6 ms·

Excuse my ignorance, couldn't have he moved the bitcoins to offline storage, or is that the thing of the past? I am so out of the loop with bitcoin.

ericcholis 9y ago
Nope, hardware & paper wallets are the preferred method of storage. Keeping crypto with exchanges is generally frowned upon by long-term holders.
- raverbashing 9y ago
  Hardware and Paper wallets are offline storage
onewaystreet 9y ago
> As part of his plea, Bridges agreed to turn over the stolen bitcoin to U.S. agents. He likely got less time for agreeing to turn over his private key. That might have been a bad decision depending on how many years he would have gotten otherwise. Those 1,600 bitcoin are worth over $10 million at the moment.
- gambiting 9y ago
  Surely, that can't be how it works though, can it? If he refused to release the key and got say 10 years of prison, he wouldn't be free to spend them after getting out of prison - after all, they are still considered stolen property. Serving the prison sentence wouldn't magically make them his.
  - asmithmd1 9y ago
    That is the justification for the much maligned forfeiture laws. Without them, or some other lawsuit, yes they are his.
    - gambiting 9y ago
      Ok, so just for example - if I steal your car, hide it so no one can find it, go to prison for a year or two, get out.....the car is mine? Or a phone, or money, or pretty much literally anything else? A stolen property remains stolen until it's returned to its owner, it doesn't transfer ownership just because the thief served time.
      - amdavidson 9y ago
        No, it does not magically transfer ownership, but for what crime would you be prosecuted? You've already done time for stealing the car.
        TomMarius 9y ago
        For not returning the stolen car and using a stolen item? That's not illegal in the US? (European here)
        lightbyte 9y ago
        Are you not stealing it again at that point? I'd guess that you would be charged for a similar crime, just at a different date.
        astura 9y ago
        The judge will almost certainly order the return of the car (or a cash restitution) as part of the sentencing. If you don't return the car or don't pay the restitution you are in contempt of court. More so, "possession of stolen property" is also a crime. The car doesn't magically become unstolen just because the theft went to jail.
    - astura 9y ago
      What? No. Possessing stolen property is a crime. This has absolutely nothing to do with civil forfeiture. Civil forfeiture is when the getaway car is seized when you are robbing a bank. Restitution is when you are ordered by a court to repay the victim for their losses that your criminal behavior caused. This case involved restitution, if he didn't comply with giving up the private keys he would be ordered to pay restitution. Civil forfeiture doesn't impact restitution.
  - dagw 9y ago
    No, but if he managed to get the coins into an offline wallet he could in theory move to Cambodia, cash out his coins and live the rest of his life in exile. Or if he was careful about it he could tumble his coins, and then withdraw a small amount of cash every month or so for the rest of his life while still living in the US.
    - astura 9y ago
      And just hope the government just doesn't notice the coins leaving the wallet?
- astura 9y ago
  Nah, it was in his best interest to turn over the private keys. You also don't get less time for turning over stolen property, you are ordered by the court do that no matter what. If he said "I lost the private key," he would have been ordered to pay restitution in cash. That means his assets (including his house) would be seized, when he gets out of jail his wages would be garnished forever, any inheritance he ever tried to claim would be seized, if he won the lottery that would be seized, his tax returns would be seized, etc. He would never be allowed to build any wealth at all until that restitution was paid, and it never would be because who makes enough money in their lifetime to pay a $10M restitution? The coins are now completely worthless to him because those addresses will be watched forever, if any coins ever moved from that wallet, he would automatically go to jail. $10 million you can never spend or give away is not useful.
Xophmeister 9y ago
Offline storage just means having a physical copy of the wallet keys stored somewhere safe and no digital copies (or a hardware wallet that is equally well-hidden) that can be accessed by the network. The record of any nefarious transaction will always exist on the blockchain for all to see. To get away with it, he would have had to deny all knowledge of the keys -- which he could potentially do with offline storage, at the expense of opening himself to perjury if he ever got busted -- but, importantly, never spend the contents in a way that could be linked back to him by following the metadata "paper trail". That last one is pretty difficult to achieve, especially when so many coins are involved and they're already "hot". A mixer could help obfuscate the trail -- especially if there were steps involving exchanging to other cryptocurrencies or fiats, but then trust becomes a real issue -- but given the current exchange rate, it would probably be worthwhile for the Feds to do some blockchain forensics to keep track of it all. I don't think he would have ever got away with it.
- davidsong 9y ago
  Did Monero exist at the time? It ought to have been possible to just put it in Monero and leave it mixing for years, then pull it out slowly over time.
  - TomMarius 9y ago
    No, it didn't. It also isn't that easy, I've seen some papers about tracking Monero coins.
- strong_silent_t 9y ago
  I agree that there is no way he would have gotten away. I think all discussion of storage and mixing is moot. Even if it were cash -- if something is missing from US Govt. owned storage, and they look at who had access, and one of them is a known criminal who had done other similar crimes in the recent past -- that is pretty much game over in the first move.
ht85 9y ago
The confusion for many people stems from how security is achieved for blockchains. Most systems have an identifier and a password, and sometimes 2FA. For bitcoin, all you have is a 256 bit key. The key points to a 160 bit address (through hashing), and allows signing transaction from that address. This is true security by statistical obscurity, as you can generate as many keys as you want by brute force, and all of them will match and give you control of a valid address, with a non-zero chance of it being an existing address with a balance. The chance is so low that it is completely acceptable though, at around one in 2^154. This means the bitcoins people own aren't materialized, you can't delete, download or store them. They are simply a positive balance recorded on the blockchain for an address they control. There is no cold storage for the coins, as they are always publicly available on the chain, and anyone with a valid key to that address can spend them. The only way to lock them down is to move them to an address that only you control. When people talk about cold storage, they're talking about the private key. You can generate and store a key on a secured machine / device, allowing you to generate signed transactions for the corresponding address. You then copy that transaction to a internet enabled machine in a secure way, and broadcast the transaction to the network.

ericcholis 9y ago

Nope, hardware & paper wallets are the preferred method of storage. Keeping crypto with exchanges is generally frowned upon by long-term holders.

raverbashing 9y ago
Hardware and Paper wallets are offline storage

onewaystreet 9y ago

> As part of his plea, Bridges agreed to turn over the stolen bitcoin to U.S. agents. He likely got less time for agreeing to turn over his private key. That might have been a bad decision depending on how many years he would have gotten otherwise. Those 1,600 bitcoin are worth over $10 million at the moment.

gambiting 9y ago
Surely, that can't be how it works though, can it? If he refused to release the key and got say 10 years of prison, he wouldn't be free to spend them after getting out of prison - after all, they are still considered stolen property. Serving the prison sentence wouldn't magically make them his.
- asmithmd1 9y ago
  That is the justification for the much maligned forfeiture laws. Without them, or some other lawsuit, yes they are his.
  - gambiting 9y ago
    Ok, so just for example - if I steal your car, hide it so no one can find it, go to prison for a year or two, get out.....the car is mine? Or a phone, or money, or pretty much literally anything else? A stolen property remains stolen until it's returned to its owner, it doesn't transfer ownership just because the thief served time.
    - amdavidson 9y ago
      No, it does not magically transfer ownership, but for what crime would you be prosecuted? You've already done time for stealing the car.
      - TomMarius 9y ago
        For not returning the stolen car and using a stolen item? That's not illegal in the US? (European here)
      - lightbyte 9y ago
        Are you not stealing it again at that point? I'd guess that you would be charged for a similar crime, just at a different date.
      - astura 9y ago
        The judge will almost certainly order the return of the car (or a cash restitution) as part of the sentencing. If you don't return the car or don't pay the restitution you are in contempt of court. More so, "possession of stolen property" is also a crime. The car doesn't magically become unstolen just because the theft went to jail.
  - astura 9y ago
    What? No. Possessing stolen property is a crime. This has absolutely nothing to do with civil forfeiture. Civil forfeiture is when the getaway car is seized when you are robbing a bank. Restitution is when you are ordered by a court to repay the victim for their losses that your criminal behavior caused. This case involved restitution, if he didn't comply with giving up the private keys he would be ordered to pay restitution. Civil forfeiture doesn't impact restitution.
- dagw 9y ago
  No, but if he managed to get the coins into an offline wallet he could in theory move to Cambodia, cash out his coins and live the rest of his life in exile. Or if he was careful about it he could tumble his coins, and then withdraw a small amount of cash every month or so for the rest of his life while still living in the US.
  - astura 9y ago
    And just hope the government just doesn't notice the coins leaving the wallet?
astura 9y ago
Nah, it was in his best interest to turn over the private keys. You also don't get less time for turning over stolen property, you are ordered by the court do that no matter what. If he said "I lost the private key," he would have been ordered to pay restitution in cash. That means his assets (including his house) would be seized, when he gets out of jail his wages would be garnished forever, any inheritance he ever tried to claim would be seized, if he won the lottery that would be seized, his tax returns would be seized, etc. He would never be allowed to build any wealth at all until that restitution was paid, and it never would be because who makes enough money in their lifetime to pay a $10M restitution? The coins are now completely worthless to him because those addresses will be watched forever, if any coins ever moved from that wallet, he would automatically go to jail. $10 million you can never spend or give away is not useful.

Xophmeister 9y ago

Offline storage just means having a physical copy of the wallet keys stored somewhere safe and no digital copies (or a hardware wallet that is equally well-hidden) that can be accessed by the network. The record of any nefarious transaction will always exist on the blockchain for all to see. To get away with it, he would have had to deny all knowledge of the keys -- which he could potentially do with offline storage, at the expense of opening himself to perjury if he ever got busted -- but, importantly, never spend the contents in a way that could be linked back to him by following the metadata "paper trail". That last one is pretty difficult to achieve, especially when so many coins are involved and they're already "hot". A mixer could help obfuscate the trail -- especially if there were steps involving exchanging to other cryptocurrencies or fiats, but then trust becomes a real issue -- but given the current exchange rate, it would probably be worthwhile for the Feds to do some blockchain forensics to keep track of it all. I don't think he would have ever got away with it.

davidsong 9y ago
Did Monero exist at the time? It ought to have been possible to just put it in Monero and leave it mixing for years, then pull it out slowly over time.
- TomMarius 9y ago
  No, it didn't. It also isn't that easy, I've seen some papers about tracking Monero coins.
strong_silent_t 9y ago
I agree that there is no way he would have gotten away. I think all discussion of storage and mixing is moot. Even if it were cash -- if something is missing from US Govt. owned storage, and they look at who had access, and one of them is a known criminal who had done other similar crimes in the recent past -- that is pretty much game over in the first move.

ht85 9y ago

The confusion for many people stems from how security is achieved for blockchains. Most systems have an identifier and a password, and sometimes 2FA. For bitcoin, all you have is a 256 bit key. The key points to a 160 bit address (through hashing), and allows signing transaction from that address. This is true security by statistical obscurity, as you can generate as many keys as you want by brute force, and all of them will match and give you control of a valid address, with a non-zero chance of it being an existing address with a balance. The chance is so low that it is completely acceptable though, at around one in 2^154. This means the bitcoins people own aren't materialized, you can't delete, download or store them. They are simply a positive balance recorded on the blockchain for an address they control. There is no cold storage for the coins, as they are always publicly available on the chain, and anyone with a valid key to that address can spend them. The only way to lock them down is to move them to an address that only you control. When people talk about cold storage, they're talking about the private key. You can generate and store a key on a secured machine / device, allowing you to generate signed transactions for the corresponding address. You then copy that transaction to a internet enabled machine in a secure way, and broadcast the transaction to the network.