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.
  • #876

4.5 hours.


 
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Physics news on Phys.org
  • #877


prison-jail.gif
 
  • #878
On Nov. 2, a New York jury found Bankman-Fried guilty on all seven counts he was charged with by the Department of Justice, including defrauding customers and investors of his crypto exchange FTX. Bankman-Fried, the jurors decided, was part of a conspiracy to extract more than $8 billion from FTX customers and funnel it to his trading firm Alameda Research, which then spent it on Bahamian real estate, startup investments and political donations.

The jury’s decision comes exactly one year after Bankman-Fried’s empire first started to crumble, when the crypto outlet Coindesk published a leaked balance sheet from Alameda Research. The balance sheet appeared to show that Alameda was in much worse financial shape than it had let on. Fears about FTX’s solvency quickly mounted, with customers withdrawing billions of dollars. But FTX, it turned out, did not have the funds to pay them back, and the company declared bankruptcy less than two weeks later.

Since then, Bankman-Fried has consistently denied that he misused customer funds. He pleaded not guilty and testified of his innocence last week in a Manhattan courthouse. But the jury was not convinced. It took them less than five hours for them to find him guilty on all counts.
https://www.yahoo.com/finance/news/biggest-bombshell-allegations-sam-bankman-133410648.html

Edit/Update:

FTX is bankrupt and SBF was on trial, so why are people still buying FTT tokens?​

Experts say the coin likely has no long-term value, but it could prove lucrative for professional traders who can quickly flip it.
 
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  • #879
That sure didn't take long to deliberate, did it?

I don't know how crypto tokens work for bankrupt issuers. I would imagine they are liabilities, but they could be picked up by some other company in the restructuring plan.

There is money to be made in trading stocks for bankrupt companies (symbol ends in Q). I did this, mostly by mistake. I bought a small amount to ensure access to the annual meeting. Thing is, these stocks are really volatile, and it went up so much I couldn't resist selling it.

While I blundered into this by accident, I assume Wall Street has hired people to do this full time, and i imagine they get good at it.
 
  • #880
Some more of DOJs strategy is becoming clear.

One of the things that Bankman-Fried will be charged with in the next trial is "bribing a foreign official". That's more complicated, and nuanced - with Bankman-Fried's lifetime this was not just allowed, it was tax deductible!

But suppose he gets, say 57 years. Half the max, and 5x what Elizabeth Holmes got for stealing an order of magnitude less. The DOJ can go to him and say "If you plead guilty to all these new crimes, we'll give you 20 years - to run concurrently" Barnkman-Fried has little to lose by accepting, so a whole stack of other charges can be quickly and cheaply disposed of.

Maybe he gets to go to Pensacola and not Leavenworth if he doesn't put up much of a fight.

His lawyers made an interesting statement: "We respect the jury's decision. But we are very disappointed with the result. Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him." Note that they did not say that they would continue to vigorously fight the charges against him.
 
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  • #881
A pretty good overview of this SBF entire saga.


If he had just been happy with the first Billion and walked away it's unlikely he'd be in the slammer now.
I know
1699052851061.png
 
  • #882
Indeed SBF was disingaged from the very real possibility of being arrested. From November 2022 when FTX imploded to his arrest December 2022 he had a month in the Bahamas to get a fast boat to Cuba. Seems it is unknown how much real money/cash he had access to. But sure it was enough to be very wealthy in Cuba.
Screenshot_2023-11-04-07-09-43-22.jpg
 
  • #883
I think I said it before - Dubai is a nice place if you have money, and perhaps more tolerant of rich Americans than Cuba. If he prefers Europe, there is always Montenegro. They not only have no extradition with the US, they also have something called citizenship through investment, which is absolutely Not A Bribe.
 
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  • #884
Now that that bit of drama is on pause - with more to come I am sure (I do not think Mr. Bankman-Fried will do well in prison, even Camp Cupcake) there is something I don't get.

National currencies rise and fall depending on their balance of trade. Canada sends the US maple syrup, and the US sends Canada semiconductors. The relative demand for each of those items sets the relative value of the USD and the CAD. Ultimately, the maple syrup producers want to be paid in CAD and Intel in USD, (Although this is usually handled out of view by importers and banks)

So why do cryptocurrencies fluctuate among each other? Is there anything one can buy with one that cannot be bought with another? We saw the case of the doctor who wanted his girlfriend whacked, and he paid in crypto rather than USD. Fine...but which crypto. Do hit-men not take Etherium?
 
  • #885
berkeman said:
My brain just short-circuited...
Bored, I looked into it. She claims to have lost 3 bitcoins and 11 ether....etheriums? Etheria? When Celsius reached...um...absolute zero. Today, this is a little more than half the stated $200K. It was less at the time, so she's probably calculating from the peak.

Of course, this does prompt the question of how losing a bundle qualifies one to be what they call an "influencer". It sounds a lot like "I lost my shirt - you can too!"
 
  • #886
Column: Silicon Valley VCs wanted to believe SBF's lies. Now they want you to believe their excuses.
https://finance.yahoo.com/news/column-silicon-valley-vcs-wanted-110021949.html

What's more important is examining how Bankman-Fried managed to gull the nation's ostensibly most sophisticated investors into bankrolling his firm — which, as testimony at his trial and discoveries by FTX's post-bankruptcy chief executive have shown, was built on quicksand.

Sequoia was not alone. Public pension funds in Alaska, Washington State and Ontario, Canada, had direct or indirect investments in FTX. So did respected money managers and venture investment firms such as BlackRock, Tiger Global Management, Lightspeed and Softbank.

There's scant evidence that any of them performed the due diligence — a focused inquiry into a prospective investment — that would have exposed the discrepancies between Bankman-Fried's claims about his firm's operations and the reality.

It's not merely that these investors were snowed by Bankman-Fried's unique variety of what the veteran and vigilant short-seller James Chanos calls "techno-gibberish"; it's that something spurred them to plunge without looking. To some extent it may have been "FOMO," or "fear of missing out."

As Alan Greenspan mentioned - "irrational exuberance".
 
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  • #887
Due diligence? He said "blockchain" - give him whatever he wants before someone else does!

I'll just leave my Juicero here if anyone wants it and show myself out.
 
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  • #888
You mean, like, we shouldn't take financial advice from Giselle Bundchen?

I mean, she's no Kardashian, but still....
 
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  • #889
This is how you hack code.
 
  • #890
Can you give us a synopsis of what you found new and important in that rather lengthy video?
 
  • #891
Vanadium 50 said:
Can you give us a synopsis of what you found new and important in that rather lengthy video?
Important? Not much. New? The Python software hack using stock indexes, multiplying by some random number and dividing a billion tells me everything I need to know about what a grifting clown show this was.
1699642291568.png
 
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  • #892
Would you feel better if the fudge factor were generated the old-fashioned way, by hand, and not the new-fangled computer-generated ones?

"Bob's handcrafted cons!
Tired of mass-produced grift? Try Bob's handcrafted cons. Just the way Mom used to make - provided your Mom was Ma Barker. No computer-generated grift here. At Bob's we carry only the finest locally-sourced cons, No computers. No Nigerian Princesses.
Try Bob's!"
 
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  • #893
Vanadium 50 said:
Would you feel better if the fudge factor were generated the old-fashioned way, by hand, and not the new-fangled computer-generated ones?

"Bob's handcrafted cons!
Tired of mass-produced grift? Try Bob's handcrafted cons. Just the way Mom used to make - provided your Mom was Ma Barker. No computer-generated grift here. At Bob's we carry only the finest locally-sourced cons, No computers. No Nigerian Princesses.
Try Bob's!"
Yes, I would feel something but I don't know if better is the correct term.?:)

There's a high probability this grift method and others from FTX will be recommended by some AI chatbot once it digests the transcripts of the trial. Not just fraudulent code, but bad fraudulent code.

https://newsletter.mollywhite.net/p/the-fraud-was-in-the-code
1699661844989.png


Numpy.random is not cryptographically secure or as FTX proved, Numpy.random is not financially secure either.
 
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  • #894
The story of this con is not complicated. As I said, this is a bank that took customer deposits, and then spent them.

To cover it up, they inflated their assets with magic beans...er...Dutch tulip futures...no wait, "SamCoins". They liked using the word "illiquid", but the better word is "worthless" or maybe "made up".

The balance sheets were clearly just lies.

I think the more interesting question is who was scammed - does this include any members of The Outfit? Mexican drug cartels? African warlords? If any of these people were taken in, Mr. Bankman-Fried might consider prison a better option than being "Made a 'zample of".

Many years ago, Chicago mob boss Tony "Big Tuna" Accardo was robbed. Over the next few months, parts of the gang that did it were found all over town. And by parts, I mean parts.
 
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  • #895
Vanadium 50 said:
Many years ago, Chicago mob boss Tony "Big Tuna" Accardo was robbed. Over the next few months, parts of the gang that did it were found all over town. And by parts, I mean parts.
Ack! I missed a pun!
They used to be members of the gang that knocked over The Big Boss. And then they were dis-membered.

Back to Bitcoin. The FTX sacm sounds a lot like the MF Global collapse, where customer deposits were used to pay back loans. The customers ultimately got their money back, and the CEO (and former US Senator and NJ Governor) Jon Corzine was never convicted of anything.,
 
  • #896


Beating S&P 500. . .how high will its market cap get? Crypto is equivalent to a Google/Alphabet. . .Amazon. . .Nvidia, etc. - the greatest American (global too) companies not named Apple and Microsoft (the latter two with $2.75T market caps).
 
  • #898
nsaspook said:
What is the Total Crypto market?

Every coin that's been mined?
https://www.coingecko.com/en/coins/plutonian-dao
https://www.coingecko.com/en/coins/ftx-token
Sum of all [coins x price]? I assume its market cap is defined something like that.

To think total crypto is worth more than Amazon or Google is pretty amazing. Those holding crypto presumably think it'll go up a lot more. But that would mean it could get into Apple/Microsoft territory and more.
 
  • #899
kyphysics said:
Sum of all [coins x price]? I assume its market cap is defined something like that.

To think total crypto is worth more than Amazon or Google is pretty amazing. Those holding crypto presumably think it'll go up a lot more. But that would mean it could get into Apple/Microsoft territory and more.

Actually more in value is IMO questionable.

​

Market cap doesn’t = value​

It’s essential to find out what a company or asset you are investing in is worth when making an investment. If you understand what something is worth (its value), it’s possible to judge whether an investment is over or underpriced.

Herein lies the problem. Market cap is about price, not value. It does not reflect the value of the company or crypto asset you’re investing in. This is a fundamental distinction that is often overlooked. Price is what you pay for a coin or token, it has nothing to do with what you actually get aka value. It’s an indication of what people are paying for something, and this is usually driven by irrational sentiment, which has little connection to an asset’s real value. Assuming that whatever the market is willing to charge for an asset is equal to what it’s worth is a big mistake.
 
  • #901
nsaspook said:
Asks FBI for His Seized Cryptocurrency Back
If I worked for the FBI and got that letter, I would say "Sure....but we need you to come here to Washington to fill out some forms."
 
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  • #902
Market cap isn't quite meaningless. It's not a dollar, and it's not a quadrillion. That tells you something.

However, the trillion dollar number being batted around is not what you think it is. If people were to try an exchange it for a trillion dollars worth of stuff, they wouldn't be able to. As soon as they started, the value would fall, and then people would dump it, and the value would fall further, and pop goes the bubble.

Bitcoin has value only insofar as people would rather have bitcoins than dollars. If people decide they would rather have something else - say pizzas - than bitcoin, its value will fall.

Take a lesson from Sam Bankman-Fried. He could have just stolen FTT. Instead, he wanted to steal dollars.
 
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  • #903
Vanadium 50 said:
If I worked for the FBI and got that letter, I would say "Sure....but we need you to come here to Washington to fill out some forms."
To be fair, Vishal was only holding the money for a Nigerian prince who promised he would pay him back once the prince was returned to power.
 
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  • #904
nsaspook said:
Actually more in value is IMO questionable.
Sure, but there is nonetheless a market cap value as defined above - like it or not. :smile:

Anyways, given it's reached Magnificent 7 market cap level, I have a hard time imagining it goes on another 10x tear in the next decade. It could happen - we never know - given its usage as an inflation hedge (particularly, if you live in a hyperinflating currency country and want "relative" stability and easy access to something that can be a store of value/currency) and the power of its network effect and alt currency status.

I'd rather own commodities and stocks of good companies instead for the next 10 years or so as the U.S. devalues its currency (a la the 1940's-50's, when debt-to-GDP was 118% coming out of WW2) to deal with the national debt (per Harvard economist Carmen Reinhart, once debt-to-GDP gets over 120%, every nation studied other than Japan, has defaulted - usually thru many years of high inflation).
 
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  • #906
https://www.reuters.com/markets/us/...il-settlement-with-binance-source-2023-11-21/

Binance's Zhao pleads guilty, steps down to settle US illicit finance probe​

NEW YORK, Nov 21 (Reuters) - Binance chief Changpeng Zhao stepped down and pleaded guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the world's largest crypto exchange, prosecutors said on Tuesday.

The deal, which will see Zhao personally pay $50 million, was described by prosecutors as one of the largest corporate penalties in U.S. history. It is another blow to the crypto industry that has been beset by investigations and comes on the heels of the recent fraud conviction of FTX founder Sam Bankman-Fried.
Binance broke U.S. anti-money laundering and sanctions laws and failed to report more than 100,000 suspicious transactions with organizations the U.S. described as terrorist groups including Hamas, al Qaeda and the Islamic State of Iraq and Syria, authorities said.The exchange also never reported transactions with websites devoted to selling child sexual abuse materials and was one of the largest recipients of ransomware proceeds, they said.

“Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges,” U.S. Attorney General Merrick Garland said on Tuesday. “Binance also did more than just fail to comply with federal law. It pretended to comply.”
 
  • #907
kyphysics said:
To think total crypto is worth more than Amazon or Google is pretty amazing.....

kyphysics said:
Anyways, given it's reached Magnificent 7 market cap level

Why? Crypto is not a company, it's a market, so it makes little sense to make that comparison. Can we compare them to the real estate market ($45T) or the stock market ($113T)? Or maybe it's trying to be a currency, we should compare it to t-bills ($23T) or some other measure of the total value of US currency.

But I agree with @Vanadium 50 there; unlike holding USD, you can't do anything with it without affecting its price. It holds value because people are hoarding it whereas the USD has value in part because people are using it.
 
  • #908
Mod note: A certain member's contributions to this thread will no longer be accepted.
 
  • #909
russ_watters said:
agree with @Vanadium 50
As everybody should.

It is also true with national currencies. If people decide they want more of what Japan is selling and less of what Switzerland is selling, the JPY will rise with respect to the CHF. But those currencies can only move so far so fast, because they are backed by the labor of tens or hundreds of millions of workers.

What tethers crypto? The full faith and credit of a guy about to be hauled off to prison for fraud.
 
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  • #910
Vanadium 50 said:
As everybody should.
Whelp, I guess I'll never make that mistake again.
Vanadium 50 said:
What tethers crypto? The full faith and credit of a guy about to be hauled off to prison for fraud.
I do find it interesting that FTX's fall had very little impact on the crypto market. And I know it's early, but so far the Binance settlement hasn't either (yeah, it did lose 3% briefly last night, but it was just a Tuesday). Binance has lost a third of it's market share, but it isn't clear if that's everyday "investors" or just all the money launderers leaving, nor if they are leaving the market or just going elsewhere. It's also not clear to me if the conclusion of the investigation means they are positively proven not to be stealing the real money or if the $4B fine would make a big enough dent to shake their solvency. It's said to have $67B in coins (but how much real money?):
https://www.coindesk.com/markets/20...in-net-outflows-as-changpeng-cz-zhao-resigns/
 

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