> “digital currency heists executed through complex money laundering schemes could undermine confidence in cryptocurrency,” said U.S. Attorney Matthew M. Graves
Well now you US prosecutors aren't reading hacker news!
Feds arrest couple, seize $3.6B in hacked Bitcoin funds
101–110 of 901 posts
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#102I'm sitting here trying to understand their mindset. They had to know what kind of scrutiny would be on those coins forever. At the time of the theft, the coins are worth $100M+ and they can't touch them. Even worse, anything they do with them will be monitored, researched, dug into, and everything else from law enforcement, amateur detectives, and every major tech+crime group. Fast forward to now and the coins are w…
I was wondering about this. I would think the most obvious path would be to find some other criminals (now you've got new risks) who don't care about the provenance of the coins, will pay cash for some coins at a discount, and you somehow launder that cash.... Could at least get a couple bucks from it, possibly.
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Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#103Earlier quoted context omitted.
I was wondering about this. I would think the most obvious path would be to find some other criminals (now you've got new risks) who don't care about the provenance of the coins, will pay cash for some coins at a discount, and you somehow launder that cash.... Could at least get a couple bucks from it, possibly.
On the one hand, the mob would probably be happy to buy them for 10-30% face value. On the other hand, how do you contact a reputable mob boss?
Yeah I think the odds of "how about you give me cash and I not turn you in" are ... possible.
Bitfinex was offering a reward….
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#104In a hypothetical, if the two did not breach Bitfinex servers (unauthorized access to others systems) but instead managed to "guess" the private key to the Bitfinex wallet and transfer the funds, would this also be a crime? Would this be treated the same way?
Computer Fraud and Abuse Act covers any unauthorized access regardless of how the credentials were obtained or... magically guessed.
In the scenario outlined there would be no unauthorized access to any systems, whether owned by Bitfinex or anyone else, so I really don't see how the CFAA could possibly apply here. As for the cryptocurrency network itself, the protocol is that anyone who has the private key is authorized to spend the corresponding funds—how the key was obtained is irrelevant.
Of course, correctly guessing a 256-bit random private key is exceedingly unlikely, though if they key is based on a lower-entropy password (a "brain wallet") then the odds of a correct guess improve dramatically.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#105> “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…
Well, the police had a search warrant, so the police could have found them if they had had them in their possession anyway. Sure, they could have destroyed them, losing the money but maybe not getting arrested?
vitalik (ethereum founder) used an interesting system. He split the key in 2. Wrote both on paper. Gave 1 paper to family and kept the other. Even if the police raid him (hypothetically), they cannot raid the houses of his family and friends at the same time
This way the police or anybody else cannot get your private key.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#106Earlier quoted context omitted.
I was wondering about this. I would think the most obvious path would be to find some other criminals (now you've got new risks) who don't care about the provenance of the coins, will pay cash for some coins at a discount, and you somehow launder that cash.... Could at least get a couple bucks from it, possibly.
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The thing about Craigslist is now you need to meet folks / exchange ... you're only going to make so many of those transactions.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#107> “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…
Well, the police had a search warrant, so the police could have found them if they had had them in their possession anyway. Sure, they could have destroyed them, losing the money but maybe not getting arrested?
When a few billion is at stake, you think they'd make the effort to memorize the keys. Or at least encrypt them.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#108In a hypothetical, if the two did not breach Bitfinex servers (unauthorized access to others systems) but instead managed to "guess" the private key to the Bitfinex wallet and transfer the funds, would this also be a crime? Would this be treated the same way?
Computer Fraud and Abuse Act covers any unauthorized access regardless of how the credentials were obtained or... magically guessed.
I’m so confused how this holds up in a distributed system like Bitcoin.
There is this ownerless software running.
I don’t see it as theft.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#109Earlier quoted context omitted.
I'm not invested in crypto or really at all interested in it. That said, my mentor seems pretty excited about it and is pretty heavily invested as of the past few months. I advised him to do something like https://en.wikipedia.org/wiki/Shamir's_Secret_Sharing and distribute it across a wide number of storage mechanisms, physical, digital, and custodial. For instance, in google drive, in drop box, in a bank safety dep…
I don't understand the math but I think I have seen that style of secret management where any 3 of say 10 secrets can access something but no 2 or any 1 secret can do it. It would seem to solve a lot of just organizational problems where "jan is out of the office today" and nobody can do the thing ... but if access is spread out among 10 people ... 3 probably are in the office when needed. Granted I've never seen it…
Hashicorp Vault uses it.
https://learn.hashicorp.com/tutorials/vault/rekeying-and-rot...
> In order to prevent one person from having complete access to the system, Vault employs Shamir's Secret Sharing Algorithm. Under this process, a secret is divided into a subset of parts such that a subset of those parts are needed to reconstruct the original secret. Vault makes heavy use of this algorithm as part of the unsealing process.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#110Earlier quoted context omitted.
Cash is not a good comparison to cryptocurrency at all. Stealing $70M, or trying to launder $5B in cash, is absolutely not the same thing as doing the same with cryptocurrencies. $70M or $5B is a serious logistical problem to steal, hide, and launder. $70M is 700kg in $100s. > under the control of the owner of the private key, Not owner, no. Temporary viewer is enough. And that's a huge difference.
Possession is probably a better word than ownership, sure. In the same way that if someone takes your cash into their possession, they might not have legal ownership, but now they have to somehow be involved in its' future transfer (even if that's like, handcuffing them and forcing them to hand it over). In a cryptographic system you need the key in order to do things. Whether you think it's good or bad to apply that…
> Possession is probably a better word than ownership, sure.
I want to stress that I don't consider this a minor difference.
> In the same way that if someone takes your cash into their possession, they might not have legal ownership, but now they have to somehow be involved in its' future transfer
Yes. Cash can be stolen by a pickpocket. But two things make this not a difference in degree, but in kind:
1. You can't pickpocket $70M 2. A pickpocket can quickly hand the $100 in your pocket to an accomplice, but not to an accomplice in Bolivia.
If you want to move millions or billions in cash then you have to fill out paperwork exactly because that's how money laundering happens. Cash isn't actually easy to move, nor anonymous, at scale.
$70M is 700kg in $100s. And any legit business you show up with $1M in cash will report it, because they have to and/or because they don't want to be tried as an accomplice to money laundering.
I've had friends receive huge sums in cash, and they have reported it exactly for this reason. Enforcement against financial crime is actually built in.
I think the comparison to cash therefore is completely inappropriate, to the point where I question if it's even said in good faith.
> In a cryptographic system you need the key in order to do things. Whether you think it's good or bad to apply that principle to the concept of money is orthogonal to the ground reality of how it actually works.
In my opinion it's not "money" that's being replaced with math, but "intentions". It's not about replacing fiscal policy with math so much as replacing laws against theft and money laundering.
The definition for the features of cryptocurrencies tend to be the exact description of money laundering and tax evasion.
So if the goal is "I want to commit all the financial crimes" then yes, for those purposes cryptocurrencies have found their use cases.