BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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In summary: I don't know if this actually happened, but...?In summary, the website of major bitcoin exchange MtGox was offline Tuesday amid reports it suffered a debilitating theft. Around midmorning in the U.S., the company released a statement saying it had closed off transactions "to protect the site and our users." It offered no further details.
  • #701
I have to say, it seems like a massive know your customer failure by the bank that retail customers sent 8 billion dollars to his proprietary trading firm account without them noticing...
 
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  • #702
It was wgar, $8B? That would generate a revenue stream in the many tens of millions. I'm sure the moment they opened up the account they also started a file titled "We Couldn't Possibly Have Known."
 
  • #703
Vanadium 50 said:
It was wgar, $8B? That would generate a revenue stream in the many tens of millions. I'm sure the moment they opened up the account they also started a file titled "We Couldn't Possibly Have Known."

It honestly wouldn't surprise me if it turns out the bank's salesperson recommended this workaround.
 
  • #704
That's the kind of thinking that turns a branch manager into a VP.
 
  • #705
And speaking of KYC, there is the other side of that coin, AML: anti-money laundering. If someone takes dollars, turns it into crypto and uses it to pay someone to, say, whack his mother-in-law, and then that person turns the crypto into dollars, the Feds have a reasonable case that crypto exists to do money laundering.

This would not be good news for the owners of crypto.
 
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  • #706
Interesting article in the Feb 25th - March 3rd issue of the The Economist titled Crypto-heist. The full article is behind a paywall, but most libraries have the magazine. Excerpt from the article:

Despite being unable to feed its people, North Korea has found innovative ways to fund its missiles programme, including by forging foreign currency, committing insurance fraud and making and selling arms and narcotics. A more novel revenue stream is stolen cryptocurrency. Last year its hackers pinched a record $1.7bn of the stuff, according to a report published this month by Chainalysis, a data firm based in New York.

Further bad news for the owners of crypto.
 
  • #707
https://www.cnn.com/2023/02/28/investing/nishad-singh-ftx-guilty-plea/index.html
Former director of engineering at FTX Nishad Singh pleads guilty to criminal charges
Singh was selected to be the face of the left-leaning donations, the prosecutors allege. Bankman-Fried conspired to contribute “at least a million dollars” to a super PAC that was supporting a candidate running for a United States Congressional seat and appeared to be affiliated with pro-LGBTQ issues, the indictment says.

A political consultant working for Bankman-Fried allegedly asked Singh to make the contribution, telling him, “In general, you being the center left face of our spending will mean you giving to a lot of woke sh*t for transactional purposes.”
https://www.sec.gov/news/press-release/2023-40
SEC Charges Nishad Singh with Defrauding Investors in Crypto Asset Trading Platform FTX

Yes, it seems this was all just a calculated confidence game for all points of view, personal and political.
 
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  • #709
Money laundering? I'm shocked. Shocked!
 
  • #710

https://www.streetinsider.com/dr/news.php?id=21323004​

​

Crypto firms behind Tether used falsified documents to maintain banking system access - WSJ​

March 3, 2023 1:36 PM
resize_images-13.jpg

According to a Wall Street Journal report on Friday, crypto firms behind Tether used falsified documents and shell companies to get bank accounts.
According to the report, documents show that in late 2018, companies behind Tether struggled to maintain access to the global banking system, resulting in some of their backers turning to "shadowy intermediaries, falsified documents, and shell companies to get back in."
In an email from Stephen Moore, one of the owners of Tether Holdings Ltd, viewed by the WSJ, one of the intermediaries, a major tether trader in China, was revealed to be trying to bypass the banking system by "providing fake sales invoices and contracts for each deposit and withdrawal."
Tether, which according to WSJ sources, has been under investigation by the US justice department, runs the $71 billion stablecoin tether, and a sister company runs Bitfinex, one of the largest crypto exchanges.
 
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  • #711
lol. . .Nowadays, I'm not asking which crypto firms engage in fraud, but which DON'T?!
 
  • #712
People can do themselves a favor and just get rich slow: $VOO ...DCA for 30-40 years....retire rich.

Even $BRK (Class B shares for us mere mortals) is fine.
 
  • #713
kyphysics said:
lol. . .Nowadays, I'm not asking which crypto firms engage in fraud, but which DON'T?!
Schrodinger's Crypto Exchange.
 
  • #717
“Please note you are solely responsible for the security of your email, your passwords, your 2FA codes, and your devices,” Coinbase allegedly told Ferguson in an email.

He argued that the company’s response to the alleged theft “disclaimed any responsibility for the hacking of its customers’ accounts,” and that its security practices fail to notice and stop “obviously fraudulent” transactions.
Of course we are responsible, but what if it is HACKED? Credit cards will take the loss if you report a stolen/lost card and there were unauthorized purchases. You don't have to pay for them.

If this guy's money was taken out using an IP address NEVER associated with his account and he reported this quickly, it seems reasonable to think he's telling the truth.
 
  • #718
There is an ongoing hack with the Myalgo wallet. It's a web browser ''wallet'' for Algorand. To me, it looks like an insider job. Supposedly your private keys aren't supposed to leave your machine when interacting with the website, but people who interacted with it are getting their wallets drained. As if a dev had modified the closed source code of myalgo, to retrieve the private keys of people connecting to it. Pretty disgusting, if you ask me.
 
  • #719
USDC, a stablecoin (non algorithmic), is losing its peg to the USD.
DAI, an algorithmic stablecoin, is also losing its peg to the USD. I think this is related to the bankrupt of a crypto friendly bank in Sillycoin Valley.
 
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  • #720
fluidistic said:
a stablecoin ... is losing its peg to the USD.
Obviously a new definition of the word "stable" of which I was previously unaware.
 
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  • #721
Vanadium 50 said:
Obviously a new definition of the word "stable" of which I was previously unaware.
https://cointelegraph.com/news/bitc...c-terms-how-high-can-the-btc-short-squeeze-go

“If USDC is only 90% backed, the equilibrium price is NOT $0.90. The equilibrium price is ZERO,” Cory Klippsten, CEO of Swan Bitcoin, reacted, adding:

“Everyone has the incentive to redeem asap for $1. You don’t want to be in the last 10%, with all the money already gone.“
 
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  • #722
nsaspook said:
https://cointelegraph.com/news/bitc...c-terms-how-high-can-the-btc-short-squeeze-go

“If USDC is only 90% backed, the equilibrium price is NOT $0.90. The equilibrium price is ZERO,” Cory Klippsten, CEO of Swan Bitcoin, reacted, adding:
With this logic, people should run to withdraw all their cryptos from all centralized exchenges, as none is fully backed up.

People should also run and empty their bank accounts in cash, as only around 2 percent of one's money is backed in paper money. Once all papers are removed from banks, people could start making money by selling them to those badly in need of paper money.

Am I wrong?
 
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  • #723
fluidistic said:
Am I wrong?
Yes, for US banks anyway. Unless your bank account is more than $250,000 it is insured by the FDIC.
 
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  • #724
fluidistic said:
People should also run and empty their bank accounts in cash, as only around 2 percent of one's money is backed in paper money.
Nonsense. "Paper money" is just a holding token for "the full faith and credit of the United States" and that is backed to the tune of $250,000 for individual bank accounts.
 
  • #725
I do not understand how that goes against what I wrote. Even if it were fully backed no matter the amount in one's account.
 
  • #726
gmax137 said:
it is insured by the FDIC.
But that's also not cash but electronic money, no?
So regardless the insurance no sufficient 'backing' in cash.

As scorn on the nonsense of that bitcoin guru, it's just brilliant, IMHO.
 
  • #727
fluidistic said:
I do not understand how that goes against what I wrote. Even if it were fully backed no matter the amount in one's account.
what you wrote was
people should also run and empty their bank accounts...
That is what I was saying is nonsense. People COULD just pay for everything with checks, credit cards, PayPal, etc. Actual greenbacks are not necessary.
 
  • #728
gmax137 said:
unless your bank account is more than $250,000 it is insured by the FDIC.
I believe it is better than this. If it is over $250K, the first $250K is insured, Per bank, not per depositor. If someone had $1.5M and deposited $300K each in five banks, and fourt failed, he would get at least $1.3M back

As a practical matter, when the FDIC has stepped in, people have gotten all of their money back. Few people are above the limit, so the difference is snall, and the government prefers to step in before a bank goes belly-up.
 
  • #729
Rive said:
But that's also not cash but electronic money, no?
So regardless the insurance no sufficient 'backing' in cash.

As scorn on the nonsense of that bitcoin guru, it's just brilliant, IMHO.

I don't know what point you are making here.

See
https://www.fdic.gov/resources/deposit-insurance/understanding-deposit-insurance/

"Federal deposit insurance goes to the heart of the FDIC’s mission: to promote confidence and stability in the nation’s financial system. FDIC deposit insurance enables consumers to confidently place their money at thousands of FDIC-insured banks across the country, and is backed by the full faith and credit of the United States government. Since the founding of the Federal Deposit Insurance Corporation in 1933 no depositor has lost a penny of FDIC-insured funds."

EDIT: Emphasis mine.
 
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  • #730
gmax137 said:
I don't know what point you are making here.
My point is that you did not get the point of that comment either.
#722 was sarcasm, not an argument.
 
  • #731
Rive said:
My point is that you did not get the point of that comment either.
#722 was sarcasm, not an argument.
Well, I have missed out on sarcasm before, especially in print.
 
  • #732
https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

Regulators close New York’s Signature Bank, citing systemic risk​

To stem the damage and stave off a bigger crisis, the Fed and Treasury created an emergency program to backstop deposits at both Signature Bank and Silicon Valley Bank using the Fed’s emergency lending authority.

While depositors will have access to their money, equity and bondholders at these banks are being wiped out, a senior Treasury official said.

FDIC insurance now covers all deposits but equity and bondholders are left holding worthless paper.

I guess that's the risk with any investment.
 
  • #733
nsaspook said:
https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

Regulators close New York’s Signature Bank, citing systemic risk​

FDIC insurance now covers all deposits but equity and bondholders are left holding worthless paper.

I guess that's the risk with any investment.
I heard about it last night. Crypto exposure (is like Cryptonite) has real world consequences.

Regulators seized New York regional bank Signature Bank (SBNY) two days after shutting down Silicon Valley Bank as overseers of the banking system try to restore calm before markets open Monday.
https://finance.yahoo.com/news/regu...-third-largest-us-bank-failure-231404695.html
Signature becomes the third-largest bank to ever fail in the U.S., behind Silicon Valley Bank and Washington Mutual in 2008, if its assets haven't changed significantly since the end of 2022. Signature had $110 billion in assets as of Dec. 31, ranking 29th among U.S. banks. It had $88 billion in deposits as of that date, and approximately 89.7% were not insured by the Federal Deposit Insurance Corporation.

Signature served clients in the cryptocurrency world and had been trying to reduce its exposure. Like Silvergate Bank, another crypto-friendly bank that said last week it would voluntarily wind itself down, it suffered from a deposit outflow in the aftermath of the collapse of crypto exchange FTX. Deposits dropped 17% in the fourth quarter of 2022 as compared to the year-earlier period.

The value of some of its securities had also dropped in value due to a rapid rise in interest rates over the last year, . . .
So where was the regulation, the risk assessment, the stress tests, . . . . ? Interest rates have been steadily rising for about a year, and there was warning months before that started happening.
 
  • #734
https://www.bloomberg.com/news/arti...r-finance-hit-by-197-million-hack-experts-say
Decentralized lending protocol Euler Finance was hit by an attack that drained $197 million in cryptocurrencies from its platform on Monday, making it the largest hack in its corner of the digital-assets market this year.

The bulk of the hacker’s loot — worth roughly $135 million — was denominated in staked Ether tokens (stETH), while the remainder was held in wrapped Bitcoin and stablecoins DAI and USDC, according to security firm BlockSec. Some of the proceeds from the attack are already being laundered through Tornado Cash, a US-sanctioned platform which enables users to obfuscate their transaction history, security companies PeckShield Inc and Elliptic said.
The incident at Euler is the latest blow to the battered crypto sector, following the recent shutdown of several crypto-friendly US banks in the last week which left multiple major digital-asset companies exposed. Those collapses have capped off months of bankruptcies, scandals and layoffs among crypto companies, triggered by a rout in digital asset prices.

 
  • #735
A new report filed in the ongoing autopsy of failed crypto exchange FTX reveals a litany of accusations against the company including executives who laughed about losing track of millions, a culture that cracked down on anyone who flagged potential problems, and a total disregard for normal accounting principles.
https://finance.yahoo.com/news/ftx-execs-joked-internally-losing-180620302.html
A group of FTX’s debtors, led by current CEO and chief restructuring officer John Ray III, filed a 39-page report with the U.S. Bankruptcy Court for the District of Delaware Sunday, detailing the demise of the exchange along with its trading arm, Alameda Research. They allege that FTX was completely controlled by a small cabal of executives, helmed by cofounder and former CEO Sam Bankman-Fried (SBF), who failed to institute proper accounting, security, and management practices, putting the firm’s “crypto assets and funds at risk from the outset.”

“While the FTX Group’s failure is novel in the unprecedented scale of harm it caused in a nascent industry, many of its root causes are familiar: hubris, incompetence, and greed,” they wrote.
 
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