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.
  • #946
Well, I don't know how I missed that. The recent news was that they somehow linked the $400M to the trio, although it was pretty obvious. If someone steaks $400 and on the same day, someone else has $400 appear in their account, you don't know there was a causal relationship. But if it's $400 000 000, you're pretty sure.

It has caused me to rethink two-factor authentication using a cell phone. There are those who seem to think it will stop attacks by major world governments, but it didn't even stop three Millennials. It also makes me wonder who made the decision not to spring the $40 for a Yubikey or similar.
 
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  • #947
Vanadium 50 said:
It has caused me to rethink two-factor authentication using a cell phone. There are those who seem to think it will stop attacks by major world governments, but it didn't even stop three Millennials. It also makes me wonder who made the decision not to spring the $40 for a Yubikey or similar.
I thought it was well known it's worst than single factor authentificatikn due to impersonalization.

Some crypto hardware wallets have FIDO2 compatibility and can be used for 2FA.
 
  • #948
https://www.theguardian.com/technology/2024/feb/27/crypto-mining-electricity-use
US judge halts government effort to monitor crypto mining energy use
The federal government has said it needs better information about major miners’ power use, but estimates that up to 2.3% of the US’s total electricity demand last year came from just 137 mining facilities. Globally, crypto miners are thought to soak up as much as 1% of all electricity demand, which is the same as the entire country of Australia, with bitcoin mining’s energy use doubling just last year.

This new thirst for electricity risks worsening the climate crisis, campaigners say. In the US, where nearly four in 10 of all bitcoin are now mined, up to 50m tons of carbon dioxide is released each year due to the mining operations, according to RMI, a clean energy thinktank.
In Texas crypto-farms are operating on an independent power grid, so I'm not sure what the feds can do about it.
 
  • #950
https://arstechnica.com/tech-policy...ence-calls-100-year-recommendation-grotesque/

SBF asks for 5-year prison sentence, calls 100-year recommendation “grotesque”​

Bankman-Fried argues for 63 to 78 months, says he "is already being punished."​


1709160991261.png

"if you can't do the time, don't do the crime"​

 
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  • #951
fluidistic said:
Make a push request to switch to PoS like Ethereum did.
Sure, It's that easy.
https://hackernoon.com/exploring-the-feasibility-of-transitioning-btc-from-pow-to-pos

Conclusion​

By analyzing several factors (such as technical, economic, political, and social factors) and available resources associated with the likelihood of switching Bitcoin's consensus algorithm, it is concluded that the transition of Bitcoin to PoS is unlikely to happen in the near future. But, based on the pace of technology and the majority consensus to change Bitcoin’s algorithm among the Bitcoin community, everything is possible in the future to fulfill the majority of demands. In addition, developers and experts in the related field are continuously striving to find the best possible solutions to solve the scalability and over-energy consumption issue of the biggest public blockchain Bitcoin. So, just not sticking to the PoS consensus algorithm, let’s hope there will be an advanced, highly secure, and truly decentralized consensus algorithm for Bitcoin in the future.
 
  • #952
nsaspook said:
Bankman-Fried argues for 63 to 78 month
Roughly one minute per theft. One minute per $7000 stolen.

Guy holds up a gas station and steals a few hundred bucks and gets a few years in the joint. I guess the lesson isn't "crime doesn't pay". It's "blue collar crime doesn't pay".
 
  • #953
nsaspook said:
https://www.theguardian.com/technology/2024/feb/27/crypto-mining-electricity-use
US judge halts government effort to monitor crypto mining energy use

In Texas crypto-farms are operating on an independent power grid, so I'm not sure what the feds can do about it.
Make a push request to switch to PoS like
nsaspook said:
Sure, It's that easy.
https://hackernoon.com/exploring-the-feasibility-of-transitioning-btc-from-pow-to-pos

Conclusion​

By analyzing several factors (such as technical, economic, political, and social factors) and available resources associated with the likelihood of switching Bitcoin's consensus algorithm, it is concluded that the transition of Bitcoin to PoS is unlikely to happen in the near future. But, based on the pace of technology and the majority consensus to change Bitcoin’s algorithm among the Bitcoin community, everything is possible in the future to fulfill the majority of demands. In addition, developers and experts in the related field are continuously striving to find the best possible solutions to solve the scalability and over-energy consumption issue of the biggest public blockchain Bitcoin. So, just not sticking to the PoS consensus algorithm, let’s hope there will be an advanced, highly secure, and truly decentralized consensus algorithm for Bitcoin in the future.
Unfortunately Bitcoin devs are very conservative. The problem is that they want to stick to Nakamoto's original ideas, thinking he was a God, whereas in reality if Nakamoto was still active, he would probably embrace more efficient systems.

Nakamoto failed in several things. He wasn't able to design an anonymous use of Bitcoin (smarter people in privacy matters, did however, and they created Monero). He came up with PoW as a solution to double spending problem, which works in practice, but isn't the most efficient system, by an immense margin. He himself said he hadn't found a better way than PoW. There are other things he failed, too, that got fixed over time.

Shame to the current Bitcoin devs.
 
  • #954
Very conservative here means protecting the current system investment. IMO that Nakamoto worship is a cover. It's the large Bitcoin holders (whales) and miners that control what happens, the Bitcoin devs know what's good for them. The miners would fork off a backwards compatible PoW version of Bitcoin in an instant causing the new PoS (with Bitcoin now one of many PoS coins :wink: ) version to die a quick death unless the miners get a large slice of the action from those that don't want to give it away.
 
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  • #955
U.S. Government Crypto Wallets Transfer Nearly $1B of Bitcoin Seized From Bitfinex Hacker
https://www.msn.com/en-us/money/com...tcoin-seized-from-bitfinex-hacker/ar-BB1j4cpj

Two crypto wallets tagged as holding funds seized by the U.S. government related to the infamous Bitfinex hack have just transferred nearly $1 billion of bitcoin to unidentified addresses.

A wallet that's one of at least three tagged by the blockchain-data firm Arkham Intelligence as holding seized Bitfinex hacker funds, on behalf of the government, initially transferred 1 BTC around 18:39 UTC (1:39 pm ET). Roughly a half-hour later, the remaining 2,817 BTC in the wallet were sent, leaving the wallet empty. Together they represented about $173 million worth of bitcoin.
 
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  • #956
A Florida woman had $500K in the bank and a mortgage-free home. Now she’s broke — thanks to her husband — and joining a surge of Americans facing bankruptcy

https://news.yahoo.com/finance/news/m-contemplating-bankruptcy-florida-woman-110300154.html

The woman thinks her husband spent some or much of the money on crypto-investments.

Crypto has become a common financial secret within relationships. Bread Financial’s survey revealed that 16% of people (12% of men and 4% of women) admitted to hidden crypto ownerships. Though the survey didn’t delve into the whys, it’s likely because cryptocurrency is often considered a risky investment and respondents didn’t want to risk upsetting their partners.
 
  • #957
https://www.coindesk.com/policy/202...-didnt-author-bitcoin-whitepaper-judge-rules/
Craig Wright Is Not Satoshi, Didn't Author Bitcoin Whitepaper, Judge Rules
"I will make certain declarations, which I am satisfied are useful and are necessary to do justice between the parties. First, that Dr. Wright is not the author of the Bitcoin white paper. Second, Dr. Wright is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period 2008 to 2011. Third, Dr. Wright is not the person who created the Bitcoin System. And, fourth, he is not the author of the initial versions of the Bitcoin software. Any further relief will be dealt with in my written judgment," Judge Mellor said.

1710432614271.png

Scratch Aussie.
1710432743713.png
 
  • #958
If I were Satoshi Nakamoto, I might be very pleased with a court ruling saying I wasn't. I'd still have my zillion dollars in Bitcoin. I would slowly unwind my holdings, paying full income tax on it. My defense against ever being a co-defendant is "It's not me. The courts said so."
 
  • #959
Sam Bankman-Fried gets sentenced Thursday. He faces up to 119 years. The prosecution asked for 40-50 and the defense 6 or less.

I have not heard about the sentences of his former co-workers. I don't think its happened yet. I'm not sure what they are waiting for, as they have guilty pleas already. Perhaps it is to avoid the possibility of harsher sentences to the ones who cooperated. I don't know.

Anyone want to guess the sentence? I hope it included a lifetime ban from the financial services industry.
 
  • #961


The media hordes can make the worst look good.
 
  • #962


One last time for Ms. Fong.
 
  • #963
Ellison apparently received only $6M in total compensation, so scaling back the sentence, I would say about one week is what's fair for her.
 
  • #964
https://www.cnbc.com/2024/04/05/ter...on-found-liable-in-us-civil-fraud-trial-.html

Terraform Labs and founder Do Kwon found liable in U.S. civil fraud trial​

The SEC estimates investors lost more than $40 billion on the two tokens combined when the TerraUSD peg to the dollar could not be maintained in May 2022.

Their collapse also dragged down the value of other cryptocurrencies, including bitcoin, and caused wider havoc in the crypto market, leading several companies to file for bankruptcy in 2022.

Terraform itself filed for bankruptcy protection in January.
 
  • #965
Ah, Do Kwon. The man who put the"Doh!" in cryptocurrency.

Is he still in a Montenegrin jail for trying to travel on a forged Costa Rican passport? ("OK, which one of you guys is...umm....Javier Gonzales"?)
 
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  • #966
Vanadium 50 said:
Ah, Do Kwon. The man who put the"Doh!" in cryptocurrency.

Is he still in a Montenegrin jail for trying to travel on a forged Costa Rican passport? ("OK, which one of you guys is...umm....Javier Gonzales"?)
Don't we all have a fake driver's license?
1712505236539.png
 
  • #967
https://www.livemint.com/news/crypt...l-tests-code-is-law-claim-11712599101095.html
Crypto Trader’s Criminal Trial Tests ‘Code Is Law’ Claim
In the crypto world, where digital blockchains govern who owns what, the virtual ecosystem is built around the notion that “code is law." It means that if something isn’t explicitly forbidden by terms of a crypto platform, then government can’t intercede. But prosecutors say those rules can’t protect traders against possible criminal charges for market manipulation or fraud.

“It touches on the big argument within crypto — is code law?" said Chris Janczewski, head of global investigations at TRM Labs. “If the code allows somebody to do that, does the actual law? Obviously, the government took a different approach that code is not law. Just because there is an opportunity to exploit it does not mean that it’s legal."
Prosecutors charged Avraham Eisenberg with manipulating Mango Markets futures contracts on Oct. 11, 2022, to boost the price of swaps by 1,300% in 20 minutes. He then “borrowed" from the exchange against the inflated value of those contracts, a move the government claims was a theft.

Jury selection began Monday in New York federal court, where groundbreaking crypto cases have played out. FTX co-founder Sam Bankman-Fried was sentenced there last month to 25 years in prison for orchestrating a multibillion-dollar scheme, while Terraform Labs Pte. and co-founder Do Kwon were found liable Friday for fraud in civil trial over the firm’s 2022 collapse, which wiped out $40 billion in investor assets.

So if the Blockchain bank of the future accidentally leaves the front door (login loophole) and the vault open (cryptographic loophole), does that mean the money (cryptocurrency) you took that night wasn't stolen?
 
  • #968
I don't see this as a defense that will go anywhere.

If I take out a loan from my bank, and flee the country with it, I'm in trouble. Especially if I then fly back.

Eisenberg took out a loan from an exchange, fled the country and then flew back. Now he's in trouble. Did he manipulate the markets as part of this theft? It doesn't matter - it's a separate offense. He can be tried for that too. Did he get agreements not to prosecute from his victims by paying back half of what he stole? It seems so. Is this enforcable? My non-lawyer opinion is that it is not, on several grounds (and that the remedy would be that the victims have to re-return the stolen money - not a good position for Eisenberg).

The fact that "the code let me do it" is irrelevant in both cases.
 
  • #969
Bitcoin's once-every-four-years "halving," which took place late last week, was supposed to bring a steep cut in revenue for crypto miners, since their rewards for new data blocks would drop by 50%.

Instead, the simultaneous launch of Casey Rodarmor's new Runes protocol – for minting digital tokens on top of the oldest and largest blockchain – has proven so popular that it's caused massive network congestion, sending transaction fees to record levels and showering Bitcoin miners with a windfall like never before.
https://news.yahoo.com/finance/news/bitcoin-miners-reap-windfall-runes-201843783.html

https://www.coindesk.com/markets/20...ng-fees-soaring-as-users-rush-to-mint-tokens/


Meanwhile, Sam Bankman-Fried Agrees to Help FTX Investors Go After Celeb Promoters
https://www.coindesk.com/policy/202...-help-ftx-investors-go-after-celeb-promoters/
Sam Bankman-Fried has inked a settlement agreement with a group of FTX customers who have agreed to drop their class action lawsuit against him in exchange for his help going after celebrity promoters of the collapsed exchange.
The agreement, filed in a Miami court on Friday, has not yet been approved by a judge. If approved, the settlement would release Bankman-Fried from both current and future civil liability tied to the collapse of FTX.
 
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  • #970
https://www.cnbc.com/2024/04/30/bin...o-cz-sentenced-to-four-months-in-prison-.html
Binance founder Changpeng Zhao sentenced to 4 months in prison after plea deal
The U.S. ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao agreed to pay a $50 million fine.

Binance has separately been sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission over the alleged mishandling of customer assets and the operation of an illegal, unregistered exchange in the U.S.
 
  • #971
Four months? He barely has time to get settled.

Zhao practically fell over himself trying to cooperate, and I presume the Feds wanted to showcase the difference in outcomes if you cooperate and if you don't. My understanding of the federal system is that you spend the last six months typically in a halfway house.

And people still argue "No, crypto is not shady at all!"
 
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  • #972
Vanadium 50 said:
Zhao practically fell over himself trying to cooperate, and I presume the Feds wanted to showcase the difference in outcomes if you cooperate and if you don't.

The prosecution asked for 3 years so I'm skeptical of this interpretation. I assume the bigger element is that he could afford to pay the massive fine, or just generic judges don't like sending rich people to prison syndrome.

Either way the thing he's charged with is pretty different from what most crypto crimes are accused
 
  • #973
nsaspook said:
https://www.cnbc.com/2024/04/30/bin...o-cz-sentenced-to-four-months-in-prison-.html
Binance founder Changpeng Zhao sentenced to 4 months in prison after plea deal
How ridiculous it looks, 4 months in prison. For him, it is just an official vacation
+ yeah crypto is not shady at all:D
Vanadium 50 said:
Four months? He barely has time to get settled.

Zhao practically fell over himself trying to cooperate, and I presume the Feds wanted to showcase the difference in outcomes if you cooperate and if you don't. My understanding of the federal system is that you spend the last six months typically in a halfway house.

And people still argue "No, crypto is not shady at all!"
 
  • #974
https://www.coindesk.com/policy/202...xey-pertsev-found-guilty-of-money-laundering/

Tornado Cash Developer Alexey Pertsev Sentenced to 64 Months in Prison by Dutch Court​

Alexey Pertsev was first jailed in the Netherlands in August 2022.​

The 31-year old Russian was escorted after the session by police to the cells under the court. This is where he will remain until the public prosecutor finds a prison in the Netherlands that is appropriate for his crimes.
“Tornado Cash does not pose any barrier for people with criminal assets who want to launder them,” according to the translated verdict seen by CoinDesk. “That is why the court regards the defendant guilty of the money laundering activities as charged.”
 
  • #975
US brothers arrested for stealing $25m in crypto in just 12 seconds [inside the article it points out that this took months of study and planning, so the 12 seconds is just sensationalism, but still ...]

"The defendants' scheme calls the very integrity of the blockchain into question," US Attorney Damian Williams said in a statement on Wednesday, referring to the public ledger that records crypto payments.

https://www.bbc.com/news/world-us-canada-69018575
 
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  • #976
https://www.reuters.com/technology/...ypto-investors-panic-bitcoin-boom-2024-05-15/

Wallet recovery firms buzz as locked-out crypto investors panic in bitcoin boom​

Recovery services provided by firms do not come cheap. ReWallet and WRS charge a 20% fee on the wallets' contents, with the caveat being they get paid only upon retrieval.
INVESTORS' WALLET RECOVERY ATTEMPTS
"I was simply worried that I would no longer have access (to my wallet) and thus lose my bitcoins forever," said an investor living in Germany, who declined to be named. "Of course, the high bitcoin price was an incentive to finally tackle this."
Another Switzerland-based investor, who also requested anonymity, said, "I had secured the wallet with passphrases and couldn't remember it. I tried again and again and created various lists with possible alternatives, but unfortunately without success."
 
  • #977
https://www.justice.gov/usao-sdny/pr/former-ftx-executive-ryan-salame-sentenced-90-months-prison

Former FTX Executive Ryan Salame Sentenced To 90 Months In Prison​


Damian Williams, the United States Attorney for the Southern District of New York, announced that RYAN SALAME was sentenced today to 90 months in prison. SALAME previously pled guilty to conspiracy to make unlawful political contributions and defraud the Federal Election Commission and conspiracy to operate an unlicensed money transmitting business before U.S. District Judge Lewis A. Kaplan, who imposed today’s sentence.

U.S. Attorney Damian Williams said: “Ryan Salame agreed to advance the interests of FTX, Alameda Research, and his co-conspirators through an unlawful political influence campaign and through an unlicensed money transmitting business, which helped FTX grow faster and larger by operating outside of the law. Salame’s involvement in two serious federal crimes undermined public trust in American elections and the integrity of the financial system. Today’s sentence underscores the substantial consequences for such offenses.”
 
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  • #978
The prosecution asked for 5-7 years. Do we know why the jidhe gave him more?
 
  • #979
Vanadium 50 said:
The prosecution asked for 5-7 years. Do we know why the jidhe gave him more?
As an incentive to rat maybe.
https://www.ussc.gov/sites/default/...ations/research-publications/2016/Rule35b.pdf
Offenders may also receive credit for substantial assistance
after they have been sentenced. Federal Rule of Criminal Procedure
35(b) permits a court, upon the government’s motion, to impose a
new, reduced sentence that takes into account post-sentencing
substantial assistance, and that new sentence may go below the
recommended guideline range and any statutory mandatory
minimum penalty. These Rule 35(b) reductions are, in most respects,
identical to §5K1.1 departures, as both require substantial assistance
and both require a government motion. The only significant
difference between the two types of motions is timing: Rule 35(b)
motions are made after the original sentencing and so require a
resentencing if granted, and §5K1.1 motions are made before
sentencing and are granted at the time of the original sentencing.
 
  • #980
Usually if one provides testimony against one's partners...i.e. "to rat", they get shorter sentences, not longer.

Usually the defense asks for a low number, the prosecution asks for a high number, and the judge picks something in that range. Its rare that they go outside it.
 

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