> Officials said Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were arrested on charges of conspiring to launder money. They are accused of trying to launder 119,754 bitcoin that were stolen after a hacker breached Bitfinex, a cryptocurrency exchange, and initiated more than 2,000 unauthorized transactions. Prosecutors said the bitcoin was sent to a digital wallet controlled by Lichtenstein.
From the actual charging statement (https://www.justice.gov/opa/press-release/file/1470186/downl...), the Feds have more details and fascinating traces through the various methods which the accused laundered the funds. Raises the question of whether they would've attracted so much attention if it were "only" a $70M hack instead of the multibillion dollar one due to BTC appreciation.
> In or around August 2016, a hacker breached Victim VCE’s security systems and infiltrated its infrastructure. While inside Victim VCE’s network, the hacker was able to initiate over 2,000 unauthorized BTC transactions, in which approximately 119,754 BTC was transferred from Victim VCE’s wallets to an outside wallet. At the time of the breach, 119,754 BTC was valued at approximately $71 million. Due to the increase in the value6 of BTC since the breach, the stolen funds are valued at over $4.5 billion as of February 2022.
> The 2017 transfers notwithstanding, the majority of the stolen funds remained in Wallet 1CGA4s from August 2016 until January 31, 2022. On January 31, 2022, law enforcement gained access to Wallet 1CGA4s by decrypting a file saved to LICHTENSTEIN’s cloud storage account, which had been obtained pursuant to a search warrant. The file contained a list of 2,000 virtual currency addresses, along with corresponding private keys.
> ...The connection among the VCE 1 accounts was further confirmed upon reviewing a spreadsheet saved to LICHTENSTEIN’s cloud storage account. The spreadsheet included the log-in information for accounts at various virtual currency exchanges and a notation regarding the status of the accounts
> ...Lichtenstein Email 2 was held at a U.S.-based provider that offered email as well as cloud storage services, among other products. In 2021, agents obtained a copy of the contents of the cloud storage account pursuant to a search warrant. Upon reviewing the contents of the account, agents confirmed that the account was used by LICHTENSTEIN. However, a significant portion of the files were encrypted
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".
One of the first Google results for the names returns 'Get your first $1 million in enterprise sales with zero marketing spend' https://www.youtube.com/watch?v=DuIr5IFQ9Xg
Heather R Morgan
Serial entrepreneur SaaS Investor Razzlekhan = Surrealist Artist, Rapper & Fashion Designer with synesthesia Also Forbes writer
https://www.inc.com/heather-r-morgan/dont-hire-a-salesperson...
"As I build a sales team for my latest software startup, Endpass"
Endpass "Bringing you the delightful and secure Ethereum wallet that's easy enough for grandma to use."
Wait, so did Feds nab them for running Ethereum wallet startup and claim $3B in client wallets as theirs? Or did the pair start Ethereum wallet company to wash stolen coints?
Would this be treated the same way?
Sounds like they were very much involved in the hack... or someone hacked Bitfinex and gifted them the coins?
Reads suspiciously like Gmail. Oh no. You stored your keys weakly encrypted on Google Drive?!
Is there any solution yet to preventing stolen cryptocurrency funds from being spent? Isn't the only solution to have a central database and require laws to require every transaction to be pre-checked to see if it's stolen funds or not?
And not only that, the centralized system will have to be constantly keeping track of wallet mixing to see where funds are being redirected to, attempted to being washed to?
> Lichtenstein and Morgan are charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
It is alleged they stole 119754 BTC, which in 2016 was < $1000USD. Which would have been < $100,000,000. Today, it is worth 5bln. (not that 100mm is nothing.... but it is a lot less).
Could you imagine stealing something that most people thought was a toy. Suddenly it became so valuable that the government could justify who-knows-how-much resources to catch you?
Are you essentially asking if bitcoin has ownership?
I would assume that using someone else's credentials (wallet private key) without permission to make changes to a system (the bitcoin blockchain) is in itself illegal, yes.
IANAL.
The best analogue is cash. If you want to return the cash you need to physically find it and move it back.
1. The bitcoins were only worth ~$70 million at the time of theft. saying they stole "billions" is highly misleading
2. I don't get it, aren't we supposed to be getting less "tough on crime", especially for non-violent offenses?
- Laundering happened before Tornado Cash existed, so Tornado Cash was not used
- They used something like Tornado Cash, but the funds were still traceable
If someone steals steal a fiver from your back pocket then there's no magical wand that the police can wave that teleports the cash back into your hand. They need to come and get it from the kitchen table or wherever the thief has put it assuming they haven't spent it.
Most cryptocurrencies are explicitly designed to act as digital cash in this way. The system is structured such that a coin is fully under the control of the owner of the private key, there is no third party involved to effect some sort of return like a bank can.
If the coins are sitting in an exchange or some other custodian i.e. not exclusively under the control of the owner of a private key then you can effect this change by leaning on the exchange (in a legal sense).
The exchange is the bank, the coins are cash.
Which is why these things are not features, but bugs, in cryptocurrencies. The core design principles of cryptocurrencies are actually bugs, if you think about it.
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.
2. Supposed to be, but we all know that folks are sitting in jail right now for longer periods of time for stealing less.
Is it a bug that my fork can't cut like a knife? Different tools, different purposes.
For fiat currency, there's usually a court system that can be used to determine ownership. Though often they explicitly exclude cash from that - if somebody legitimately acquires bank notes that were previously stolen, they can keep them and they are valid as legal tender.
For cryptocurrency, which jursidiction's justice system is going to determine whether something has a "stolen" marker or not? What if that's not recognised by a different jurisdiction, or someone else comes to the opposite conclusion?
How is this not a total death blow for bitcoin? If the justice department can do it, anyone can. It's a public ledger. So you effectively must treat every transaction you ever make on the blockchain as totally public and tied directly to you.
It's a system designed around a different set of trade-offs. Calling a bug doesn't really make sense. For instance, using full disk encryption means that you lose all your data if you forget your keys. That's not an issue if you use icloud (which presumably has an account recovery process). Based on this, can you say that the "core design principles of full disk encryption are actually bugs"?
So most likely,
1) they didn't launder it properly, leading to police being able to trace it to their bank accounts. I wonder if tornado.cash was used.
2) then police had their names, leading to warrants for all online accounts - google account, apple account, etc.
3) they made the big blunder of keeping their private keys in their online account. Most likely a txt file in google drive. That is such a silly blunder. Without the private keys, the police has zero proof of anything. They could have made a hundred excuses for how they got money in their bank account, as long as the police didn't have the private keys. Who keeps their private keys in an online account?
Apparently the biggest criminals make too many silly mistakes. The old saying applies here: "you don't have to be smart, just don't be an idiot"
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 worth 50x that.. and now they try to move them? And all the keys are in cloud storage? But it had to be frustrating to be sitting on something so valuable without any way to use it. They had to be stressed and anxious about it.
A life of crime is stupid. A life of crime for something this high profile is far beyond stupid.
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 principle to the concept of money is orthogonal to the ground reality of how it actually works.
The original Bitcoin whitepaper explicitly refers to itself as a peer to peer electronic cash system (https://bitcoin.org/bitcoin.pdf). It's the 7th word in. It's designed to operate in a cash-like manner as opposed to a referential (credit-like? not sure what the term is for this) as in a bank ledger or similar.
Having stolen coins recovered seems like an OK thing.
As far as how exactly they got caught, there was a reward offered by the company it was stolen from. It may have been someone tipped the feds off for the reward.
https://www.reddit.com/r/blockfi/comments/skxiei/blockfi_hor...
They couldn't even bother to use strong encryption on the file of private keys. Crypto 101: never store private keys online.
Could at least get a couple bucks from it, possibly.
Example?
The US sentencing guidelines[1] considers multiple factors other than "value stolen"
https://www.ussc.gov/guidelines/2021-guidelines-manual-annot...
https://www.justice.gov/opa/press-release/file/1470186/downl...
note, I didn't read the article, it was just the headline that made me ask the question so possibly slightly off-topic.
Why anyone with a significant amount of crypto assets isn't going to insane extremes in terms of secrecy and durability is beyond me.
I have a fairly good idea on how to make a very efficient algorithm for this. If there is a need for it, I would love to help in any way I can.
They are clearly associated with the hack, but that can be tacked on after further investigation and cross-examination. The money laundering is an easier opening target.
There's selection bias going on because only dumb criminals get caught, so you only hear about the dumb opsec practices of those criminals. Conversely, you'll never hear about the opsec practices of that professional crew with perfect opsec that hacked an exchange/difi contract and disappeared into thin air.
There is absolutely no way of knowing if the money is good or bad. If you consider every mixed_cash as bad, you would be forced to assume that the entire cryptocurrency is bad bec of how the money flows.
The DOJ always pats itself on the back to pretend to the worldwide audience that there is "no" illicit money in the US financial system.
They don't say "good thing they didn't use X method! that would have hampered our investigation irreparably!" at least not in press releases.
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 used in production personally, not / seen it on a granular level.
Sure, they could have destroyed them, losing the money but maybe not getting arrested?
Well now you US prosecutors aren't reading hacker news!
Bitfinex was offering a reward….
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.
This way the police or anybody else cannot get your private key.
There is this ownerless software running.
I don’t see it as theft.
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.
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.
"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 interesting, because apparently fake identity accounts on exchanges are cheap ( partially 'thanks' to all the breaches over the years ).
edit: added '' to thanks
Also, with mixers such as tornado_cash, laundering money is ,sadly, pretty trivial.
They could have used something like wbtc, to bridge the bitcoin to Ethereum and then swap to eth to run it through tornado. But wbtc is a custodial wrapping service that would require kyc. There are other wrapping services that don't, but they have nowhere near that much liquidity on Ethereum to execute the trade to eth needed to run it through tornado.
The other problem is that tornado has limited liquidity itself. At the moment there is about $500M USD worth of eth in tornado. You would do yourself no good to dump a large multiple of that into the pool all at once.
I hope that it's cathartic for you; I just wanted to discuss how possession works in cryptocurrencies.
My apologies for using the word ownership instead of possession, lazy language on my part.
...why not? Police coordinate raids all the time.
Search warrants are given on reasonable doubt. When it comes to cryptocurrencies, the feds have reasonable doubt on everyone. So it is always possible for them to get a search warrant.
I emphasized private keys, bec without them, no matter how much doubt the feds had, they couldn't prove anything.
Or does anyone know if the data is so encrypted that nobody at Google can override? I would highly doubt that, looking at US law enforcement pressure. And I am sure there's a million and one barriers and access requests blocking raw queries, but technically...
Of course, a hefty hefty conspiracy-laden thought, but I just found myself curious if that would even remotely be an option.
Is this not a valid approach?
It's a bug to the vast majority of people, but that doesn't make it a bug to ultralibertarians.
It's a bug if the goal is actually to have everyone adopt it.
they were done-in by I am assuming to be a weak password, enough entropy would have made it uncrackable
You can do that by owning crypto. No need to use it.
> Self-sovereignty
Majority people use centralized exchanges, which regularly control transactions.
> Ease of use/trade/leverage/exchange
Fiat banking is much easier to use than crypto. It's also faster. Now everyone uses 1-tap payments. Crypto transactions are more complicated than that. They also take longer. Also are bad for the environment (not as bad as media portrays, but bad nonetheless)
Tornado cash has about $700mm right now deposited in it, with the vast majority of that being in the 100 ETH deposit pool.
They absolutely could have done it over time. They could have bridged the Bitcoin using the RenVM protocol to receive renBTC, done a combination of selling the renBTC and let arbitrageurs provide the liquidity as the couple would have had to sell a little below market. They could then deposit the ETH in Tornado.cash. Simultaneously to speed things up, they could have deposited the renBTC into an onchain staking protocol to borrow against it, using the borrowed proceeds as their liquidity, and possibly even just forgetting about the collateral and letting the protocol take it eventually.
Even though they would be a large part of the Tornado.cash pool, it would actually only be "for now" because there are several other heists of large seizes that are turned away from Tornado.cash because it is too small. So liquidity begets liquidity. I would content that even if they had become 60% of the pool, boosting its size to $1.5bn, that it would have attracted many more deposits, I could see Tornado.cash being a $3bn pool by now, given the size of heists that I know of.
Tornado.cash of course is not good enough to reintegrate back into the economy, under your name. So then they could have employed the reintegration.
With clean money they earned from salary, they could have created a random token on the Ethereum network, lets call it SHIBA INU (SHIB), made sure to keep a bunch of the tokens for themselves, and then withdrawn tornado cash notes to 100,000 addresses which programmatically bought SHIB, and pumped the token 52885982.4% and just been a lucky trader that cashes out with long term capital gains they pay. They would have had many more billions doing that.
Its too bad that people could try to throw a "conspiracy to commit" charge at me too, the moment I use Tornado Cash or launch an erc20 token now, but its more important to me that my speech isn't chilled so that you all can have a better discussion about it.
A USB is tiny, and you can shrink it's footprint with USB-C. You can also buy USB keys with tamper-proof housings that will blow a fuse if opened to be physically compromised. Coupled with strong post-quantum crypto, that key is relatively secure, even if physically discovered.
That's just the technical bit. You can also split the key in half and transfer the other half somewhere, which creates legal protection. You could also create a housing for the key so it's not easily discoverable.
If all that sounds a bit extra, circle back to that the perpetrator has 4.5 Billion worth of something.
To secretly monitor a single individual's communications, law enforcement should have to get probable cause, present their case to a judge and obtain a court order.
Dragnet surveillance of all communications all the time is a Very Bad Thing.
Financial surveillance and seizure is currently at the Very Bad Thing stage and bitcoin helps move us back toward a better balance between the rights of the individual and the interests of the state.
As to your 2nd point, I agree. Another mistake was uploading private keys to google drive.
And if you're released from prison and recover your Bitcoin, you will be arrested again for contempt of court or a similar charge.
Take 10 BTC and give them to 100 groups/people you don't like. Investigators make their lives miserable for a while.
For normal people, that'd be ridiculously expensive but since they didn't pay for the coins and have 100k+ more they can't use, it's "free."
The difference is that laundering provides you with an explanation for wealth and/or income. Example of laundering: buy a business (with clean or borrowed money), have fictional customers "spend" their cash money at your business every day, then report your income and pay taxes. Now if anybody asks about where you got your money, you have a seemingly legit explanation.
Mixing does none of that. So mixing may be trivial, but laundering is not.
edit: now that I think about it, is that why NFTs are so popular? Are people pretending to have gotten capital gains, while in reality they're buying these things from themselves? That would explain a lot.
They could have used bitwarden (or a password manager) and they would be good to go.
Also the best pursuers needs 6 years (2022 - 2016) to catch them. Plenty of time for the perps to take a lot of measures.
Isn't that impractical? Also how were the police supposed to know that he used this system?
A thief still has to figure out how to convert crypto to fiat. But I am assuming that there are jurisdictions where this is possible without KYC.
Then you can convert those crypto (in new account) into fiat money.
Everyone will know you are lying, but they will never be able to prove it.
Do you think there are more charges to come?
If they think they actually laundered money through businesses, why didn't they charge them with multiple counts of money laundering and multiple counts of wire fraud and a violation of the CFAA?
Maybe that'd allow for something of a reboot of the ecosystem having eliminated the scum that usually starts to invade any remotely financially exploitable system after a while.
Should have just become a limited partner in one of the Silicon Valley PE funds, next to the Oligarchs
Encrypting it with a good password that you remember and then printing the encrypted keys comes to mind.
I think you mean reasonable suspicion & probable cause.
Reasonable doubt is the threshold prosecutors must appear to exceed for a successful finding of guilt with a jury (elimination of reasonable doubt).
We would first go through the process with 'dummy' keys to check everyone was happy with the process and what we were going to do (ie. which commands, what software, what exactly will be signed). We would then do it again with the real thing. And then we'd power off the computer till next time it needed to be used.
"Clunky" would be a good way to describe it... But it's hard to make it better without relying on a bunch of software we don't have the resources to audit.
I don't think he will be commenting anytime soon again if this really is him
https://news.ycombinator.com/threads?id=il
like your neighbor being a serial killer or something
I haven't studied criminology, but I alternatively suppose someone who does that just doesn't think that far ahead. This likely also explains why the vast majority of people with these capabilities choose to live a life in accordance to their country's laws.
From TFA: "Court papers filed against the couple did not accuse them of the hack itself; officials declined to say if the pair are suspected of stealing the money."
But if someone who knew how crypto works wanted to commit a crime, they can. That's scary.
$25,000 bounty seems pretty small, considering.
In the US, it's "innocent until proven guilty".
Media is so quick to assume the person is guilty just because of an allegation.
So is it possible for 1 seed to generate all of them? Doesn't that break information theory (Shannon's compression limit)?
That's exactly what's happening, according to this page that was on the HN front page a few days ago: https://news.ycombinator.com/item?id=30224637
I'm much more worried about non crypto believers hating crypto believers for getting rich while their life is getting harder because of the inflation central banks are imposing on most people.
It worked out well for the owners assuming it is returned.
Not necessarily. If they can spend stolen $, presumably that may be enough to persuade a jury they own it.
Talking about mixers (such as tornado_cash) is a worthy discussion on a post about laundering cryptocurrencies.
I have a question: is it possible to write scripts to do the above automatically? Or does it have to be a manual process?
Few people understand the ecosystem thoroughly (I admit that I do not), so few people can implement the manual process properly. One mistake equals 0 privacy.
Also, would they be allowed to use renVM since everyone knew that these accounts contained bad bitcoin?
> anonymity-enhanced virtual currency (AEC), in a practice known as “chain hopping”; and using U.S.-based business accounts to legitimize their banking activity.
Their problem was that they "closed" the money circle by sending it to real bank accounts. That's how they caught their trace. It seems that laundering billions of dollars is not as easy as they thought haha.
The question is perhaps what is the most one can use and how to do it. Privacy coins probably play a part in this equation.
You maybe could slowly, and methodically convert it out of the privacy coin into a spendable form when needed.
That's backwards. It's how they wrapped it all up. The real trail is pretty clearly AlphaBay 2016/2017 transactions (under gov control around that timeframe), to KYC-flagged accounts at an exchange, with a web of accounts with real info linked together past there.
Justice must give the perception that they are doing enough. They can't really say that it's really hard to catch people committing crimes in cryptocurrencies.
Heather R. Morgan is an international economist, serial entrepreneur, and investor in B2B software companies. She is an expert in persuasion, social engineering, and game theory.
You'd hope that before someone is arrested, the prosecutor has ample evidence to prove guilt.
I don't understand your point.
These individuals have not been proven guilty yet. Why are you editorializing their presumed guilt in this matter.
Note: I have no affiliation with these individuals nor case.
There is a push for more and more permissionless bridges. All the bridge builders and their communities shy away from that obvious discussion because they do host and earn basis points from any crypto that passes over the bridge, even if it is obviously from a heist. It would put a bridge, especially that bridge, in a tough spot if these hackers did too much too soon, the hackers would have needed to be watching bridge technology and from this indictment it just looks like they werent.
But you don't have to keep going for drinks with a person who's just been arrested and let out on bail, you can make up your own opinion as you feel. You can say bad things about him before the judge does, you can deny them business opportunities, your kids don't have to play with his kids.
Later, the UK, Portugal, and Poland seized $1B or so of Bitfinex customer funds due to the funds being delivered by Crypto Capital Corp who was found to be engaged in money laundering. Bitfinex issued LEO tokens to make up for that asset seizure, and have a clause that if the 2016 stolen bitcoins were recovered, they'd be used to retire the LEO tokens. That's why LEO has greatly increased in value recently. https://cryptowat.ch/charts/BITFINEX:LEO-USD?period=1d
Millions of innocent people use cryptocurrencies. Even if you assume a currency is bad, its impractical to think that millions of people are bad.
yes, they're legally presumed innocent but they have a LOT of 'splaining to do.
If someone is on video shooting someone, it is a bit silly to say "Why are you editorializing their presumed guilt in this matter."
This is because USDC is a centralized stablecoin (as is USDT). There are decentralized stablecoins such as UST and MIM (and I believe DAI as well).
A person can believe whatever they want, but when push comes to shove, it's a country's court of law that ultimately determines who legally owns what.
It's the same decision process as the normal justice system. Broadly speaking, you can analyze it as follows (for civil complaints):
1. Is there a clause in the contract that says "disputes follow XYZ jurisdiction"? Then that's the jurisdiction. (And adding such a clause is Contracts 101 material).
2. If not, then you can usually get jurisdiction based on where the offense actually happened, or where the defendant lives. The analysis can get complicated, but it's not going to meaningfully change for cryptocurrency.
3. There's also a potential for extraterritorial jurisdiction in some cases.
> What if that's not recognised by a different jurisdiction, or someone else comes to the opposite conclusion?
Well, jurisdiction really comes down to a) can you get a court to agree that it has jurisdiction, and b) can you get other people to agree to the court's orders for relief.
Lichtenstein and Morgan are charged with conspiracy to commit money laundering
If so, this means that (outside tax obligations) they may have gotten away with it essentially by sitting on the money doing nothing for 5 years and then openly transferred it to themselves. Since they took actions that were meant to launder the money, they opened themselves up to the money laundering charges on their own.
https://www.law.cornell.edu/uscode/text/18/3282
This is similar to many financial regulations where you can have completely legally obtained money but if you deposit $9,000 followed by depositing $1,000 thereby avoiding a CTR notification to the government required for a $10,000 deposit, you're guilty of "structuring" your deposits.
https://www.fincen.gov/sites/default/files/shared/CTRPamphle...
You would never know if it was somebody employed there or at the data center or at the government agency tapping the servers
Yup, I don’t understand how people is not used yet to public trials at social networks
Are bitcoins recognized as personal property, IP, none, or something of a blend in smaller jurisdictions? I have no idea.
In my model the only liability would occur from the normal day to day business operation that you earn the successfully laundered proceeds from. like one of your actual clients sue you because you breached the SLA because you forgot you’re actually running a legitimate business.
From that seed you can generate for all practical purposes an infinite number of private keys for any and all purposes in existence. Using cryptographic one way functions such as a hash or PRNG.
Example: truncate_as_needed ( sha512 (seed | 2022 | wallet_title | priv #123) ) = private key #123
I think you've answered your own question - a true crypto believer does not agree with that. If the smart contract says the Ethereum is mine because you wrote it poorly and I called the transfer money function in the right way ("exploited it"), a true believer would say "yep, it's yours."
I've been indicted twice and both times the grand jury transcripts were just lies.
In fact, I got someone released after 16 months in jail on a burglary charge because their grand jury was lies. The story the cop told was a complete fabrication.
Is it arrogance? Stupidity? Misplaced faith in the anonymity of crypto?
I really don't understand these arguments.
The law still applies whether or not you use cryptocurrency. Using cryptocurrency doesn't free someone from the consequences of their actions.
Illegal acts are still illegal acts.
Intellectual property has been a thing for a long, long time. You don't literally need to have a physical thing somewhere for laws to apply.
Proving this is hard by design, but a good example of that would be how they used the Hansa market as a honeypot by running the market themselves for months.
The entire investigation around Alphabay and how they got to the owner is a bit shady, too, and there have been tons of rumors of the entire official case being based on ad-hoc parallel construction.
They could easily point and say "dude I don't know who that was, here's those coins FBI".
Edit: I checked and unless I mixed some zeroes somewhere it looks like the current bitcoin hash rate of 200 million TH/s can crack 92 bits within a year. log (200,000,000,000,000,000,000*3600*24*365) / log 2 = 92.35
In that world, there is no such thing as stealing. If the crypto transfered, it was allowed to transfer by the contract.
The part that "true believers" are meant to hate is that now, someone on one side of the contract is grasping back to Money 1.0 concepts of conceptual ownership and meeting-of-the-minds type contracts. This enforcement action shows that the government thinks of Ethereum et al in this way too. And therefore the crypto paradise dream is dead.
1. https://www.bhlawfirm.com/blog/2021/05/the-federal-convictio....
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.
High profile cases with public pressure change the equation a bit and can cause charges to be brought on people who normally would not. I suspect this is a way to pass the buck to the courts when the person eventually gets off due to lack of evidence.
>As the anarchists and idealists on HN will soon learn, the decentralized nature of Bitcoin won't make a difference if anyone transmitting it is in violation of federal law.
https://news.ycombinator.com/item?id=5714963
Did he change his mind?
Another fascinating detail.
Source: https://twitter.com/ncweaver/status/1491118233973571585
In reality, crypto's true purpose is a moving target, so it can never be criticized because that's not what crypto is really about.
“The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.” - Assistant Attorney General Kenneth A. Polite Jr. [My emphasis.]
There's no reason for the Justice Dept. not to take a firm stand against those who try to use virtual currencies for criminal purposes, or say that they are doing so - and, in fact, that would be rather better than taking a firm stand against those who have merely been accused of doing so. I guess that 'allegedly' was inserted here in order to forestall a claim that this statement deprived the defendants in this case of due process, if or when it comes to trial.
https://www.europol.europa.eu/media-press/newsroom/news/800-...
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 bit flip) then it should stand even in front of a judge.
Or what if he decided to create his own crypto-currency and it just so happened that his dirty wallet was an early investor of ETH to his fund.
Seems like he could have done more to distance himself.
This article says 97%: https://www.nbcnews.com/think/opinion/prisons-are-packed-bec...
Why are people so eager to confess their guilt instead of challenging the government to prove their guilt beyond a reasonable doubt to the satisfaction of a unanimous jury?
The answer is simple and stark: They’re being coerced.
People standing ready to buy legitimizes crypto as property. I don't love crypto. But prohibition has never worked as intended.
Sidenote: one of the reasons i don't touch crypto is possible laundering charge/suspicion if the tokens happens to had passed through unsavory hands/situation (which may be even unknown at the time) or God forbid 2-3 transactions after me the tokens get involved in terrorism/etc. - imagine as a minimum for example the "FBI background check" hell your GC/etc. will be stuck forever ...
Here its poor OPSEC, no improvement is necessary.
And even if it weren't that's no different than guessing someone's bank account number and paying for purchases that way. Its still someone else's money and its still stealing.
What if they acquired the Bitcoin without using illegal means
Probably not possible in this case, but in DeFi where everything is ruled by smart contracts, what would make executing behavior allowed by those contracts illegal.
Darknet markets sell IDs, the DOJ also says the hackers used fake IDs to reintegrate the money. This fairly welloff couple (lives in Manhattan condo, owns bengal cat and jewelry) could easily just be one of the IDs. Both the husband and wife are early crypto proponents but that might just be circumstantial to both the DOJ and the hacker who got their IDs.
Watching this one. Its like they got just enough of data for a charge to get the subpoenas and warrants, but not enough to go for the bigger more damning charges.
This whole crypto space is just a giant show of "Punk't" isn't it. This can't be real - it is just parodies the whole way down.
Technically no. Many things have intrinsic physical value that cannot be tracked via digital contracts. If I go to amazon and buy a book, but they ship the wrong book due to clerical error, then there's a clear cut violation of expectations with no room for conflicting interpretations.
In the crypto world, NFTs are frequently criticized for this very issue, and it doesn't even leave the digital boundaries: you can prove to have ownership of a token through the blockchain, but whether that token is actually tied to legal ownership of an asset is anyone's guess (case in point, there are various cases of people selling fraudulent NFTs for art they do not own).
Bitcoin is a tool. Like hammer or a shotgun. You can use it whatever way you want. There is no centrally defined "purpose".
I was replying to a claim that a high conviction rate somehow suggests we should dispense with the idea that, as a society, we should not presume guilt.
grumple, who I replied to, seemed to me to be suggesting that because the federal government has a high conviction rate, we should assume the accused are guilty.
I'm suggesting that because there is compelling evidence that many guilty verdicts are obtained through coercion, we should not make that assumption.
They certainly thought an awful lot of themselves - it's fascinating to dig into their public facing digital trail. If they played by the rules they'd have been living large as part of the .001% of the world.
They bought themselves a giant lead brick and chained themselves to it. It'd be sad if it weren't so stereotypically comical.
There are contract disputes all the time over what a word or phrase means, and what a judge will look at is which interpretation best aligns with the broad strokes of what the parties were agreeing to. Nobody agrees to a contract that contains "I get to void the entire agreement at my discretion, keep the proceeds, and leave you with nothing"
You can obviously do that, but it makes little sense to do so when the system has been built around not taking what the prosecution says at face value or as a source of truth. The job of the prosecution is not to show the facts, it's to prosecute. Yes you don't have to go by the standards of the judicial system & presume innocence here, but why then use the prosecution's case when it only makes sense in the context of how our judicial system works?
Since these have a known rightful owner, though, they may just be returned.
Your example doesn't fit what I am saying either. With a digital currency you can do a pre-sale trick, so you'll see the funds were stolen - and you then don't sell them the car in the first place.
We can't incentivize theft.
So why on earth is that a good thing for an asset which is all about the power of decentralized systems?
everyone thinks this story is about me
https://news.ycombinator.com/item?id=30162085
So government was moving bitcoins not hackers. Like I said in that thread it is easier to launder cash than bitcoins because bitcoins are on chain forever and cold cash can be laundered in numerous ways.
Most people take it, and now they have a record. Any future fuck ups (guilty or not) and you're looking at real jail time.
Unless you already knew the people involved or we have some third party sources, we are basically just believing the side that only has 1 goal; showing how guilty the people they prosecute are. How could that mean anything else but assuming guilt?
(And honestly I think that personal feelings towards a person are very often good enough to make a personal judgment on guilt, but we don't even have that here! I'd bet most of us never heard of them before today)
A page recently posted here ([1], citing [2]) claimed that there's a market for freshly mined Bitcoin (i.e. with no history), with people paying as much as 20% markup for it to avoid such risks.
I didn't make any attempt to verify this claim.
[1] https://sethforprivacy.com/posts/fungibility-graveyard/
[2] https://news.bitcoin.com/industry-execs-freshly-minted-virgi...
You'd be crazy not to take the deal, even if you're innocent. Thus, the conviction rate doesn't actually tell us much about how strong the federal cases actually are.
I haven't mentioned either the prosecution or the defense.
The defense makes noises too, and you are welcome to make your own mix of whatever you like.
But to repeat the point, you are under no obligation, it is the official system that is.
https://en.m.wikipedia.org/wiki/Rahzel
And Khan is from Genghis Khan, as mentioned here:
https://www.lyrics.com/sub-artist/Razzlekhan/28366
But this is all just a guess.
What is wrong is for media organizations (which can be as small as independent reporters) to break expected traditions w/o acknowledging it. It suggests that this case is different (and again, it might be different) implicitly, which isn't ethical. You should either work within the prevailing assumptions of the system, or explicitly defy them in a principled maner.
"The DOJ said it was able to seize the funds after an FBI search warrant of one of Lichtenstein's cloud storage accounts found a file containing cryptocurrency addresses and their corresponding private key that granted access to funds stored within."
Any infrastructure has a purpose. It’s fair to ask why Bitcoin exists and whose project it is.
At least, that’s how I think about it.
It does sound like a lot of work. I think I'd go with the $5 wrench option.
On a value system with an inherently public ledger that eventually has to hit a fiat off ramp with KYC/AML requirements? Nah. Everyone has quality opsec until they don't, and the record of your criminal activity is immutable and highly durable.
https://twitter.com/matthewesp/status/1491116443207094272?s=...
They could have possibly gotten cash from cartels at a steep discount, but that story would probably have ended with a richer cartel and two dead nerds.
But you can refer to https://hashcat.net/hashcat/
I don't think this is in practice true, as a matter of fact rather than an ideal. People don't, in general, behave the same with other people who are currently being prosecuted for a crime.
This certainly doesn't mean (most) people support vigilantism or witch hunts, or even that you assume guilt. However it seems clear the vast majority of people are fine with the idea that you might be "careful" with someone who is suspected of a crime, especially one being actively prosecuted. To the degree that many will claim they have a right to know this is happening, i.e. they will argue that news should be carried on this (although perhaps no editorializing). This absolutely is not the same as presumption of innocence.
Sometimes this is very unfair, obviously. But "the social contract" as it is practised seems to be pretty ok with that.
Doing so would mean the token could be transacted, except by users who are on the blocklist and not on the allow-list. And this would prevent a privileged user from abusing the power to add accounts to the block-list. Getting unblocked at the speed of DAO is less of a concern, as long as blocked account-holders can still vote with their tokens.
Granted, their billions aren't in cash. However, once he fled the country he could immediately start converting his position to other assets that aren't so easily stolen. He'd also be able to afford to hide himself, pay taxes and bribes, and pay for some security.
https://twitter.com/BillSPACman/status/1491131214014869505
Edit: whoops. That video is fake. It's from
https://www.tiktok.com/@realrazzlekhan/video/690851478968159...
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 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 KYC is not well enforced, enabling for money laundering between the two wallets.
Especially since in general the likeliest failure mode would be the user forgetting the password to their millions of dollars worth of Bitcoin keys, followed by someone attacking the password.
My online bio need some levelling-up.
But felt it was important enough to state that you know her? I'm not sure what your comment is supposed to be.
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 hood it out" to a bunch of random wallets. You just happen to own 10-20% of the wallets, but the feds now have to try and track thousands of different people over years to try and identify the true thief, and there will always be plausible deniability.
With the Feds involved, that would be sufficient to crack the data.
I don’t see how anyone could really still believe in the original ideals behind Bitcoin. They made something but not what they wanted.
The question is where do you draw the line as an individual.
We can, and should discuss subjects without "tainting" them with general, over-discussed points when we can, especially if we want to keep HN curious and not turn into a echo-chamber.
Even if that were the case, maybe they rationally decided that the risk of pissing off United States federal authorities was better than pissing off Russian authorities and organized crime.
People can disagree even if you're found innocent at trial... just look at OJ's case. The government isn't going to prosecute him again, but "OJ did it" is gonna dog him for the rest of his life.
What happens if a criminal tries to burn cash and is mostly successful in doing so? Do the feds go to the BEP with a claim to get the money reprinted; or, like burned bitcoin, is it gone forever?
They could have just bought a Vanuatu passport with bitcoin (~$150k), then travelled there for a holiday. Leave the US with the US passport and arrive in Van with the Van passport. CHange their name in Vanuatu, then move to a 3rd country to settle permanently with a new name. Maybe change it one more time and gain citizenship in that third country, and that'd be enough to disappear for regular people.
The spooks will still find you, but without extradition powers...
I'm not sure I understand what you mean. Regardless of whether you "were not directly harmed" I don't see why someone should or shouldn't “say bad things about them."
Why shouldn't I express my opinion? Or are we in "If you don't have anything nice to say, don't say anything at all" territory?
I may be misunderstanding your point. If so, please do correct me. If not, I don't see why I (or anyone else) shouldn't express their opinion WRT anything.
What value that opinion may have can certainly be debated, but why should someone not express their opinion?
Disagree here. I know many institutional funds that accept crypto for investment, solely because the third party fund administrator allows it, who only updated to account for that because so many funds and limited partners wanted that.
You would have no idea how much is happening behind the scenes, with the merchant services pushes being just a small tip of an iceberg with its own success or failures.
Auction houses are known to be on the trick -- that is passively mainly/ they don't care and work to "pump" the prices of artwork. But of course law enforcement agencies know about it too.
It shouldn't be illegal: people should be free to buy what they want. But let's not hide behind our noses.
It's a bit of a nitpick, but the Justice Department (DoJ) hasn't proven anything.
The defendants in question have been charged (and arrested?), but no trial (or plea bargain) has been held. As such, presumably the DoJ has what they believe is sufficient evidence to convict the defendants on the charges brought against them.
However, until a trial (or a plea agreement) is concluded, the DoJ hasn't "proven" anything. Rather, they brought charges against some folks. That's not "proven beyond a reasonable doubt," that's making accusations and bringing the case into the court system.
What the DoJ believes (and/or believes it can prove) is not proof in and of itself.
https://www.buzzfeednews.com/article/sarahemerson/crypto-lau...
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 profile cases with public pressure change the equation a bit and can cause charges to be brought on people who normally would not.
Usually, I think the opposite is the case: generally, the DoJ is more careful in high-profile cases, not more cavalier.
Heather Morgan explaining how you can social engineer yourself out of a bad situation, can't make this shit up.
Hint: Millions of people use Bitcoin as a:
- store of value to protect purchasing power over time
- inflation hedge to protect savings from the ravages of inflation
- a hedge to protect against corrupt governments manipulating currency
- protection from negative real interest rates
- censorship-resistant payments
- anonymous payments with instant finality (Lightning)
Money is a tool like any other. Cash, gold, NFTs, Bitcoin, and credit cards can be used for good or evil, lawful or unlawful purposes. The technology isn't inherently moral or immoral. It is just a tool.
The "it's really for nazis" argument is particularly weak. The critics must be getting desperate.
Actually, the 'allegedly' bit was inserted because the defendants in this case are alleged to have committed some criminal act(s). They have not been proven (whether via a trial or a plea agreement) to have done so.
The defendants may well be "guilty," or they may not. That's what the legal process (as flawed as it may be) is constituted to determine.
Forming an opinion at to whether or not anyone has committed an illegal act(s) is perfectly normal and reasonable. However, unless you're a member of a jury in a trial, your opinion generally won't affect the outcome.
All that said, defendants are "alleged" to have committed criminal act(s) until the case has been adjudicated, whether that be by trial or plea agreement.
N.B.: IANAL.
Would be the same with cash
a money laundering charge requires an illicit origin, which means it can only be a tacked on charge after charging or proving someone was involved in the illegal activity.
the government just doesn't know, they just find everything this couple did to be super suspicious. they clearly had control of an excessive amount of cryptocurrency that they were reintegrating into the economy. the government doesn't seem to know if they were actually involved in the heist, or how, or to what extent.
simply obfuscating money isn't illegal. obfuscating an illicit origin is. lets see if the government can get to the bottom of this "conspiracy to obfuscate money of an illicit origin".
"CoinJoin is a trustless method for combining multiple Bitcoin payments from multiple spenders into a single transaction to make it more difficult for outside parties to determine which spender paid which recipient or recipients. Unlike many other privacy solutions, coinjoin transactions do not require a modification to the bitcoin protocol."
This seems to be a pretty nerdy idea of 'how the world works' that could easily spectacularly backfire.
well the most obvious answer to that question is, we don't.
He's not someone I'd hire for anything, he's not someone I'd want my friends and family around. He's not someone I'd want attending any protest I was attending. He's not a good person, and he's a clear and present danger to society. These are the decisions that I, as an individual, am free to make because I'm not the government, and I don't have to abide by "innocent until proven guilty" for how I personally judge people.
Of course that txn would show up on-chain, but if you don't have possession of the private key for the first account, and no digital device has ever "seen" the hardware account then he would've been fine.
This is assuming the key piece of evidence was his private key, and he wouldn't have been prosecuted without it.
Additionally, putting your key in cloud storage sounds like the dumbest thing ever... Just memorize your seed phrase and write it down. Its 4bn for christ sake.
We are just 10,000 hacks away from bitcoin being gone forever! A boy can dream.
"Like it or hate it, there is a sea change happening in how governments treat cryptocurrency. "
Wonder how he feels about that sea change now.
"Approximate Crack Time: 61,103,576,810,655,170 centuries"
Yeah, sure:)
I'm thinking of tying them both in as friends of Lady Gaga, tasked with trying to pay the ransom to the people who kidnapped her dog in crypto. In the process, they accidentally stole too much.
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?
Like it or hate it, there is a sea change happening in how governments treat cryptocurrency."
So they also applied for PPP.
Another good reason not to take a case to trial is potentially spending years in pre-trial detention, destroying your life -- losing your house, your kids, your job and anything else that requires your presence outside of a detention facility.
Which is why so many cases end up as plea bargains -- get sentenced to "time served" for a lesser offense and then try to pick up the pieces of your shattered life, or fight (assuming you have the money/resources to do so) and potentially never get the chance to pick up those pieces.
So yes, the system is quite coercive.
Let's say for the sake of argument that the DoJ (or state prosecutors) determine (by whatever means) that tptacek has committed criminal acts.
You are arrested, arraigned and bail is either denied or set high enough that you can't afford to pay.
How long could you sit in jail before you lose your job, your house, possibly your spouse and your kids and anything else important to you?
It could be years before a trial. And given that most folks can't afford an unexpected $500 expense, sitting in jail waiting to be tried isn't all that unusual.
Given those circumstances, how long could you sit in jail awaiting trial before your life is a complete shambles? Given the make up of folks here on HN, I'd expect that you may well be able to last longer than most.
High bail and pre-trial detention are absolutely used as cudgels that attempt to force even the innocent to accept plea agreements. Especially when indictments tend to include a lot of overcharging -- another cudgel to force a plea agreement.
Which is why I don't believe that plea agreements should be used at all. But that's a much larger discussion and beyond the scope of this comment.
What crypto believers should really hate is the fact that with a warrant, the government can potentially get at your private keys. That'd be an interesting problem for crypto to try to solve
Maybe? IIRC, if you unknowingly buy stolen property, and they trace it to you, I think you have to surrender it to its rightful owner (without compensation from the police).
When someone steals your bike, the cops could spend weeks investigating, interviewing witnesses, searching Craiglist, Facebook Marketplace, staking out the neighborhood for anyone riding the stolen bike, etc.
But they don't, because it's a bike. But steal $3.6 billion, you'll hold their attention for a bit!
This absolutely sounds like parallel construction.
Anyway, I'm not saying that. Eichmann is simply a reductio ad absurdum example of the problems with the "it's just a tool / technology has no moral" position.
Or, the TLA involved have some sort of crack or acceleration procedure; the TLA say "the criminals were dumb" because the people involved can't combat that without admitting guilt, and who'd believe them. The real reason is the TLA used illegal access and tools that we wouldn't be happy they're using against the civilian population? Oh, and the people using the tools are guilty by association so they're inhibited from whistleblowing.
Memorizing a seed phrase leaves you vulnerable to a $5 wrench attack, I wouldn't recommend it.
So claiming it was from mining didn't work in this particular instance.
They don't need to prove you are lying in all instances, it's enough to prove you are lying in one instance. They will get you for that one instance where you didn't launder it properly if they are after you.
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" :)
We don't have to guess. The CFAA refers to unauthorized access to computers, not "systems". The Bitcoin network is not a computer, and someone posting a transaction signed with some key, however that key was obtained, is using the network as intended and not accessing either the Bitcoin network as a whole or the individual computers comprising the Bitcoin network in an unauthorized manner.
> And even if it weren't that's no different than guessing someone's bank account number and paying for purchases that way.
It is different, because in that scenario you're claiming to be the designated account owner, a specific legal person authorized by contract to direct the bank to pay money from that account—not just someone who knows the account number. You generally have to sign a statement to that effect in addition to providing the account details. If you aren't the account holder then you're committing fraud. (Though practically speaking it's really a bit ridiculous that merely knowing the account number—something printed on every check and hardly a closely-held secret—is considered sufficient to set up a direct debit.)
By design, Bitcoin doesn't care about your real-world identity; it only cares about whether you know the private key.
> Its still someone else's money and its still stealing.
Wrong on both counts. Bitcoins are an abstract concept, much like points in a game. They are governed by voluntary consensus among Bitcoin users according to a particular specialized system of rules, and not your private property. In short, they're "yours" only as long as the network says they're "yours". If other Bitcoin users stop recognizing those bitcoins as "yours" for whatever reason—a blockchain fork, a change in the consensus rules, someone else guessing your private key and spending them—you have no legal recourse. There are no physical goods involved which you could sue to have returned to you, and no legally-binding contracts between you and any other participants in the Bitcoin network which you could claim were breached by the change.
Your Wikipedia link cites a 2019 paper published in the Georgetown Technical Law Review whose analysis (https://georgetownlawtechreview.org/wp-content/uploads/2019/...) on page 415-6 says that 2016 US v 50.44 Bitcoins (https://casetext.com/case/united-states-v-5044-bitcoins) determined "cryptocurrencies do not meet the UCC's definition of money" and thus bona fide acquisition is not sufficient to prevent the crypto from being legally seized from the possessor and returned to the original owner.
Of course the problem is the attacker may not know what method you used and resort to the $5 wrench attack anyway :)
Not stealing $3.6B might be an even safer bet.
Of course Putin will take all the money anyway, so what is the point ? Getting the mob for support never ends well.
Also to note one of them is a dual Russian citizen so it more complex than the hypothetical
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 careful in their own process. To make sure their ducks are all in a row. But, when it comes to actually pressing charges or agreeing to plea deals, I think they are much more likely to overcharge or not negotiate so that the case is no longer on their desk and they can say "I did my part".
To use the Rittenhouse example, I think the public expectations of charges impacted the charges because the ones bringing charges are often elected officials (or appointed by them) so there's an incentive to not look at what can be proven with the evidence and instead charge with what the public thinks is "right". The incentive for an elected official is to appease the public with charges, convictions be damned because that's someone else's problem. That's how Rittenhouse's case played out too. Outside of conservative media, there was a lot of attention paid to the judge and the lawyers not being able to prove their case rather than floating the idea that maybe a lesser charge and a conviction was the right thing to do.
On the other hand, I think you saw the same course of events with the George Floyd case but with a different result. The investigation was drawn out and meticulous and charges were brought. That resulted in a conviction but the implication I'm making is that those charges would have been brought regardless of evidence because of the public nature of the case.
https://www.wilsonelser.com/files/repository/PHLY_Article_Cl...
So, crypto believers should be just fine with this.
They used to have the keys. Now the US Govt has the keys. The one who has the keys has the power. All is good
A fair point. And it's likely you're correct.
Although using the term 'prove' has specific legal meaning that many (myself included) folks would associate with the use of that term.
As I said, there's what you believe and what you can prove. Believing you can prove something may be well founded, but at least in the US nothing is actually "proven" until it has been adjudicated -- and even then contrary decisions (e.g., in an appeal) can "un-prove" stuff.
Jokes apart, it is not easy even for Google in-house teams such a query scanning all their drive folders would be very, very expensive computationally.
Most files are stored as binary blobs, i.e. bin formats like PDF etc with some level of compression. Retrieval costs and file read costs for even most common formats can be expensive and slow
Perhaps a better phrasing would be "believe they can prove".
Speculation for IDOs usually requires directly interacting with the contract with your wallet. Likewise new tokens are found on DEXes which requires taking custody of the token.
Borrowing against crypto, leveraging it, going delta neutral, buying options are all available on chain, typically with better yields, and with a higher variety of tokens.
https://www.cnbc.com/2021/08/11/bitcoin-family-hides-bitcoin...
That’s 30+ years of storage for free.
“your memes do have out-of-touch-dad-trying-to-be-cool energy tho”
The article mentions he had many wallets.
And thus the only crime here being tax evasion.
Brokep moved to Cambodia for that reason. They still got him anyway. If the powers want you, they can find away to get you. The only options I can imagine are publicly embarrassing the US government to the delight of Vladimir Putin or making a very large donation to the Cuban government.
There might be prestige in some circles for taking down some dumbass Solidity coder, and some people seem to be getting some money out still (e.g. Wormhole).
But overall I’m short Trail of Bits consulting rate.
also, as time goes on, the proportion of btc that are "dirty" approaches 1, so these chainalysis strategies become less effective, assuming you aren't stupid enough to do some criminal act then cash out at a kyc exchange the next day from the same wallet
> Taihuttu is trying to put a crypto cold wallet on every continent so it’s easier to access his holdings.
I hope it’s at least encrypted with an additional passphrase, otherwise it’s only as strong as the weakest bank’s security.
> Taihuttu has two hiding spots in Europe, another two in Asia, one in South America, and a sixth in Australia.
> We aren’t talking buried treasure – none of the sites are below ground or on a remote island – but the family told CNBC the crypto stashes are hidden in different ways and in a variety of locations, ranging from rental apartments and friends’ homes to self-storage sites.
I hope this is all a decoy or else it’s the worst opsec I’ve seen since about five hours ago.
Assuming you can't physically track down a thief and seize control, the technical best case you can achieve with Bitcoin is to blacklist specific transaction outputs e.g. you can choose not to accept them. You can't prevent others from accepting them, but you could for example as a governmental body add them to a global blacklist of sorts and legally forbid exchanges from accepting transactions which have at some historical point interacted with those blacklisted transaction outputs.
With the use of Lightning or coinjoin or various other privacy preserving protocols you're going to end up in a situation in which you have to taint the entire coinbase (e.g. all coins) eventually; the ultimate endgame of doing that would be to "ban Bitcoin" on exchanges.
With something like Monero or ZCash there's no serial number to track in the first place so you have no ability to blacklist anything; your only option is to refuse to accept those currencies at all.
These are possible legal avenues you can go down. But _returning_ the funds is mathematically impossible without somehow gaining access to the private keys that control them.
The fact that there is no "solution" here is an explicit goal of most of the cryptocurrencies that I'm aware of. It's certainly the reason that I'm interested in the space; it's non-custodial, as cash is.
If someone steals your car, takes it abroad and you don't know where it is, it's gone. There is no solution. Goodbye car. So it goes. If I could add a mechanism that drove it back to me, I wouldn't want it for a host of reasons.
people in Tech will yak-shave choosing the "correct" cypher. Then get pwned by an implementation detail like a bug in enigmail.
1) Hacking, 2) opsec and 3) tradecraft are totally different skills. The most dangerous people (to themselves) are the ones who cover only one of 3. The more advanced among them _know_ they lack in the other areas, but think they can compensate going even deeper on whatever they already know.
When a crime has been committed, it was not allegedly done by a person or persons unknown, it was actually done by whoever they were. One of the jobs of the justice department is to catch criminals, not alleged criminals.
As the anarchists and idealists on HN will soon learn, the decentralized nature of Bitcoin won't make a difference if anyone transmitting it is in violation of federal law. --
This was inevitable. People can wax rhapsodic about the decentralized nature of Bitcoin, but once the feds freeze a few million dollars of a major exchange's assets, as they have done with every single anonymous digital currency since the beginning of time (e-gold,1mdc,Liberty Dollar) and launch a criminal investigation, the currency will be severely destabilized. Within the next year I expect to see a cottage industry emerge where the true believers cash out frozen bitcoin accounts for pennies on the dollar.
and a few other:
CS1: "I would like to exchange these dollars which I represent to be the proceeds of the sale of controlled substances in violation of the Controlled Substances Act for Bitcoin."
Localbitcoins trader: "OK."
It's a slim picking...
Iran North Korea Syria Bhutan Taiwan Azerbaijan Palestine Georgia Cyprus Western Sahara
Even Russia has too much to lose. Maybe if it were $360 Billion, they might consider it.
Since you brought up prohibition, I'll take the bait. We already have prohibitive socio-legal constructions which few people use to form the basis of "prohibition has never worked, so we should not prohibit it." Some examples that are socially and legally prohibited are: murder, rape, incest, slavery, torture, buying and selling of children. I'm unsure if you believe that the prohibition of these acts has also never worked as intended and should be left unprohibited.
Assuming their guilt: "worst", or "most shameful" are the terms I would use. An embarassment to any community they were in.
Presumably, this would do the trick.
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).
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."
Honest questions to people who are familiar with SmartContracts/Ethereum - how do disputes and adjudicating work in this example then?
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.
I'm curious why you included a statement about IP existing for a long time. Is there something about the duration of existence that makes something important? Descriptive statements are notoriously difficult to transform into normative statements.
Do Visa and Mastercard count?
Another way of putting it is this. Expansions in the legal concept of property are consequently expansions in the dominion of the state.
> "The DOJ said it was able to seize the funds after an FBI search warrant of one of Lichtenstein's cloud storage accounts found a file containing cryptocurrency addresses and their corresponding private key that granted access to funds stored within."
That makes sense, and of course storing them in cloud storage was a bad idea. However they could have only obtained the warrant /after/ they pretty much knew Lichtenstein was the culprit.
How did they determine Lichtenstein was the person who had the bitcoins?
Your decision process might work for you, but it's not meaningful for establishing consensus in a cryptocurrency.
How did the FBI know, hey he's the guy, lets get a warrant
I don't know to whom this actually refers. I don't remember anything about enabling money laundering in Satoshi's white paper.
Isn't this exactly how your access to digital content is mediated? A bunch of servers somewhere says that this user identifier is allowed to access this content.
Shortly after he committed suicide I pulled up the French language technical board where he had linked an alias to a real email address. Which mirrors the same mistake as the Silk Road operator.
When you dig deeper into these cases it’s clear that they aren’t properly washing the money. There’s no placement or layering. They go straight to laundering on a public ledger and cash out under their own names.
The simplest explanation is usually the correct one.
...of a case the US DoJ wasn't involved in prosecuting, because it was prosecuted by a completely separate sovereignty.
Not sure how that's an example of DoJ prosecutorial decision-making.
(And that's even before considering if comparison of actual events in one case to the speakers own stated opinion of how a counterfactual hypothetical would turn out, rather than contrasting real events, is really good evidence of a comparative behavior difference.)
https://arstechnica.com/tech-policy/2020/02/man-who-refused-...
Not trying to troll, is there something here I'm missing?
It s what they seem not to explain in movies: we protect our brothers in citizenship against exaggerated foreign conviction, but not foreigners.
There are general similarities in computers mechanically enforcing access that applies to crypto-assets and digital content. I'm specifically interested in how the legal system confers additional properties or re-enforces these properties in digital assets that legitimize the properties institutionally.
I wonder what the penalty is for accepting money to uproot your life because you have nothing to hide. Well, _had_ nothing to hide.
To me that indicates they have been able to turn off alphabay for a long time, considering how easily and well timed they did it. That also means they have had tons of time to build the case. Of course you can argue that the simplest explanation is the best one but considering law enforcement literally operated the biggest DNM for months, completely under the radar I'm not sure why "they found an email he used for a few weeks 4 years ago" would be more simple.
You can read what DeSnake, another admin of the website had to say about the takedown. He's extremely security conscious (he hasn't been caught yet afaik which is another can of worms) and he's adamant that it was not a simple bust. Actually, the whole thing was kind of a mess, with some mods getting arrested (even without making obvious mistakes like Alex did ). You can read up on the confusion here: https://www.darkowl.com/blog-content/alphabay-marketplace-re...
If I had to guess, some mod/admin informed on him (maybe even snake!) hence why they had access to an early email. But who knows? Now in cases like the silk road I'd agree that it was simply trash OPSEC but the Alphabay/Hansa takedown was so sophisticated that anything is possible
this is a strange one, because the IRS agent is the one that made the call.
so FBI, DOJ and IRS are involved.
The IRS agent actually suggested wire fraud and CFAA along with money laundering and defrauding the US (an IRS thing about revenue its owed), which makes sense, but DOJ has only moved on "conspiracy to commit money laundering" and "defraud the US".
Doing business with criminals can bite you, even if you were not participating in a criminal enterprise.
That's all it means. Obviously judges are not supposed to come into a case assuming you are guilty, but you can say that about any type of case. The phrase certainly doesn't mean we have to pretend that you are perfectly innocent up until the point of verdict.
Printing the paper wallets, putting them in a $1 glass jar with a silica packet and burying in your back yard would have been 100 times smarter.
Prohibition has doubtful effect in US on even universally hated and criminally suppressed content like CP.
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.
> 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.
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.
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.
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.
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.
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…)
"Between the 2016 hack and the present, LICHTENSTEIN and MORGAN further engaged in a diverse array of virtual currency transactions, including transacting in numerous altcoins, liquidating BTC through a BTC ATM,23 and purchasing non-fungible tokens (NFTs)."
This is the part that was unproven and goes against sworn testimony in the court. Supposedly, the gun was stored at his friend's house in Kenosha. There was no evidence he took the gun across state lines.
So, you're proving the above poster's point because you're assuming he took the gun across state lines even though there was no evidence shown to show that was the case.
Allow me to rewrite since it wasn't understand I was replying to your question:
I would be convinced to change my mind if you could cite prohibition against inanimate data that maintains the 4th amendment protections in US while simultaneously thwarting those determined to share and manipulate that data.
There's also a lot of time for law enforcement to try and find these threads as well, meaning the perpetrator could well be living in paranoia for as long as the statute of limitations lasts.
People that are capable of getting away with life-changing money type crimes would often be better off being entrepreneurs at the edges of existing regulation. Hello cryptocurrency...
The feds were able to link them to the couple because bitcoins were moved from VCE 4 to other accounts that also had received bitcoins which were traceable to their alphabay accounts.
If they had funneled everything through monero I can't say that they wouldn't have got caught like this.
This is where I may only be a 'partial' member: My feeling is that Bitcoin (not all cryptocurrencies) was about removing Fed/Gov control of the currency. It takes no position against law enforcement of direct currency theft - outside of what could be construed as the theft of currency value by quantitative easing / gifting bailout money to banks, etc.
Bitcoin, specifically, has always had a public ledger too, so start-to-finish transaction tracking is part and parcel.
Definitely not a compelling reason.
Guns = good
Cryptocurrency = bad
Opinions I agree with = good
Opinions I disagree with = bad
Me getting mine = good
Someone else getting theirs = bad
Censorship is the battleground issue for the 2020's.
^Apologies for the lumping of 300 million people into a single sentence description, it's for the sake of trying to make a point of the entanglement of "the US" and "freedom" - which isn't a bad thing.
My understanding so far is that "I currently believe prohibition of inanimate objects has no effect. If supplied with this evidence, then I would believe prohibition of inanimate objects would have an effect."
edit: also under what criteria would be used to judge whether a prohibition "maintains the 4th amendment protections in US"? Any specific relevant cases? If I go hunting for evidence, I want to make sure the goalposts are not moved.
Ironically, Bitcoin enables ownership to be established (at least as far as knowing the private keys = proof of ownership), in addition to the transaction path the electronic bits and bytes took in order to reach its current place of ownership.
So your concerns are about restriction of liberties? or society moving away from small government?
Are you a supporter of cryptocurrencies?
They definitely had custody of the funds and felt obligated to try and launder it
It seems like the government needs to figure out if they were the only ones with custody, which is proving a negative with private keys, but the government seems to feel like it’s needs a greater proof of the actual heist of bitfinex so they can pin the rest on this couple.
Still reading though, this is just what I’ve parsed so far.
The IRS-CI agent had requested CFAA and Wire Fraud charges.
Human society, for a number of years now, has been governed by central authorities that define the rules in which society has to live. Bitcoin cannot and does not take part in dictating how society is to function, Bitcoin is put forward as an alternative currency that cannot be quantitavely eased / printed and gifted to society's largest entities as reward for criminal behaviours that endangered the very society that the central authorities are meant to be acting in protection of.
Central authority is a basic requirement of society. Bitcoin is an alternative currency. Recognition by the central authority of society is a legitimisation of Bitcoin in its position as an alternative currency.
I don't (sort of I do actually) understand Bitcoin being seen as a replacement for all centralisation / government. Bitcoin has never attempted to make legislation. Currency only (and that's shrunk to 'store of value').
DAO's on the other hand... maybe.
I don't follow what you're saying here. Nothing stops something from being dirty multiple times, does it? So nobody might care that it could be traced back to something sketchy 5 years ago, if more immediately it's traced back to last month's crime.
Am I talking to a bot?
My current belief is that attempting prohibition against inanimate data (sharing and manipulating) while maintaining the 4th amendment protections in US and simultaneously thwarting those determined to share and manipulate that data, will be minimally effective and will not significantly impact the ability of those determined to violate the prohibition.
My new belief is immaterial to whether I have changed my mind, other than it must be different somehow (otherwise the mind wasn't changed). Changing your mind just means it changed, so the only requirement is the belief is different. Without evidence, I can't possibly predict what my new belief would be. Therefore I refuse to box in what my new belief would be, and I think it would be ignorant of me to make such a presupposition.
Bear in mind 'change your mind' was a notion introduced by you not me, I can't possibly speak for what you meant there when you brought this phrase into the conversation.
>I currently believe prohibition of inanimate objects has no effect. If supplied with this evidence, then I would believe prohibition of inanimate objects would have an effect."
That's actually not my belief. Clearly there is an effect, and the criteria I think crypto meets is much stricter than merely an inanimate object but rather it drills down to just being sharing and manipulating data. You can memorize a seed phrase that resides entirely in your mind, and other than chemical storage in your brain there is no physical manifestation to seize at a national or individual level that would effectively destroy that wealth.
I think prohibition on inanimate objects has an effect, just not usually the intended effect.
The only data that can even comparably be viewed as a candidate for what prohibition of (strictest case) crypto data can look like I think again is CP. It is universally detested, the criminal penalties can be devastating, fellow prisoners may straight up kill you, and the community will virtually always back the jailing for as long as anyone cares to jail the people engaged in sharing it. I think that puts a decent ceiling for what is possible to impose on crypto, because the public will to impose prohibition on crypto surely can't be as high as it is for the prohibition of sharing data of the abuse of children. Given that even this effort has been essentially futile, I'm not seeing much of a prayer of crypto prohibition being effective at thwarting anyone but the undetermined.
There may be prisoners this moment mining some crypto on their phone, smuggled up someone's ass into prison. If they're not, they trivially could be. That's how hard it is to get rid of.
>also under what criteria would be used to judge whether a prohibition "maintains the 4th amendment protections in US"
The criteria would be not to violate the 4th amendment.
>If I go hunting for evidence, I want to make sure the goalposts are not moved.
That's really up to you, you don't owe me anything and I don't owe you anything either.
Can't trust them if they are lost in the money game
I’m also curious what here looks like parallel construction to you - I thought the statement of facts was surprisingly mundane, but perhaps I missed some red flags?
Maybe these guys are thinking if you're going to be a criminal, you had better make the juice worth the squeeze. Live large, party extravagantly, and probably just rent everything from hotel rooms to yachts so there's less for the authorities to eventually impound when it catches up to you.
Some corollary would apply here. (it's not that anyone particularly loves letting criminals off the hook, it's granting that ability is a slippery slope)
https://idlewords.com/2010/05/an_annotated_letter_from_roman...
A link in there has expired. Archived here:
https://web.archive.org/web/20100130223615/http://www.thesmo...
When the government steps in, it's not usually to say _you_ own it but rather _they_ own part of it. If you own it of course you owe them nothing of it. Government finally getting their greedy hands out of private property would be a huge step up.
This is even more obvious when I present it this way. Yesterday there's a cow in my yard. The next day my neighbor says he recognizes the cow as my cow. The neighbor has ceded over power of the cow, now recognizing I have full control of the cow and they're removing any claim of power they had. It's a contraction or break even of, not expansion, of my neighbor's power.
Ownership means you have full control over your crypto. Paying taxes on it means you don't have ownership, but rather partial ownership. If the state is conferring you full ownership, it would appear their power is decreasing. If the state is taxing crypto, then they're taking away ownership status and instead attributing some of it to themselves -- THEN it's an expansion of power.
At least in half of those countries, once they found you really in control of $3.6B crypto, they would torture you until you give it all, then dispose off your body.
https://twitter.com/jackdwagner/status/1491141362707996672
https://twitter.com/jackdwagner/status/1491140930090717184
https://twitter.com/rudy_betrayed/status/1491225062984531968
If gov got to you, it probably doesn't matter how well you got it protected.
I for one am very sad about this news but much more sad about the reaction of "crypto OGs"
With a bad choice like SHA256, a 7 word passphrase could be cracked in as little as a few months with a single ASIC. The US government probably has a bunch of them already, so I think that an 8 word passphrase is already within reach for current tech.
Of course, with a real key derivation function like Argon2id, things would look much better.
https://www.thedailybeast.com/heather-morgan-rapping-tech-ce...
“The only other significant deposit to the account was an approximately $11,000 U.S. Small Business Administration Paycheck Protection Program (PPP) loan advance provided in response to the COVID-19 crisis,” the complaint states.
It's a race against time. As soon as the coins are sent to a new address you can't know whether goods or services were exchanged in this process and you are thus punishing a well-intentioned seller as opposed to the thief.
She presents herself here: https://www.youtube.com/watch?v=mWq7JgRknTM , I suppose you know what kind of person she is right ? The kind that use pipes as in "Economist | MBA | Serial Entrepreneur | Rapper "in their linkedin profiles but do nothing at all once hired :)
She was more truthful 7 years ago: https://youtu.be/NQAA2LlabUg?t=84 where she listed her main skill as copy writing.
Goodbuy to the luxurious live you enjoy in SV. Part of being a financial criminal is to post about "hustle culture" on linkedin and doing LSD with VC buddies or something
*cryptocurrency is too long
> Like it or hate it, there is a sea change happening in how governments treat cryptocurrency.
To boot, mounting a good defence against the state doesn't cheap. Competent defence attorneys charge quite some money.
In this instance however, it's safe to assume the accused can afford a good legal team/firm.
Talking about (smart) contracts in general, if both parties agree that there was an error they can resolve it without any court. The problem is when only one party disagrees.
Imagine you have a contract with the bank and agree to pay 10% interest on a loan. Later on you try to claim you just weren't paying attention and thought it's 1.0%. That's a hell of a case to prove in front of a judge. And if that were the case the concept of contract would be worthless, invalidated by simply claiming "I didn't mean that".
A smart-contract should be easily reproducible. If that piece of code consistently returns the same result under the specified conditions then it's valid even if the result was because of a mistake the author made while preparing it.
Technically language is very interpretable but in some very simple cases it can be mitigated to the point where it's not a realistic issue. Even your book example isn't simple enough to be completely iron clad in all cases. You can receive a book that matches the criteria you provided (say title) but it's not really the book you were thinking of [0].
For more complex things like contracts and laws you have a lot of reasonably vague points that are up for interpretation. Courts reinterpret laws an contracts all the time, it's (part of) their job. Math is nowhere near as interpretable.
[0] https://www.flavorwire.com/376237/the-doubles-10-pairs-of-gr...
That’s “credit card”. We’ve already lost “crypto”(graphy), let’s avoid deliberately giving away other common shorthands.
Ilya had trouble figuring out how to launder it
Still the outstanding question is whether he is the only one with the encrypted files, or if he was a service provider. not that its a real question to me, its something the government has to prove for stronger charges like the CFAA to be levied and stick.
Law on receiving stolen goods is vague, complex, and jurisdiction-dependent. But in some cases, if the money you get paid is "the same" money that was stolen (something that's actually much easier to show with Bitcoin, where every input to every transaction is another transaction's output), and you know about the crime, yes. See People ex Rel. Briggs v. Hanley.
> Cuban told BuzzFeed News his last email exchange with Lichtenstein was in 2012. “I also found an email saying he left MixRank 6 years ago. That’s the extent of what I know about the guy,” Cuban said.
> Y Combinator did not respond to BuzzFeed News’ request for comment.
— https://www.buzzfeednews.com/article/sarahemerson/crypto-lau...
Isn't that the prime value of blockchain - the immutable chain/record of transactions?
https://www.bloomberg.com/opinion/articles/2022-01-19/washin...
> This is called “money laundering,” and the essential component of money laundering is generating fake taxable income. If you take $13,800 out of your (legitimate, previously taxed) bank account, and you use it to buy cryptocurrency in a wallet that you tell your accountant and the IRS about, and you then use that cryptocurrency to buy a Meebit, and then you take $50 million out of your sack of illegal money, and you use it to buy cryptocurrency in a wallet that you don’t tell your accountant about, and then you use that cryptocurrency to buy the Meebit from your declared wallet, and then you take the $50 million of cryptocurrency out of the declared wallet and put it back in your (legitimate) bank account, and then you write the IRS a check for $20 million saying “ah I’ve been selling NFTs, what fun I have had, but I have to pay the IRS my fair share,” then … I am obviously not going to give you advice on crime but it’s possible you’ve got something there? Like, nobody has any idea what a Meebit is worth, so this string of outlandish numbers is somewhat plausible? It’s possible that some number of NFT wash trades have a purpose other than pumping up volume on NFT platforms?
This is still true, no? Now the government has the keys, so they own it. It's clear that you can't be sloppy with your keys, because "whoever has the cryptographic keys".
If they used a brainwallet (https://en.bitcoin.it/wiki/Brainwallet), the gov wouldn't have taken those keys.
1. Chinese people using Bitcoin to move money outside of China, thereby bypassing government regulations.
2. People building private marketplaces (even if it isn't drugs), thereby avoiding paying taxes.
3. People doing blackmail and extortion directly and using crypto to try to avoid having the money tracked back to them.
4. People stealing electricity and then laundering that stolen energy by converting it into crypto which is then sold for money.
Really, name me any big crypto-based operation that actually pays sales taxes in all regions in which they operate.
Morgan and Ilya appear to be the original hackers as well so on top of the money laundering sentencing which is around 10~20 years, they now have to deal with the hacking charge which appears to be a separate trial.
Morgan and Ilya aren't the only ones involved and the rest of the guys will eventually appear on DOJ website.
I think you are tad exaggerating here. not the dumbest but not certainly anything close to being competent. leaving keys in a cloud storage and not using OTC crypto exchanges outside US.
It's unbelievable stupid to use mixers on a public ledger because its all traceable and immutable. The really smart "criminals" DO NOT live in the US, especially NEW YORK out of all places, they DO NOT leave stupid social media posts or spend time chasing the vapid social media fame, they DO NOT use mixers because they are all points of surveillance.
I won't detail how one could've gotten away with this loot but there is an obvious hint here, blockchain is simply a means of temporary storage to move dirty money. Tether is largely considered a pipeline for illicit funds from China to move out to the West. They absolutely do not do any of the transactions on the blockchain, it is all done through highly organized criminal networks involving banks, shells, casinos.
Feels aside, I get the impression that your knowledge of monero, zero knowledge proofs, and anonymized transaction outputs is lacking. By virtue of the way that monero burns and creates unlinkable transaction outputs with concealed amounts, you cannot discern the amount of any transaction or output unless you're a key party to the transaction. As always the sender is also concealed. Tumblers would be a different and weaker concept all together.
The equation group admits this themselves, and it is proven time and time again every time monero is seized or analyzed.
I do hope you eventually get out of your feelings and get your proverbial shit together, because idolizing your detractors is no way to live. I assure you my ramblings are nowhere near as interesting as the conversations you'll have with your therapist about them.
Also lmao, nobody in this space uses banks, stop it.
Nobody knows who Satoshi was, everybody just assumes he isn't the feds themselves. Such scenario would be so catastrophic to organizations that rely on its advertised anonymity and it would be the best investment ever since you could just keep denying you have this capability, always coming up with a cover story (keys in cloud, we traced their keys, they were dumb etc).
This would keep criminals guessing, the economic value of laundering with crypto is too great to give it up but at the end of the day, they can only operate under uncertainty.
If you had such capabilities, the moment it is known you have it would immediately neutralize any value you derive from that capability.
What is the logical course of action?
Deny. Deny. Deny.
Disavowing, deception, secrecy of such capability is what gives them the edge.
Again, there is no proof that Satoshi Nakamoto was some good hearted criminal/spook.
The true professionals in this industry only use crypto as a reference in their private ledger stored far far out of reach to any Western government.
It's funny that these successful professionals are also the most paranoid and least trusting of crypto (they are convinced Bitcoin was created by the US Government itself).
On a side note, Islam requires a 2.5% Zakat from money hoarded in your account, to be donated to charity, so there's your solution against hoarding :) We don't need the government to fake print money to prevent people from hoarding. Better that money go into charity to truly have a more equitable society, as opposed to the fake and useless proposals we keep seeing and pitting parties against each other.
Since inflation is a centralized operation and Zakat is decentralized, I would wage enforcement of inflation is much easier than enforcement of Zakat.
inspirational in the direction of ideas on this case, and I know people that would trade a private key directly.
would help explain the amateurish laundering.
could be an interesting defense. could explain why they didn't run or do anything when their ISP notified them of the US government snooping back in November.
According to https://www.usgovernmentspending.com/welfare_spending_analys..., in FY2021 welfare (not including Social Security or Medicare, which are for retirees, but including Medicaid) was $2,418B across federal, state, and local, about 76.6%. Neither Zakat or US welfare spending includes discretionary charity.
Overall, US welfare spending seems to be on the same order as, albeit a little less than, a Zakat imposed on all US wealth. Also, I'm not sure if this welfare figure includes EITC, which is the logical way that additional cash benefits should be distributed (since it avoids welfare cliffs).
I'd encourage you to read an excellent primer on the subject: The Ascent of Money by Niall Ferguson. Money is a social construct, not anything tangible. You can create money from leaves you rake in your yard, and organize your neighborhood around how many leaves you have. You can all agree that the giant stone at the bottom of the bay belongs to the unfortunate sailor who lost it, and therefore he's still wealthy even though he can't get his giant stone back (true story). You can agree that the people who are oldest in society deserve the most access to credit, and give them services accordingly.
Basic point here is that wealth is derived from society creating connections and performing services for each other, not from holding currency. Currency is simply the oil in the machinery which helps facilitate these connections. It has no intrinsic value, and the easier it flows, the faster the engine can run. That's why the Fed conducts QE and money printing - it's about the economy, not the currency. Inflation is a side-effect but it's often preferable to loss of real assets and jobs and lives.
Bonds and cash are no longer viable investment asset classes. So all that leaves is Equities, Gold, real estate and bitcoin. It's all about TINA -> there is no alternative.
Zakat is centralized by the government.
> that same mechanism of force could be used to inflate currency.
How so? Could you elaborate?
> but I don't see much functional difference from inflating the currency by 2.5% and then giving the newly created currency to the poor
It's very different because when the government inflates the currency, we all know whose pockets it ends up going into :)
Bitcoin and ETH combined are over 1T USD, much more than the figure you quoted. That's 25B annually, imagine how many lives that can change. Not to mention gold, which is at 11T, so 250B annually. Insane money that can revamp the entire planet.
It's strictly superior to have a system based on Zakat than the insane income taxes that we have today.
> Neither Zakat or US welfare spending includes discretionary charity.
Zakat is the bare minimum required for Muslims to pay per year. Islam heavily encourages discretionary charity, called Sadaqah. Both approaches are complementary.
I'm going to assume you're from one of the countries mentioned below? It's my understanding most countries with Muslim majority do not centrally enforce Zakat.
>Today, in most Muslim-majority countries, zakat contributions are voluntary, while in Libya, Malaysia, Pakistan, Saudi Arabia, Sudan, and Yemen, zakat is mandated and collected by the state (as of 2015).[16][17]
[wikipedia ^]
>How so? Could you elaborate?
By compelling people to hold wealth denominated in currency, and then inflate that currency using central bank or treasury.
> It's very different because when the government inflates the currency, we all know whose pockets it ends up going into :)
No disagreement here. But government can also misappropriate Zakat. I am actually not in favor of most forms of planned inflation nor a compulsory Zakat precisely in part because I predict massive fraud on the minority of those holding the power to distribute it.
The need for currency oil is real! imagine if you had to sell a house, everytime you needed to get some liquidity.
Today, many Muslim countries are not in a good shape unfortunately, and that's due to several reasons beyond the scope here. I'm referring to how things are required by Islam, and how things were done historically when Islam was actually implemented. Today Islam is not applied 100% unfortunately, which is a main cause of weakness for Muslim nations. They're either in property due to occupation, current or historic, or have to bow down to the West's whims, so that they are not overturned or invaded.
> By compelling people to hold wealth denominated in currency, and then inflate that currency using central bank or treasury.
I meant how would inflation happen in case of Zakat being enforced? They're orthogonal things unless I'm misunderstanding you.
> But government can also misappropriate Zakat
There is a set category of people whom are deserving of Zakat clearly outlined in the Quran. So, if Islam is properly applied, there would not be any meddling. It has been historically documented that in Iraq during Ummayad rule, there were no more poor people left to accept Zakat. Quite amazing.
>It has been historically documented that in Iraq during Ummayad rule, there were no more poor people left to accept Zakat.
Umayyad had a variety of religions of persons overseen by their caliphate. Was Zakat distributed to poor Christians in the Caliphate? Or did Zakat only go to Muslims? This is important to know, because supporting only minority of the poor who practice Islam could mean Zakat may have not solved poverty for the entire populace. I'd also be interested in seeing the citation that poverty didn't exist under this caliphate.
In America we have the problem that lots of administrators and bureaucrats siphon off much of the money in the welfare system into their salaries as well as issues with the money going into the hands it is intended to go to. Also since the money is taken by force, there's not a lot of control by those who contribute the money over making sure it is used appropriately.
I will note I find it both fascinating and worthy of respect that many cultures have come up with their own ways of helping the poor.
Personally I would be much more on board with a decentralized type of Zakat where individuals can pick what charity to go to, in order to protect from centralized failures of government.
>I meant how would inflation happen in case of Zakat being enforced? They're orthogonal things unless I'm misunderstanding you.
If I wanted to enforce Zakat via inflation, I would mandate people to hold their money in bank, as debt, or fiat denominated bonds, and then I would inflate the money supply by 2.5% by mailing out 2.5% of the current supply to the poor per year, or something approximating that. But that would also be an imperfect system.
Any evidence on this?
I agree that humans can be greedy, etc. But that's why we have a judicial system. When you look at history, the Islamic scholars took their faith extremely seriously. Their accounts and biographies are not something you'd find in Western texts, but those exceptional people truly did exist. And because of them, we had things like the Islamic Golden Age.
The governments today have way more money on their hands don't they? Especially with the insane taxation rates we see. You allude to this point when you mention secular welfare systems. But history shows otherwise when Islam was applied.
> Umayyad had a variety of religions of persons overseen by their caliphate
Islam was the dominant religion, and the majority of the population were Muslims. The non-Muslims had to pay Jizya (limited to able men, i.e. not women, children, old men, or religious priests).
One of the categories of people who are eligible to receive Zakat, are those whose hearts are inclined toward Islam. Other than that, I don't think non-Muslims receive it. That being said, poor and needy non-Muslims are definitely eligible for charity (Sadaqah), and it is the responsibility of a functioning government to ensure that its population is well taken care of. Islam guarantees the rights of non-Muslims, and is very strict about it.
> I'd also be interested in seeing the citation that poverty didn't exist under this caliphate.
I didn't claim that no poverty existed in the entire Caliphate. As you know, the Caliphate spanned several regions and districts. I mentioned the Iraqi district, but I came across this question[1], which mentions that the mayors of the Libiyan and Tunisian regions wrote to Umar ibn AbdulAziz that they could not find a needy person to give them Zakat, so he responded to give it to the poor among the Jews and Christians. They replied that still no one took it, and they were no needy among them, so Umar replied to leave it in the market for anyone to take as they need. When still no one took it, Umar ordered to purchase slaves and free them.
I'll have to validate the authenticity of this specific account, but the notion that during Umar's rule, in certain districts there were no poor people left to accept Zakat is established.
> If I wanted to enforce Zakat via inflation, I would mandate people to hold their money in bank
Ah I see. It's prohibited in Islam to hold someone's money against their will, so there goes that :)
[1] https://islamqa.info/ar/answers/182393/%D8%AD%D9%83%D9%85-%D...
https://www.reddit.com/r/CryptoCurrency/comments/sohojt/mela...
With SHA-256 it takes about $21 to crack a 6 character password.
$1500 to crack 7 characters.
$108,330 to crack 8 characters.
$7.8 million to crack 9 characters.
$561 million to crack 10 characters.
$40 billion to crack 11 characters.
$3 trillion to crack 12 characters.
$200 trillion to crack 13 characters.
Edit Note: BTC is kinda expensive per hash right now. Usually this would all be cheaper. Past 14 characters it could be 1 cent and still outrun the usual US budget for a couple years.
Yes and I think the level of money and trust the government holds is a source of massive failure. I think those practicing Islam should be free to distribute their Zakat directly to poor or their select organizations that aid poor, rather than being forced to give it to a central authority. Otherwise one central authority has a monopoly on distribution of Zakat, which can lead to many inefficiencies and failures.
>One of the categories of people who are eligible to receive Zakat, are those whose hearts are inclined toward Islam. Other than that, I don't think non-Muslims receive it. That being said, poor and needy non-Muslims are definitely eligible for charity (Sadaqah), and it is the responsibility of a functioning government to ensure that its population is well taken care of. Islam guarantees the rights of non-Muslims, and is very strict about it.
Again I think it's wonderful that people are offered this kind of charity. I'm a little skeptical that the system under the caliphate could have prevented all poverty or that the poverty that remained wasn't solved by collecting Jizya from non-muslims and then distributing Zakat only to those whose hearts are inclined toward Islam. I admit I do not understand much of the history of Muslim Caliphates or nations, so I'm unable to really ascertain where islamqa.info gets its source from, but I doubt we have very good record of income distributions under this caliphate. But hey, I don't have any proof that there were poor, so maybe it's true.
I do thank you for digging up your source in this matter, and it is interesting to note some points on records of history.
> Ah I see. It's prohibited in Islam to hold someone's money against their will, so there goes that :)
A reasonable prohibition, one I extend to involuntary taxes and forced centrally collected charity.
Thank you for your viewpoint here, as it's one I rarely see living in the west.
Of course. I did not want to get into such complications. This was more of a Fermi estimate to compare the amount a Zakat would raise in the US.
> It's strictly superior to have a system based on Zakat than the insane income taxes that we have today.
Maybe - remember that the US government pays for more besides bare welfare for the needy. Also the Islamic Zakat pays for more than welfare - also administration of Zakat (reasonable, but should be kept as low as possible) and Islamic missionary efforts (I don't think the US should redirect its welfare to "spreading liberty and democracy").
Even in Islam, there were more taxes than Zakat[1] - at the very least, a tax on harvests (corporate income or business reciepts tax) and a land tax - because Islamic governments also have other responsibilities besides charity. It would stand to reason that the federal and state governments would also continue to collect other taxes to support other government responsibilities. Also remember that inflation (certainly that intentionally engineered by the central bank) is effectively a wealth tax.
> 2OEH8eoCRo0:
> My experience was that people did not look at the evidence- they jumped to a conclusion.
You didn't look at the evidence, you jumped to a conclusion which is not based in fact, and broadcasted that you did this in your message. Thus proving 2OHEH8eoCRo0's point: people assume things about the case without looking at the facts.
> I didn't say I think he's guilty of transporting a weapon
You 100% did claim this when you said "the fact is that he took a gun across state lines".
Which missionary efforts? If you mean paying Zakat to those whose hearts are inclined toward Islam that's something different.
> a tax on harvests
I mentioned this in my previous post. Livestock and produce have different Zakat calculations than the 2.5% of money held for a year.
If you're referring to Ushr, that's imposed on non-Muslim nations that taxed Muslims, so a tit-for-tat treatment, and it's not part of Islam per-se, but a socio-political decision.
> certainly that intentionally engineered by the central bank
Exactly what we don't want. We don't want a select few people to determine the tax rate for the entire population, affecting mainly people at the lower socioeconomic levels in society.
I dont care myself, just telling you why we ll never give him as a country. We simply feel different emotions (here doubt in France vs horror in the US). No need to ad hominem me in isolation as if I supported rape. I just know the media portray him as a victim of a 120 years-sentence justice system.
If he raped someone yday, like our ex-future-president DSK did in NYC, by all means, keep him, and we d give him back if he fled. But that also turned out a puritain whitch hunt in the end so it's hard to trust americans with our citizens.
You can walk in the river instead of trying to cover your tracks.