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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

#701

> “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…

Even I encrypt my keys before uploading them to the cloud, and I don't give them a descriptive name, and I have less than $2000 worth of cryptocurrencies, and it wasn't stolen.

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

#702

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.

I think you have to get with the times a little. Crypto is an asset (some coins a security) and has been recognized as such under the law for several years, and it's taxable.

Crypto is on the balance sheet of individuals, businesses, financial institutes and even at least one nation (El Salvador). There's crypto index funds and ETFs trading on wallstreet.

And here you are philosophizing about whether crypto can really be owned? You're a decade too late.

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

#703

> One overlooked detail in the Razzlekahn arrest. Almost all the money went through AlphaBay, using it as a mixer. The feds were able to see through this because they seized AlphaBay. Its amazing how, even years after, darknet market seizures pay dividends to the feds. Another fascinating detail. Source: https://twitter.com/ncweaver/status/1491118233973571585

Another reason why Monero is better. With Monero, it wouldn't have mattered that AlphaBay was hacked.

Funny you would say that, because if you read the indictment, these people did actually deposit Monero on one exchange:

> VCE 4 Account 2 was entirely funded by approximately 13,200 XMR via approximately 21 transactions that took place between in or around November 2017 and March 2019.

> Another account at VCE 4 (“VCE 4 Account 3”) was created on or about November 20, 2017, and was registered in the name of another Russian national and under another Russian email address. VCE 4 Account 3 was entirely funded by approximately 6,870 XMR, via approximately 10 transactions that took place between in or around November 2017 and April 2019.

> The XMR deposited into VCE 4 Account 2 and VCE 4 Account 3 was all converted to BTC and then withdrawn, consistent with chain hopping. The same method was used to liquidate the funds from the VCE 1 accounts as described above.

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

#704

Earlier quoted context omitted.

There isn’t a worthy discussion left to be had about crypto that isn’t discussing its role in fraud.

That's such a sad view, especially to hold in a generally curious place like HN. Another example is narcotics, yes we know that most narcotics usage is bad, but does that mean all usage of narcotics is bad? Obviously not, and we take those articles as they come, and discuss the angles each article has independently, in most cases at least. But somehow cryptocurrencies are so emotional for most people, that they hold…

We’ve spent years watching hundreds of obvious grifts and silly ideas. There has yet to be a single compelling, obvious use for this technology.

At some point we need to stop wasting oxygen on obvious garbage.

If this domain received 1/1000th as much attention and electricity I would be with you. But until then we could do with far less waste.

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

#705

> “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…

While I do partially agree that some of it may be grandstanding. The whole: "Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.” and suggesting AEC and chain hopping is futile is an effective propaganda tool. I mean its possible something major changed, but I think your thoughts are closer to reality. If true, this is…

At the same time this crime shows the weakness of crypto: with an ever appreciating linked asset with no ability to truly "gap" transfers, you can always trace where the money goes, even with a mixer (you just then need to track many more targets, but eventually the money re-concentrate somewhere you can see), transfering just once with someone who knows your name instantly gives you traceback ability to all the transaction (can't fund a wallet without tracing back to the first ever source of fund on chain), and the fact it appreciate is the greatest enemy of money laundering: where a Mexican kingpin would understand that there's value in losing 40% of their money rather than have it stashed in USD bills in a warehouse, crypto is tempting to keep, this guy couldn't realistically forfeit a large majority of the fund by for instance randomly giving it to 5000 honest wallets with 1 being his for instance.

It's great for us non criminals, but it's one more utility of crypto going down the drain. What is it good for, if not even crime.

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

#706

> One overlooked detail in the Razzlekahn arrest. Almost all the money went through AlphaBay, using it as a mixer. The feds were able to see through this because they seized AlphaBay. Its amazing how, even years after, darknet market seizures pay dividends to the feds. Another fascinating detail. Source: https://twitter.com/ncweaver/status/1491118233973571585

Another reason why Monero is better. With Monero, it wouldn't have mattered that AlphaBay was hacked.

Could you realistically get 3.6 billion USD through Monero?

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

#707

Earlier quoted context omitted.

There isn’t a worthy discussion left to be had about crypto that isn’t discussing its role in fraud.

That's such a sad view, especially to hold in a generally curious place like HN. Another example is narcotics, yes we know that most narcotics usage is bad, but does that mean all usage of narcotics is bad? Obviously not, and we take those articles as they come, and discuss the angles each article has independently, in most cases at least. But somehow cryptocurrencies are so emotional for most people, that they hold…

Narcotic may be whatever you want, but the debate has to be honest and transparent, not shady and criminal: if you want to legalize heroin, make a case to the people, get it approved with safeguards, say like Portugal or France to some extent (Methadone), and make sure it won't profit people who also do other things with the proceeds of sales.

The problem with Narcotic is simple: people lose freedom when getting into addiction, then with hard narcotics they also lose the ability to make important life choices, minors and generally disfavored people are targeted by addictive substance sales people, production is rarely done well (because most fields should be used for food, if they are used for more profitable narcotic purpose legally or due to lax enforcement, ALL FIELDS become opium fields like in Afghanistan, which can cause food safety issues etc.

You can't just talk as if narcotic consumers are innocent party goers. Many are absolute victims and we must talk about it without crypto entering the debate. Crypto is just a weak way to try to hide the source of completely illegal funding for narcotics without going through the painful discussion with the population that we may have to sacrifice a lot of victims for the sake of spending less on narcotic enforcement.

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

#708

Earlier quoted context omitted.

This only work because they hire the right lawyers, who dinner with the right persons across all law enforcement branches.

More simply, they might get away with it because, by and large, they're not actually laundering illegal funds, but merely using the exact same tricks to obscure all sorts of socially disreputable but not actually illegal stuff. Of course, there's a real gray area since arguably a lot of disreputable stuff should also be illegal. But by the same token, some people might genuinely want more privacy depending on their c…

Maybe not, but they certainly use art to dodge taxes, which could be framed as fraud, if they were not well covered legally.

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

#709
post #373

Earlier quoted context omitted.

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.

Amounts are not public with Monero outputs created within the last few years.

Equation Group: “Challenge accepted”.

You really want to bet that a crypto tumbler won’t have a flaw in it?

Most crypto tokens have flaws.

I’m short this comment and the bank who gave the author a mortgage.

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

#710

Earlier quoted context omitted.

> Seems like he could have done more to distance himself. Bitcoin's public ledger makes transactions into prosecution futures. This is why it's such a poor choice for revolutionaries and funding the marginalized. You leave a permanent indelible public record in posterity that will in the course of time be de-anonymized, automatically, and traced back to you.

Is it illegal to sell your artwork at an auction, and a criminal happens to be the one to buy it? I honestly don't know. is the onus on an artist or on an "auction house" to vet buyers. If post sale it turns out the money was fraudulent, does the artist need to pay it back? In crypto terms. You the artist simply put a NFT up for auction at OpenSea. You the scammer happened to purchase the artwork on OpenSea. However…

> is the onus on an artist or on an "auction house" to vet buyers. If post sale it turns out the money was fraudulent, does the artist need to pay it back?

No. Normally you have to return items that were stolen from someone even if you purchased them without knowing they were stolen. But money is an exception. See:

https://en.wikipedia.org/wiki/Nemo_dat_quod_non_habet

(I don’t know whether Bitcoin would be treated as money for these purposes…)

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