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Let this be a lesson to those that say bitcoin and other cryptocurrency has no real value outside of speculation. This kind of attack would be almost impossibl
by momokoko 6y ago
Let this be a lesson to those that say bitcoin and other cryptocurrency has no real value outside of speculation.
This kind of attack would be almost impossible in the pre-bitcoin era. The difficulty of receiving that volume of money in that short of a period of time in a difficult to trace manner is a new thing.
We are entering a new era where crime can pay in very large sums with orders of magnitude less complexity.
Instead democratizing currency, we're democratizing large scale crime. Previously only large organized crime organizations could perform such an attack. Now, almost anyone can.
- chrisseaton 6y ago> n a difficult to trace manner is a new thing I still don’t understand - how is Bitcoin difficult to trace when there is a global immutable public record of all transactions?
- RangerScience 6y ago1) You need to be able to tie a BTC address to a human 2) Mixers
- runawaybottle 6y agoCan you really not follow the trail from the mixers?
- jonathanliu 6y agoCipherTrace says they lost the trail on the twitter hackers when they threw the btc they scammed into mixers. On the other hand, the Feds arrested a kid in Florida, so my question is... how did they find him?
- unangst 6y agoFeds = mixers
- kbaker 6y ago> It's not so much loose ends as loose everything. https://news.ycombinator.com/item?id=24013070 https://news.ycombinator.com/item?id=24013070
- phire 6y agoOnly 20% of the funds went into mixers. If I had to guess, the attack was done by a group of people and they split the funds up. Some of them were smarter than others. It's also possible that the people who have been arrested are simply people who have received stolen goods (knowingly or unknownly). Perhaps they traded something else of value for the Bitcoin and didn't know how dirty it was.
- rtsil 6y agoThere are other ways to track them than the trail of their BTCs. For instance, did they apply a proper opsec hygiene? Did they brag about it, to friends online or offline?
- rydre 6y ago4chan. He wrote it there, afaik from a Twitter comment with screenshot posted many days ago before the Feds announced the kid. Then bragged about it and went for more accounts. His friends left him when he went for the high profile accounts. I think it was organized on discord.
- jdxcode 6y agoThe mixers keep a ledger outside the blockchain, so no—and a well written one wouldn't store any logs. You could possibly know that someone used a mixer but you wouldn't be able to track from the blockchain where the money came from. It could've come from 1000s of other transactions all with different amounts—none that would trace back to the source funds wallet.
- chrisseaton 6y agoDo you not tie yourself to your Bitcoin when you try to use it for something physical like turning it into cash or buying a physical asset? Can you not track all Bitcoins going in and out of a mixer?
- walrus01 6y agoI think one of the ideas of mixers is to achieve such a large volume of transactions that dedicating man-hours and personnel resources to tracking down every transaction path becomes cost prohibitive on the part of a law enforcement organization.
- jki275 6y agoThe idea is that you can't track any of the transaction paths. There's nothing tying a specific input transaction to a specific output transaction, and great pains are taken to ensure there cannot be any publicly available link.
- zenexer 6y ago500 unrelated accounts all deposit money into a single shared account. From that shared account, payments are made to 1,000 other accounts. None of the amounts match the original deposits, even when summed. Whose money is whose? This is an oversimplification, but it should give you a rough idea of how difficult it is to trace Bitcoin.
- vdfs 6y agoAuthorities might already know mixers service providers and a subpoena will give them all info they need. Not sure tho, I haven't used bitcoin but there always be weak link somewhere
- walrus01 6y agoI would be very surprised if any mixer operators are located in places that care in the slightest about a US subpoena (russia, etc).
- jdxcode 6y agohttps://en.wikipedia.org/wiki/Cryptocurrency_tumbler https://en.wikipedia.org/wiki/Cryptocurrency_tumbler
- cheez 6y agoWhat happens when crypto tumblers run away with the money
- dlubarov 6y agoThere are projects like Miximus, which is an Eth tumbler with no operator. Participants deposit funds into a smart contract, then when they want to withdraw later, they use zero-knowledge proofs to show that they know one of the private keys without revealing which one. There's also Zcash, which applies similar logic to all shielded transactions.
- cheez 6y agoOh that's nice.
- marmshallow 6y agoWell, of course another will come along!
- jdxcode 6y agoit seems logical to me a sophisticated syndicate would run their own tumbler. I'd assume there is some kind of OSS wordpress for mixing out there. And I don't think it'd be that hard to get other people to use it to get liquidity (just offer it as a free service).
- walrus01 6y agoPresumably the people who use tumblers never transfer such a huge amount of BTC into any one single tumbler, at a time, that would cause the tumbler operator to seriously contemplate pulling an exit scam.
- Polylactic_acid 6y ago
- drdaeman 6y agoNot kind of a context I'd like to be associated with a cryptocurrency, though. Privacy is great, but I'd rather prefer people of thinking of that property associated with buying online porn (or whatever legal) than paying online ransoms.
- wayoutthere 6y agoFor better or worse, you can look at the current price of Bitcoin as an options contract on future criminal activity.
- karlkatzke 6y agoThat explains the dip after Trump was elected and the run up to each election.
- seebetter 6y agoThat's analogous to saying, "For better or worse, you can look at Robinhood's stock price as an options contract on future insider trading." It's meaningless unless you consider wild west financial speculation and traders as criminal activity.
- tootie 6y agoAlso, laundering is now super easy.
- seebetter 6y agoTrade based money laundering is like 100x cryptocurrencies.
- walrus01 6y agoAn interesting technical and financial challenge is how they intend to launder and tumble the Bitcoin and eventually turn it into fiat currency. The open nature of the block chain means that third parties can and will track all transactions related to the wallet(s) that received the 4.5m.
- runawaybottle 6y agoI guess figure out the average amount tumbled typically (maybe half a bitcoin - 4kish), divide that by total amount (4.5m), something like 1100 tumbles/mixes? Then spend 1100 days mixing the total sum to keep things as banal as possible (3 years). Possibly randomize the amount tumbled per transaction up to $1000 dollars. The 4.5m would have to be mixed immediately so the original wallet can no longer be an event source. Is that the right idea?
- walrus01 6y agoThe smarter move if this was 1 person who intends to use the 4+m to live off, and not buy a Lamborghini or some stupid shit, would be to extend the timeline much further past 1100 days. The smaller the individual amounts the better. If they are long term bullish on the prospects of bitcoin retaining its value or increasing, launder just enough to pay themselves a nice monthly 'salary' for living expenses, under 200k a year, and take a lot of time to consider what to do with the rest. And dividing it up between as many possible independently run tumblers/mixers. I'm sure some additional smurfing techniques could come into play for additional obfuscation.
- seebetter 6y agoSomething like 95%+ of bitcoin is related to financial speculation, investing, DeFi etc etc. An order of magnitude of more drugs are sold on Cash App and Venmo -- which is why they're in rap songs. As for large scale hacking, extortion and ransom, yes bitcoin is used but it is increasing difficult to cash out in a large way.
- garbagetime 6y ago>it is increasing difficult to cash out in a large way It is actually difficult to cash out?
- gruez 6y agoI imagine you'd get caught on the off-ramps, since you'd most certainly be reported (by the exchange and/or your bank) to FinCEN. At that point you'd have to contend with the "the money came from bags of cash that just landed in my back yard" problem if federal agents come knocking. As for whether the federal agents will show up at all, I'm not sure. There probably aren't too many criminals who would openly admit that they successfully were able to withdraw their ill gotten gains.
- bitcoinmoney 6y agoWould fincen show up in Russia? And tumblers can hide the source easily. 4m$ is a lot to clean but it’s not impossible.
- gruez 6y agoI was assuming a US-centric view. If it's russia (or any other lax country), all bets are off as you've said.
- darksaints 6y agoCash can hide the source just as easily. Laundering is the real problem. Yes, even in Russia. Unless you're best friends with an oligarch, and if that's the case, you can always get Deutsche Bank to do it for you.
- dmead 6y agomy understanding of bitcoin is that it's just used to back the drug trade. the recent price spike, as all other price spikes are the result of some (probably) nefarious activity that pumps real dollars in and out of the bitcoin platform.
- darcys22 6y agoThe recent price spike is from the lead up to Eth2.0
- yyyk 6y ago>Let this be a lesson to those that say bitcoin and other cryptocurrency has no real value outside of speculation. >This kind of attack would be almost impossible in the pre-bitcoin era.... Instead democratizing currency, we're democratizing large scale crime. Just wanted to make this same point - right now, cryptocurrency has negative value for society. Perhaps this is a justification for banning the current implementations.
- garmaine 6y agoBanning... how?
- yyyk 6y agoThe entire thing relies on several things: nearly always-on connectivity, ability to convert to USD, crummy UX, and legit cover. A ban would do serious harm to 2, 3 and 4. If no one could pay legitimately and it would become (ever more) difficult to launder, the ransomware demands would die. The first (connectivity) could be impacted as well. What would happen when traffic shaping makes sync take longer and when every LN transaction risks losing money due to disconnections?
- melq 6y agoI think the person you're responding to is how you would go about banning it in the first place, not necessarily why you would ban it.
- garmaine 6y agoYes that's what I meant (not sure why you were down-voted). Banning banks from doing business with bitcoin exchanges is not banning bitcoin. Banning use of bitcoin entirely is legally plausible, but technically impossible to implement without draconian internet censorship on the scale of China. It's a 100x harder to ban bitcoin than, say, bittorrent, and banning that in a free society ended up not being possible.
- henriquemaia 6y agoAs with everything else, the internet serves as a kind of lense, amplifying whatever underlies it to orders of magnitude unimaginable. It doesn't matter if it's a random bit of information on a encyclopedia (wiki) or cybercrime. If it can be scaled up, it will be scaled up.
- josu 6y agoYeah, same issue with Nobel inventing the dynamite. Just because some people are going to use it for unethical purposes, it doesn't mean that we have to stop the advance of science and technology. Besides, it seems that Bitcoin was inevitable, the internet needs its own decentralized currency.
- istjohn 6y ago> The internet needs its own decentralized currency Why?
- ric2b 6y agoBecause why shouldn't I be able to make an online service and easily allow people to pay for it? Currently you have to setup accounts with multiple companies in many different countries and pay fees to all of them, it's an absolute mess.
- ficho 6y agoIsn't this confusing the fact that in general any mean of transaction, can be used negatively? The nature of which depends of the nature of the currency. But that's not an argument to say bitcoin and crypto are bad as opposed to for example the dollar. Rather this only shows that criminals are much faster at understanding crypto's advantages and adopting it. The "good" use cases will follow when adoption increases and a proper legal framework is implemented.
- gruez 6y ago>This kind of attack would be almost impossible in the pre-bitcoin era. Is it? VIPs are regularly held for ransom in unstable countries, so much so that ransom insurance is a thing[1]. If those ransoms can be safely received, why can't it be the case for ransomware ransoms? [1] https://en.wikipedia.org/wiki/Kidnap_and_ransom_insurance https://en.wikipedia.org/wiki/Kidnap_and_ransom_insurance
- avs733 6y agois there a market for ransomware insurance?
- aerovistae 6y agoIf there were, the prices to unlock would skyrocket.... Unlike most kinds of insurance, the cost here is not a set thing.... It's arbitrary.
- gruez 6y agoCan't you apply the same logic to regular ransoms? They say life is priceless, but there's clearly a limit. Also, unlike a human lie, there is a substitute for the unlock key... rebuilding your business from scratch.
- pirocks 6y agoThere's generic cyber attack insurance so yes.
- jdxcode 6y agocouldn't you just store your data in append-only fashion?
- walrus01 6y agoI don't see how the two are similar, because traditional kidnapping/ransom requires someone to somehow take physical delivery of a ransom in cash or highly portable, dense valuables (gold bars etc), which is risky. They're certainly not going to do it by ACH or SWIFT. The bitcoin part makes it non tangible and could be done from anywhere in the world.
- rudolph9 6y agoThis is such a regressive mindset. Why not ban the encryption while we’re at it? Instead of bashing it, how about we come up with solutions to the problems?
- jjeaff 6y agoEncryption has shown itself to have innumerable good uses. What legitimate utility has crypto currency provided?
- curiousgal 6y agoBoy do y'all come off as entitled and privileged. I know people in Third World countries with no access to international bank accounts that were only able to buy stuff online thanks to Bitcoin. Just because you don't see a utility for it, doesn't mean it doesn't exist.
- deleted 6y ago[deleted]
- joe_the_user 6y agoI think people say "no value outside of speculation, money laundering and crime". More people can do this but I think "almost anyone" is something of an exaggeration.
- malikNF 6y ago>>democratizing large scale crime Ah give me a break, I am having a very hard time wrapping my mind around this obsession HN has for hating cryptocurrencies and blockchains. Solution to everything is to ban things we don't like, also while we are at it, lets ban credit cards too, credit-card fraud is close to 30Billion world wide[1]. People tend to focus on the bad about technology instead of all the good it can bring us, yes there are a lot of scams happening, these same scams have existed with fiat currencies too, the same thing happens every time humans come up with a new technology, everything can be used for both good and bad, and for a forum focused on technology if we start dismissing technology just because of a few bad apples what's different from us and the lunatics who run around claiming 5G gives you corona? [1]https://nilsonreport.com/mention/407/1link/ https://nilsonreport.com/mention/407/1link/
- lazyasciiart 6y agoThe difference is people talking about real problems and people making things up. It's an incredibly significant difference.
- malikNF 6y agoI am sorry I am not sure I understand you properly. What do you mean ?
- yyyk 6y agoCredit card fraud is 'some people steal credit card numbers and (eventually) steal some funds'. It's not good, but it doesn't have the major disruptive effects ransoming an hospital has. * https://news.ycombinator.com/item?id=24033925 https://news.ycombinator.com/item?id=24033925
- dgoldstein0 6y agoand usually the credit card companies reverse the charges, and bear the cost. so it's quite different.
- 6y ago
- darksaints 6y agoI've got a friend who does red team work as a CIA contractor for both terrorism smuggling and drug/human smuggling operations. And at least based off of conversations with him, crypto currency isn't quite the win that you're portraying. If you're in any country where it can be converted to cash, you're also in a country where it still needs to be laundered. And that means that no matter how quickly the transaction took place, converting to cash is gonna be a long haul, and it gets riskier the longer the haul. The one area where he claims it is an enabler is as a medium of exchange between criminal organizations. It's easier to transfer large quantities of currency and easier/cheaper to verify validity, than the traditional method of brokers and illicit escrows (nothing like the briefcase handoffs you see on TV). But those same qualities that enable those types of transfers also enable transnational transfers of currency between nations that do not have agreed on standardized electronic methods. And I'd view that as an overall win. I'm also of the opinion that on a slow and steady long haul, cryptocurrencies will eventually take over the role of the US dollar as a trading base currency. Which would also be a win in my opinion, with respect to geopolitics.
- dangerboysteve 6y agoWestern union was used to pay off parties in the past before Bitcoin.
- chii 6y ago> Instead democratizing currency, we're democratizing large scale crime. democratization works both ways. A democratized currency facilitates both crime as well as the oppressed - after all, you cannot tell the difference between them under an oppressive regime. What you implied that we should have is a democratized currency that's _only_ good for non-criminals (and used for "good purposes"). That's impossible. It's like asking for a gun that you can't commit a crime with, but can be used to defend yourself with.
- joe_the_user 6y agoHow does a democratized currency help the oppressed? It could help middle class people get their money out of a given country but otherwise, where's the benefit?
- chii 6y agoMiddle class people can still be part of the oppressed ,and them being able to get money out or use it to fund resistance or activism is a good outcome.
- bradgessler 6y agoCryptocurrency can’t really get a fair shake at being legitimate until it’s treated by governments as currency, which means not taxing its capital gains. Criminals don’t care about filing tax returns for digital assets, which is why we see them use it as currency. When you or I try to use it as a currency, we’d have to file a tax return if the value of it changes (at least in the US) If we saw governments ease up on this a bit, we might see some interesting currency applications come if it, but I don’t see them letting go of that control.
- sonicggg 6y agoWho said governments don't tax capital gains for fiat currencies? Honestly, it's pretty much the same thing. Example : https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/completing-schedule-3/bonds-debentures-promissory-notes-other-similar-properties/foreign-currencies.html https://www.canada.ca/en/revenue-agency/services/tax/individ...
- octocop 6y agoWould you blame <insert any currency here> for things such as the innocent lives lost to the drug trade and or human trafficking? Banks have been caught stealing more money than there hackers could ever do in their lifetime, with fiat currency. This is what economic freedom looks like, theft is made possible again, but then again, it was always possible to some.