$477M FTX ‘hack’ was a Bahamian government asset seizure • Hacker News Board

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#21

Post by semiquaver » Sat, Nov 19, 2022, 2:58 AM UTC

woodruffw wrote: post #19

Maybe this is a stupid question, but how ? Was the Bahamas' SEC holding its own copies of FTX's keys? I thought the entire point of these schemes was that this kind of seizure-by-force wasn't possible (absent exploits or insiders).

According to the article, they legally compelled SBF to provide access (he is AFAIK physically located there)

> the U.S.-based bankruptcy administrators […] had “credible evidence” that officials in the Bahamas had directed FTX founder Sam Bankman-Fried to access FTX’s systems after the Chapter 11 filing, “for the purpose of obtaining digital assets of the debtors.”

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#22

Post by gruez » Sat, Nov 19, 2022, 3:00 AM UTC

woodruffw wrote: post #19

Maybe this is a stupid question, but how ? Was the Bahamas' SEC holding its own copies of FTX's keys? I thought the entire point of these schemes was that this kind of seizure-by-force wasn't possible (absent exploits or insiders).

>absent exploits or insiders

Insiders can be press ganged with threats of violence, which the state has a monopoly on.

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#23

Post by tartoran » Sat, Nov 19, 2022, 3:02 AM UTC

sanxiyn wrote: post #11

texaslonghorn5 wrote: post #2

interesting, since FTX was headquartered in the bahamas this seems lawful and not unreasonable. though some will argue the government doesn't have the right to do that, I think you sacrifice your protection when you commit fraud. how quickly should the bahamas have announced about the asset seizure? is it common in other countries to not comment about (seizures in) ongoing investigations?

The news article doesn't state the legal authority, but the statement from Securities Commission of the Bahamas of course does. "Under the Digital Assets and Registered Exchanges Act, 2020 (DARE Act), the Commission has the authority..." The government has the right to do this because FTX agreed to this .

But does FTX have the right to agree to this? It’s like me agreeing with a stranger to sell your house and split the proceeds between us. FTX wasn’t entitled to the customers money and neither had the Bahamian authorities.

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#24

Post by JamesianP » Sat, Nov 19, 2022, 3:03 AM UTC

sanxiyn wrote: post #13

stefan_ wrote: post #7

Earlier quoted context omitted.

Well it seems it was SBF in the bed with the Bahamian government.

Do you have any evidence? At a glance, this seems to be Bahamian civil servants diligently doing their duty that was given.

The Bahamas has a total population of a smallish city and surely a national budget to match. Grabbing 500M anonymously (while letting everyone run around for days thinking it was a hacker) doesn't make much sense either. Did they put their entire country's budget on the exchange or something?

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#25

Post by woodruffw » Sat, Nov 19, 2022, 3:03 AM UTC

gruez wrote: post #22

woodruffw wrote: post #19

Maybe this is a stupid question, but how ? Was the Bahamas' SEC holding its own copies of FTX's keys? I thought the entire point of these schemes was that this kind of seizure-by-force wasn't possible (absent exploits or insiders).

>absent exploits or insiders Insiders can be press ganged with threats of violence, which the state has a monopoly on.

I had assumed that they had some kind of obtuse M of N scheme with no sufficient number of parties in the same place at once, but that was perhaps too optimistic (?) of me.

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#26

Post by throwaway9980 » Sat, Nov 19, 2022, 3:06 AM UTC

woodruffw wrote: post #19

Maybe this is a stupid question, but how ? Was the Bahamas' SEC holding its own copies of FTX's keys? I thought the entire point of these schemes was that this kind of seizure-by-force wasn't possible (absent exploits or insiders).

Guns. Guns are how. Guns are how governments achieve their objectives.

There is no crypto scheme, no algorithm, no possible arrangement of private keys and Merkle trees that can escape the reality of men with guns.

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#27

Post by gruez » Sat, Nov 19, 2022, 3:07 AM UTC

woodruffw wrote: post #25

gruez wrote: post #22

Earlier quoted context omitted.

>absent exploits or insiders Insiders can be press ganged with threats of violence, which the state has a monopoly on.

I had assumed that they had some kind of obtuse M of N scheme with no sufficient number of parties in the same place at once, but that was perhaps too optimistic (?) of me.

That's can be pulled off, but actually requires planning and forethought to pull off. For instance, you'd want the keys to be on HSMs/hardware wallets in different jurisdictions (ideally rivals like US and Russia). Obviously this wasn't something they considered or planned for considering many (most?) of the higher ups were living in a shared penthouse in the Bahamas. Although, to be fair I don't fault them for not planning for this. If things get bad enough that men with guns are demanding you to do something, being able to reject their request would be pretty low on my list of priorities.

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#28

Post by sanxiyn » Sat, Nov 19, 2022, 3:08 AM UTC

tartoran wrote: post #23

sanxiyn wrote: post #11

Earlier quoted context omitted.

The news article doesn't state the legal authority, but the statement from Securities Commission of the Bahamas of course does. "Under the Digital Assets and Registered Exchanges Act, 2020 (DARE Act), the Commission has the authority..." The government has the right to do this because FTX agreed to this .

But does FTX have the right to agree to this? It’s like me agreeing with a stranger to sell your house and split the proceeds between us. FTX wasn’t entitled to the customers money and neither had the Bahamian authorities.

Bahamian government is seizing assets "to protect the interests of clients or customers".

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#29

Post by Petersipoi » Sat, Nov 19, 2022, 3:09 AM UTC

throwaway9980 wrote: post #26

woodruffw wrote: post #19

Maybe this is a stupid question, but how ? Was the Bahamas' SEC holding its own copies of FTX's keys? I thought the entire point of these schemes was that this kind of seizure-by-force wasn't possible (absent exploits or insiders).

Guns. Guns are how. Guns are how governments achieve their objectives. There is no crypto scheme, no algorithm, no possible arrangement of private keys and Merkle trees that can escape the reality of men with guns.

Are you suggesting that the Bahamas infiltrated FTX with guns and took their keys?

Re: $477M FTX ‘hack’ was a Bahamian government asset seizure

#30

Post by stefan_ » Sat, Nov 19, 2022, 3:10 AM UTC

sanxiyn wrote: post #13

stefan_ wrote: post #7

Earlier quoted context omitted.

Well it seems it was SBF in the bed with the Bahamian government.

Do you have any evidence? At a glance, this seems to be Bahamian civil servants diligently doing their duty that was given.

A seizure of funds is certainly not the first step of bankruptcy proceedings. SBF seems to have "fled" to the Bahamas, and he would obviously have the access needed to make the transfer. And as the article says, the Bahamas are trying to get the US Chapter 11 proceedings thrown out arguing their own bankruptcy proceedings have priority. There was also the mystery texts from SBF arguing "Chapter 11 was my biggest mistake" and "trying to resolve a jurisdictional issue with Delaware".