Again, this communication from the FBI is specifically targeted at victims of a particular scam. The victims have already lost more than what the FBI could hypothetically maybe do to them. Unless we live in Scooby Doo-verse and the FBI agent removes his mask to reveal that he was the IRS all along and this was all a ploy to get people to pay their taxes.
Do you get to write off rug pulls like any other capital loss? For that matter, what are the tax implications of getting mugged?
They also specifically ask for people who made withdrawals. In a fraud like this, those who lost money often recover from the people who got out in time. Eg almost 90% of the losses from Bernie Madoff were recovered by suing those who innocently withdrew their 'gains' before the ponzi scheme was discovered.
That's fascinating. It would seem to set up a situation where your incentive, if you suspect a Ponzi scheme, is to quietly withdraw your money early then keep your mouth shut. Unfortunate if true.
I would imagine the FBI to be able to trace the holders of all the big withdrawals through the blockchain.
> The government alleges that the HashFlare cloud mining service did not have access to the volume of mining power that was needed to service the amount of mining contracts it sold to the public. The government further alleges that, to enable HashFlare to create the illusion that it was mining bitcoin, Potapenko purchased bitcoin from a third party and distributed it to victims who were requesting withdrawals from their HashFlare account.
This seems kinda reasonable as long as it was disclosed... Buying and setting up mining hardware takes a while. Buying bitcoins on the open market from someone else who has mining hardware is functionally identical.
It's a bit like going to a farmer and giving him money to grow a field of corn for you, only to find out he actually gave your money to some other farmer who grew the corn and gave it to you.
> The government alleges that the HashFlare cloud mining service did not have access to the volume of mining power that was needed to service the amount of mining contracts it sold to the public. The government further alleges that, to enable HashFlare to create the illusion that it was mining bitcoin, Potapenko purchased bitcoin from a third party and distributed it to victims who were requesting withdrawals from th…
Not sure about the right mind but the BTC core developer who "lost" 216 BTC a few days back apparently tried asking FBI for help[1]. [1] https://twitter.com/LukeDashjr/status/1609630432546406404#m
As long as you were going to pay taxes and weren’t actually defrauding people, might as well file a report in case anything comes of it.
It’s worth noting that Luke would be a prime target for nation state hackers from DPRK and the likes.
What happened here was likely a failed attempt to slip a backdoor into bitcoin core, attackers pulled out and took his bitcoins as a consolation prize after he realised his server had been compromised.
The FBI should absolutely be jumping on this, not because of bitcoin, but because of the likely perpetrators.
> The government alleges that the HashFlare cloud mining service did not have access to the volume of mining power that was needed to service the amount of mining contracts it sold to the public. The government further alleges that, to enable HashFlare to create the illusion that it was mining bitcoin, Potapenko purchased bitcoin from a third party and distributed it to victims who were requesting withdrawals from th…
I think you're missing an important component:
> who were requesting withdrawals from their HashFlare account
So it was more like a ton of people pay a farmer to grow a field of corn, and when they ask for corn in return, the farmer buys corn somewhere else and presents it as from his field. Meanwhile the farmer hasn't planted what they should have, and hopes not too many people ask for their cork or they'll crash.
Who in their right mind would share their wallet info with the FBI. That’s an easy way to get shortlisted.
I default to pro-privacy, on principle, but are you talking about a more specific threat? A threat that outweighs the benefits of: possibly increasing the likelihood/degree of takedown of an alleged scammer, and also possibly being more likely to be compensated for losses?
The FBI maintains databases of individuals that they consider potential terrorism with such weak definitions that anyone who uses a blockchain application would qualify[1]. When you are put on the list, they will never confirm or deny whether you are on the list. However you will find yourself losing rights to internationally travel freely without harassment, may have computing devices compromised by agents, may have wiretaps or microphones placed in your residence, and more.
I will admit that they do target US citizens less than others, but most hashflare victims are not US citizens and do not get those protections.
This whole story sounds like an intro track of an imaginary "Wild Crypto of ICO 2017" album if it was a thing. There are so many tracks yet to be discovered.
Who in their right mind would share their wallet info with the FBI. That’s an easy way to get shortlisted.
Yeah! Don’t trust the man! The man is only interested in … something! There must be an ulterior motive in trying to bring scammers to book! Just think for a second. If someone has been scammed out of millions, you think they’re not going to talk to law enforcement about it? They wouldn’t only if they were perpetrating their own scam. At some point privacy nuts on HN have to really stop and think before typing.
When considering which corporate bodies to trust, I consider their public statements and policies, their historical behaviors, and reports from other users of their services. The FBI’s official policy is to harasses individuals they place on secret watchlists. Historically, the agency has been one of the most corrupt from the beginning, especially the Hoover era, and has never gone through a period of substantive reform to resolve these issues. Additionally, multiple victims of crimes who have reported their situation to the FBI have either seen no positive actions or have even been harassed themselves by FBI employees. Currently there’s a severe shortage of reputable cybercrime security providers that also have enough capabilities to enforce the result of investigations, but the FBI is such a poor organization that it would be foolish to even consider requesting their services.