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Yes, to create a convincing fake hack is not simple. In common crimes, managing a complex fake story is dangerous. The criminal can be revealed because they can

Yes, to create a convincing fake hack is not simple. In common crimes, managing a complex fake story is dangerous. The criminal can be revealed because they can't keep every detail consistent. They get tangled up in their own lies. But in the cryptocurrency space, judicial authorities lack expertise, geographic jurisdiction can be unclear, and invesigators may not be able to unearth the truth. The Bitcoinica thefts are an example of that, Mt Gox may be another. Every time, it would be easy to prove negligence, but definite proof of criminality is hard. It is true that if Cryptsy had reported the crime at the time, the story would have been more plausible, but even then there still would have been much doubt and a genuine possibility that it was fraud. At least the possible evidence, logs and whatnot, would have been fresh.

jacquesm 11y ago
> It is true that if Cryptsy had reported the crime at the time, the story would have been more plausible To me this is an extremely important aspect and it moves the needle from 'could be fraud' to 'definitely fraud'. Nobody taking a hit like that would try to hide it from both their end users and the authorities if they weren't involved, no possible gain could come from trying to cover this up other than to see if they could do it again. Covering up a breach of this magnitude (which is simply the end for the company, assuming the funds won't be recovered, and which should be the end of the company even if the funds are recovered) is a much higher risk than being frank about it for the simple reason that the trail will be cold by the time the truth eventually comes out.
- FatalLogic 11y ago
  > no possible gain could come from trying to cover this up Unfortunately, there is a possible gain, at least from the viewpoint of the owner: Simply keeping the business, and his normal life, running --- presumably hoping that a magical solution will appear from the clouds. (or to be try to be more charitable to him, maybe he hoped for a foolish new investor, or a dramatic change in bitcoin price) If that's what happened, it was irresponsible, very stupid, and certainly fraudulent, but many people have done similarly stupid things in similar situations. No matter what happened, that ridiculously long delay in reporting the theft is a most serious red flag, like you said.
  - jacquesm 11y ago
    How would that weigh up against the possibility of recovering the funds?
    - FatalLogic 11y ago
      >How would that weigh up against the possibility of recovering the funds? Maybe you're asking a rhetorical question, but historical precedent suggests the chance of recovering the funds in this sort of crime is really small. There have been tens of relatively big cryptocurrency heists like this, and but only in perhaps three or four cases that I know were funds recovered from the thief But, to again imagine the Cryptsy site owner's viewpoint, statistics and probability are no match for pure human desperation, so, if we believe the 'hack' story, then a desperate plan based on the ill-advised belief that the funds could be recovered from the thief is not totally unbelievable. Though it sounds even more unlikely because the owner only announced a public bounty yesterday, not 18 months ago when the money was stolen.
      - jacquesm 11y ago
        A 35% chance to recover your customers funds would seem to me to be a chance worth taking, but maybe you're right and that was what drove this decision. Seems terribly incompetent and I'd say they deserve to be personally liable for the loss if that's how it went down.
        Coinhead 11y ago
        After months of no activity on those wallets, someone put some dust in them yesterday. What can that mean? If they found silk road coins, they can find cryptsy coins maybe, right?

jacquesm 11y ago

> It is true that if Cryptsy had reported the crime at the time, the story would have been more plausible To me this is an extremely important aspect and it moves the needle from 'could be fraud' to 'definitely fraud'. Nobody taking a hit like that would try to hide it from both their end users and the authorities if they weren't involved, no possible gain could come from trying to cover this up other than to see if they could do it again. Covering up a breach of this magnitude (which is simply the end for the company, assuming the funds won't be recovered, and which should be the end of the company even if the funds are recovered) is a much higher risk than being frank about it for the simple reason that the trail will be cold by the time the truth eventually comes out.

FatalLogic 11y ago
> no possible gain could come from trying to cover this up Unfortunately, there is a possible gain, at least from the viewpoint of the owner: Simply keeping the business, and his normal life, running --- presumably hoping that a magical solution will appear from the clouds. (or to be try to be more charitable to him, maybe he hoped for a foolish new investor, or a dramatic change in bitcoin price) If that's what happened, it was irresponsible, very stupid, and certainly fraudulent, but many people have done similarly stupid things in similar situations. No matter what happened, that ridiculously long delay in reporting the theft is a most serious red flag, like you said.
- jacquesm 11y ago
  How would that weigh up against the possibility of recovering the funds?
  - FatalLogic 11y ago
    >How would that weigh up against the possibility of recovering the funds? Maybe you're asking a rhetorical question, but historical precedent suggests the chance of recovering the funds in this sort of crime is really small. There have been tens of relatively big cryptocurrency heists like this, and but only in perhaps three or four cases that I know were funds recovered from the thief But, to again imagine the Cryptsy site owner's viewpoint, statistics and probability are no match for pure human desperation, so, if we believe the 'hack' story, then a desperate plan based on the ill-advised belief that the funds could be recovered from the thief is not totally unbelievable. Though it sounds even more unlikely because the owner only announced a public bounty yesterday, not 18 months ago when the money was stolen.
    - jacquesm 11y ago
      A 35% chance to recover your customers funds would seem to me to be a chance worth taking, but maybe you're right and that was what drove this decision. Seems terribly incompetent and I'd say they deserve to be personally liable for the loss if that's how it went down.
      - Coinhead 11y ago
        After months of no activity on those wallets, someone put some dust in them yesterday. What can that mean? If they found silk road coins, they can find cryptsy coins maybe, right?