to a functional configuration of bits distributed over thousands of computers. Do we have this concept for other things? yes. But I'd rather like to contract the space of property rather than expand it.

6000 years ago, one could have ownership over the right to buy a still unborn goat at a certain price in the future. It's amusing to see these modern philosophies of trying to go back to a noble savage past that never was.

Likewise it's fascinating to me to see today an assumed, "expansion of property and its financialization are natural progressions of human societies." This factoid is itself baked into the fabric of our current society and presents itself as assumed knowledge. In reality no such natural progression exists any more than people believe that the universe is just, or that nature is cruel.

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

#628
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…

Wow. Such hacking prowess. Such bad opsec. Weird. Ps not condoning the theft but I just find it strange that people with the skills to steal this much get caught using bog standard cloud storage. You'd think they could afford something better ;) Something along the lines of "you don't take notes on a criminal f** conspiracy" :)

People are sometimes too busy to deal with the many details of 'perfect' opsec. In other circumstances, they hire a professional to handle it for them, but that is more difficult for criminals.

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

#629
post #414

Earlier quoted context omitted.

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

the file was encrypted, but the fbi hacked it after already having gained access to the account (via warrent). Which is to say, this isn't how they actually got cought, it's just how the nail will go in the coffin (and thankfully for those impacted, some funds recovered). FWIW, if you ever find yourself in this position of owning a large amount of stolen crypto, I believe the best way to wash it would be to "robin ho…

Interesting idea. But you’d only need to sample a small number of wallets to see the same person appear twice.

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

#630

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.

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