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> “After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files wit

> “After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein,” the press release said. “Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.” So most likely, 1) they didn't launder it properly, leading to police being able to trace it to their bank accounts. I wonder if tornado.cash was used. 2) then police had their names, leading to warrants for all online accounts - google account, apple account, etc. 3) they made the big blunder of keeping their private keys in their online account. Most likely a txt file in google drive. That is such a silly blunder. Without the private keys, the police has zero proof of anything. They could have made a hundred excuses for how they got money in their bank account, as long as the police didn't have the private keys. Who keeps their private keys in an online account? Apparently the biggest criminals make too many silly mistakes. The old saying applies here: "you don't have to be smart, just don't be an idiot"

duxup 5y ago
Well you don't want to lose those keys ... there is a bit of a conundrum there (granted you don't have to do it the way they did either). As far as how exactly they got caught, there was a reward offered by the company it was stolen from. It may have been someone tipped the feds off for the reward.
- AlexanderTheGr8 5y ago
  Crypto 101: never store private keys online.
  - giaour 5y ago
    Crypto 102: weep for the coins you lost when your cousin spilled soda on the hard drive containing the offline-only copy of your private keys
    - hungryforcodes 5y ago
      It's funny! But really there are loads of ways to store your keys physically that are human readable.
      - netheril96 5y ago
        And can be easily seized by the government with a search warrant.
      - Miner49er 5y ago
        Yeah, and then they could be fairly trivially memorized, even.
        giaour 5y ago
        This plan doesn't really scale to the 2000 wallets mentioned in the OP. But maybe that scenario only comes up when you're looking to launder billions of dollars worth of BTC?
- rjbwork 5y ago
  I'm not invested in crypto or really at all interested in it. That said, my mentor seems pretty excited about it and is pretty heavily invested as of the past few months. I advised him to do something like https://en.wikipedia.org/wiki/Shamir's_Secret_Sharing https://en.wikipedia.org/wiki/Shamir's_Secret_Sharing and distribute it across a wide number of storage mechanisms, physical, digital, and custodial. For instance, in google drive, in drop box, in a bank safety deposit box, engraved in a gold bar buried in your yard, in your house safe, etc. Why anyone with a significant amount of crypto assets isn't going to insane extremes in terms of secrecy and durability is beyond me.
  - duxup 5y ago
    I don't understand the math but I think I have seen that style of secret management where any 3 of say 10 secrets can access something but no 2 or any 1 secret can do it. It would seem to solve a lot of just organizational problems where "jan is out of the office today" and nobody can do the thing ... but if access is spread out among 10 people ... 3 probably are in the office when needed. Granted I've never seen it used in production personally, not / seen it on a granular level.
    - shagie 5y ago
      Hashicorp Vault uses it. https://learn.hashicorp.com/tutorials/vault/rekeying-and-rotating https://learn.hashicorp.com/tutorials/vault/rekeying-and-rot... > In order to prevent one person from having complete access to the system, Vault employs Shamir's Secret Sharing Algorithm. Under this process, a secret is divided into a subset of parts such that a subset of those parts are needed to reconstruct the original secret. Vault makes heavy use of this algorithm as part of the unsealing process.
    - londons_explore 5y ago
      I have used it. It works. Tooling is still pretty poor. Every use, we ended up bringing the necessary people into a room, booting up an offline laptop from a sha-summed live USB, QR code scanning each of our secrets, combining them, then using the key to sign whatever we needed to sign, photographing the signature as a QR code. We use software from 2008 because an OS stack contains code from tens of thousands of developers, and we felt old software was less likely to have an active 'steal these keys and exfiltrate them via open wifi' malware. We would first go through the process with 'dummy' keys to check everyone was happy with the process and what we were going to do (ie. which commands, what software, what exactly will be signed). We would then do it again with the real thing. And then we'd power off the computer till next time it needed to be used. "Clunky" would be a good way to describe it... But it's hard to make it better without relying on a bunch of software we don't have the resources to audit.
deleted 5y ago
[deleted]
X6S1x6Okd1st 5y ago
There's a lot of evidence in the statement_of_facts however it's unclear how much of it can only be reconstructed with the private keys. Interested parties should really look to what was known to grant the search warrant. https://www.justice.gov/opa/press-release/file/1470186/download https://www.justice.gov/opa/press-release/file/1470186/downl...
- AlexanderTheGr8 5y ago
  They don't usually give details of how they caught them, because the next bad-actor will read that to know their tactics. Search warrants are given on reasonable doubt. When it comes to cryptocurrencies, the feds have reasonable doubt on everyone. So it is always possible for them to get a search warrant. I emphasized private keys, bec without them, no matter how much doubt the feds had, they couldn't prove anything.
  - aksss 5y ago
    > reasonable doubt I think you mean reasonable suspicion & probable cause. Reasonable doubt is the threshold prosecutors must appear to exceed for a successful finding of guilt with a jury (elimination of reasonable doubt).
    - AlexanderTheGr8 5y ago
      You are right. I meant "reasonable suspicion & probable cause". My bad. Got confused between the 2.
  - X6S1x6Okd1st 5y ago
    > When it comes to cryptocurrencies, the feds have reasonable doubt on everyone. So it is always possible for them to get a search warrant. Any evidence on this?
zozbot234 5y ago
A good guess is that "laundering" billions of dollars is inherently a non-trivial problem, and perhaps not feasible at all without cooperation from shady real-world actors outside the whole cryptocurrency ecosystem. This is actually good news for small-scale users who just want to keep their microtransactions reasonably private - the usual mechanisms might actually work well enough for that case.
- AlexanderTheGr8 5y ago
  I agree. But if not for privacy, why use crypto at all? Even bank accounts are reasonably private, if you are not doing anything considered suspicious by society. Also, with mixers such as tornado_cash, laundering money is ,sadly, pretty trivial.
  - Dwolb 5y ago
    Speculation, self-sovereignty, ease of use/trade/leverage/exchange
    - AlexanderTheGr8 5y ago
      > Speculation You can do that by owning crypto. No need to use it. > Self-sovereignty Majority people use centralized exchanges, which regularly control transactions. > Ease of use/trade/leverage/exchange Fiat banking is much easier to use than crypto. It's also faster. Now everyone uses 1-tap payments. Crypto transactions are more complicated than that. They also take longer. Also are bad for the environment (not as bad as media portrays, but bad nonetheless)
      - tedivm 5y ago
        Even the apps built off of the "blockchain" rarely touch the blockchain. Companies aren't looking up NFTs on the chain, they're just hitting OpenSea APIs.
        bandrami 5y ago
iskander 5y ago
They mention chain hopping and privacy chains. Maybe they slipped up using ZEC and made some of their transactions public?
- AlexanderTheGr8 5y ago
  Could be. But even if some of the transactions became public, it should be fine as long as the end transactions (crypto -> fiat) is private, right?
  - iskander 5y ago
    There are very few exchanges left which don't require KYC and even then the real final step is cashing to some kind of bank account. I don't think crypto->fiat privacy is possible beyond a certain level of wealth.
    - 35fbe7d3d5b9 5y ago
      OFAC has broadened enforcement to the point that pretty much any financial transaction across the world has a US nexus. Moving that much stolen crypto without the feds noticing? No chance.
- paulpauper 5y ago
  where do mention?
tsimionescu 5y ago
Well, the police had a search warrant, so the police could have found them if they had had them in their possession anyway. Sure, they could have destroyed them, losing the money but maybe not getting arrested?
- AlexanderTheGr8 5y ago
  vitalik (ethereum founder) used an interesting system. He split the key in 2. Wrote both on paper. Gave 1 paper to family and kept the other. Even if the police raid him (hypothetically), they cannot raid the houses of his family and friends at the same time This way the police or anybody else cannot get your private key.
  - deleted 5y ago
    [deleted]
  - diego 5y ago
    No, but if you don't have your half memorized and they take it from you, the other half is useless. This is more useful if you want to leave your crypto to your family if you die, provided that you make it easy for them to find your half if you're not around.
    - AlexanderTheGr8 5y ago
      Excellent point! I never considered this.
  - chrisfosterelli 5y ago
    > Even if the police raid him (hypothetically), they cannot raid the houses of his family and friends at the same time ...why not? Police coordinate raids all the time.
    - AlexanderTheGr8 5y ago
      How many raids? 1 on him, 5 on family, 20 on friends? Isn't that impractical? Also how were the police supposed to know that he used this system?
A4ET8a8uTh0 5y ago
While I do partially agree that some of it may be grandstanding. The whole: "Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.” and suggesting AEC and chain hopping is futile is an effective propaganda tool. I mean its possible something major changed, but I think your thoughts are closer to reality. If true, this is interesting, because apparently fake identity accounts on exchanges are cheap ( partially 'thanks' to all the breaches over the years ). edit: added '' to thanks
- AlexanderTheGr8 5y ago
  I agree. Propaganda is very effective here. And it's actually good - it deters potential criminals. But if someone who knew how crypto works wanted to commit a crime, they can. That's scary.
  - A4ET8a8uTh0 5y ago
    Sorry, yes. I used the term propaganda, but I briefly forgot its negative connotation. In this particular instance, I meant it more along the lines of 'shock and awe' your adversaries. I am hardly cheering on an alleged hacker/thief/launderer. The point stands, but thank you for pointing the perception issue out.
- salawat 5y ago
  ...any system appropriate for shluffing around value by definition comes with being able to trace things with enough attention to detail.
- xwolfi 5y ago
  At the same time this crime shows the weakness of crypto: with an ever appreciating linked asset with no ability to truly "gap" transfers, you can always trace where the money goes, even with a mixer (you just then need to track many more targets, but eventually the money re-concentrate somewhere you can see), transfering just once with someone who knows your name instantly gives you traceback ability to all the transaction (can't fund a wallet without tracing back to the first ever source of fund on chain), and the fact it appreciate is the greatest enemy of money laundering: where a Mexican kingpin would understand that there's value in losing 40% of their money rather than have it stashed in USD bills in a warehouse, crypto is tempting to keep, this guy couldn't realistically forfeit a large majority of the fund by for instance randomly giving it to 5000 honest wallets with 1 being his for instance. It's great for us non criminals, but it's one more utility of crypto going down the drain. What is it good for, if not even crime.
not2b 5y ago
The (alleged) criminal only has to make one mistake to get caught, if the pursuers are good. Steal enough money and the best pursuers will be assigned to catch the perp.
- AlexanderTheGr8 5y ago
  Agreed. But the (alleged) criminal kept private keys on cloud AND used weak encryption. These are extremely silly mistakes. They could have used bitwarden (or a password manager) and they would be good to go. Also the best pursuers needs 6 years (2022 - 2016) to catch them. Plenty of time for the perps to take a lot of measures.
  - netheril96 5y ago
    I don’t think Bitwarden would be helpful. You still need to protect your master password and the company is still subject to the will of law enforcement.
- paulpauper 5y ago
  John Ruffo who stole $300 million still at large after 20 years
  - aksss 5y ago
    https://en.m.wikipedia.org/wiki/John_Ruffo https://en.m.wikipedia.org/wiki/John_Ruffo $25,000 bounty seems pretty small, considering.
  - axiosgunnar 5y ago
    might be dead by now?
paulpauper 5y ago
Tornado only works for eth. they would need a bridge. they were done-in by I am assuming to be a weak password, enough entropy would have made it uncrackable
- AlexanderTheGr8 5y ago
  good point. If they had tried to use a bridge to convert their bad bitcoin with good ethereum, would they have been denied service since everyone knew that these btc were bad? As to your 2nd point, I agree. Another mistake was uploading private keys to google drive.
- EVa5I7bHFq9mnYK 5y ago
  I would guess a keylogger
soco 5y ago
This would have happened: https://xkcd.com/538/ https://xkcd.com/538/
- AlexanderTheGr8 5y ago
  lol using a mixer means that the feds don't know which account contains the bad funds. So they don't find the identity of the perp. So no possibility of beating the perp.
paulpauper 5y ago
3) they made the big blunder of keeping their private keys in their online account. Most likely a txt file in google drive. That is such a silly blunder. Without the private keys, the police has zero proof of anything. They could have made a hundred excuses for how they got money in their bank account, as long as the police didn't have the private keys. Who keeps their private keys in an online account? Not necessarily. If they can spend stolen $, presumably that may be enough to persuade a jury they own it.
- AlexanderTheGr8 5y ago
  I agee. Also, intimidation tactics can work here - e.g. telling them they might go to prison for life bec justice wants to make an example out of them.
mardifoufs 5y ago
You have to keep in mind that a lot of those highlighted "trivial" series of mistakes can be just the result of parallel construction, and what evidence really "did them in" can be completely different from what's stated by the prosecution. It is very easy to find tons of small mistakes once you already know what you have to look for thanks to an undisclosed huge exploit/honeypot/technically-illegal-seizures that you can use. Proving this is hard by design, but a good example of that would be how they used the Hansa market as a honeypot by running the market themselves for months. The entire investigation around Alphabay and how they got to the owner is a bit shady, too, and there have been tons of rumors of the entire official case being based on ad-hoc parallel construction.
- digianarchist 5y ago
  Tracking down Alex Cazes wasn’t shady at all. Shortly after he committed suicide I pulled up the French language technical board where he had linked an alias to a real email address. Which mirrors the same mistake as the Silk Road operator. When you dig deeper into these cases it’s clear that they aren’t properly washing the money. There’s no placement or layering. They go straight to laundering on a public ledger and cash out under their own names. The simplest explanation is usually the correct one.
  - mardifoufs 5y ago
    I think my comment was not really clear. Yes, the apparent mistake Alex made was glaring and obvious, but the entire operation was very weird. They shut down alphabay right before turning off The Hansa, which they had been operating for months at that point. It was the coup de grace, basically trying to get as many people to sign in to the Hansa before it also goes off. To me that indicates they have been able to turn off alphabay for a long time, considering how easily and well timed they did it. That also means they have had tons of time to build the case. Of course you can argue that the simplest explanation is the best one but considering law enforcement literally operated the biggest DNM for months, completely under the radar I'm not sure why "they found an email he used for a few weeks 4 years ago" would be more simple. You can read what DeSnake, another admin of the website had to say about the takedown. He's extremely security conscious (he hasn't been caught yet afaik which is another can of worms) and he's adamant that it was not a simple bust. Actually, the whole thing was kind of a mess, with some mods getting arrested (even without making obvious mistakes like Alex did ). You can read up on the confusion here: https://www.darkowl.com/blog-content/alphabay-marketplace-returns/ https://www.darkowl.com/blog-content/alphabay-marketplace-re... If I had to guess, some mod/admin informed on him (maybe even snake!) hence why they had access to an early email. But who knows? Now in cases like the silk road I'd agree that it was simply trash OPSEC but the Alphabay/Hansa takedown was so sophisticated that anything is possible
young_unixer 5y ago
Even I encrypt my keys before uploading them to the cloud, and I don't give them a descriptive name, and I have less than $2000 worth of cryptocurrencies, and it wasn't stolen.
BLKNSLVR 5y ago
There's an unbalanced relationship there, however, in that the criminal only has to be an idiot (or even just "not smart enough") once, to ruin an entire chain of previously smart actions. Law enforcement may only need one thread to unravel an otherwise finely crafted crime. There's also a lot of time for law enforcement to try and find these threads as well, meaning the perpetrator could well be living in paranoia for as long as the statute of limitations lasts. People that are capable of getting away with life-changing money type crimes would often be better off being entrepreneurs at the edges of existing regulation. Hello cryptocurrency...

duxup 5y ago

Well you don't want to lose those keys ... there is a bit of a conundrum there (granted you don't have to do it the way they did either). As far as how exactly they got caught, there was a reward offered by the company it was stolen from. It may have been someone tipped the feds off for the reward.

AlexanderTheGr8 5y ago
Crypto 101: never store private keys online.
- giaour 5y ago
  Crypto 102: weep for the coins you lost when your cousin spilled soda on the hard drive containing the offline-only copy of your private keys
  - hungryforcodes 5y ago
    It's funny! But really there are loads of ways to store your keys physically that are human readable.
    - netheril96 5y ago
      And can be easily seized by the government with a search warrant.
    - Miner49er 5y ago
      Yeah, and then they could be fairly trivially memorized, even.
      - giaour 5y ago
        This plan doesn't really scale to the 2000 wallets mentioned in the OP. But maybe that scenario only comes up when you're looking to launder billions of dollars worth of BTC?
rjbwork 5y ago
I'm not invested in crypto or really at all interested in it. That said, my mentor seems pretty excited about it and is pretty heavily invested as of the past few months. I advised him to do something like https://en.wikipedia.org/wiki/Shamir's_Secret_Sharing https://en.wikipedia.org/wiki/Shamir's_Secret_Sharing and distribute it across a wide number of storage mechanisms, physical, digital, and custodial. For instance, in google drive, in drop box, in a bank safety deposit box, engraved in a gold bar buried in your yard, in your house safe, etc. Why anyone with a significant amount of crypto assets isn't going to insane extremes in terms of secrecy and durability is beyond me.
- duxup 5y ago
  I don't understand the math but I think I have seen that style of secret management where any 3 of say 10 secrets can access something but no 2 or any 1 secret can do it. It would seem to solve a lot of just organizational problems where "jan is out of the office today" and nobody can do the thing ... but if access is spread out among 10 people ... 3 probably are in the office when needed. Granted I've never seen it used in production personally, not / seen it on a granular level.
  - shagie 5y ago
    Hashicorp Vault uses it. https://learn.hashicorp.com/tutorials/vault/rekeying-and-rotating https://learn.hashicorp.com/tutorials/vault/rekeying-and-rot... > In order to prevent one person from having complete access to the system, Vault employs Shamir's Secret Sharing Algorithm. Under this process, a secret is divided into a subset of parts such that a subset of those parts are needed to reconstruct the original secret. Vault makes heavy use of this algorithm as part of the unsealing process.
  - londons_explore 5y ago
    I have used it. It works. Tooling is still pretty poor. Every use, we ended up bringing the necessary people into a room, booting up an offline laptop from a sha-summed live USB, QR code scanning each of our secrets, combining them, then using the key to sign whatever we needed to sign, photographing the signature as a QR code. We use software from 2008 because an OS stack contains code from tens of thousands of developers, and we felt old software was less likely to have an active 'steal these keys and exfiltrate them via open wifi' malware. We would first go through the process with 'dummy' keys to check everyone was happy with the process and what we were going to do (ie. which commands, what software, what exactly will be signed). We would then do it again with the real thing. And then we'd power off the computer till next time it needed to be used. "Clunky" would be a good way to describe it... But it's hard to make it better without relying on a bunch of software we don't have the resources to audit.

deleted 5y ago

[deleted]

X6S1x6Okd1st 5y ago

There's a lot of evidence in the statement_of_facts however it's unclear how much of it can only be reconstructed with the private keys. Interested parties should really look to what was known to grant the search warrant. https://www.justice.gov/opa/press-release/file/1470186/download https://www.justice.gov/opa/press-release/file/1470186/downl...

AlexanderTheGr8 5y ago
They don't usually give details of how they caught them, because the next bad-actor will read that to know their tactics. Search warrants are given on reasonable doubt. When it comes to cryptocurrencies, the feds have reasonable doubt on everyone. So it is always possible for them to get a search warrant. I emphasized private keys, bec without them, no matter how much doubt the feds had, they couldn't prove anything.
- aksss 5y ago
  > reasonable doubt I think you mean reasonable suspicion & probable cause. Reasonable doubt is the threshold prosecutors must appear to exceed for a successful finding of guilt with a jury (elimination of reasonable doubt).
  - AlexanderTheGr8 5y ago
    You are right. I meant "reasonable suspicion & probable cause". My bad. Got confused between the 2.
- X6S1x6Okd1st 5y ago
  > When it comes to cryptocurrencies, the feds have reasonable doubt on everyone. So it is always possible for them to get a search warrant. Any evidence on this?

zozbot234 5y ago

A good guess is that "laundering" billions of dollars is inherently a non-trivial problem, and perhaps not feasible at all without cooperation from shady real-world actors outside the whole cryptocurrency ecosystem. This is actually good news for small-scale users who just want to keep their microtransactions reasonably private - the usual mechanisms might actually work well enough for that case.

AlexanderTheGr8 5y ago
I agree. But if not for privacy, why use crypto at all? Even bank accounts are reasonably private, if you are not doing anything considered suspicious by society. Also, with mixers such as tornado_cash, laundering money is ,sadly, pretty trivial.
- Dwolb 5y ago
  Speculation, self-sovereignty, ease of use/trade/leverage/exchange
  - AlexanderTheGr8 5y ago
    > Speculation You can do that by owning crypto. No need to use it. > Self-sovereignty Majority people use centralized exchanges, which regularly control transactions. > Ease of use/trade/leverage/exchange Fiat banking is much easier to use than crypto. It's also faster. Now everyone uses 1-tap payments. Crypto transactions are more complicated than that. They also take longer. Also are bad for the environment (not as bad as media portrays, but bad nonetheless)
    - tedivm 5y ago
      Even the apps built off of the "blockchain" rarely touch the blockchain. Companies aren't looking up NFTs on the chain, they're just hitting OpenSea APIs.
      - bandrami 5y ago

iskander 5y ago

They mention chain hopping and privacy chains. Maybe they slipped up using ZEC and made some of their transactions public?

AlexanderTheGr8 5y ago
Could be. But even if some of the transactions became public, it should be fine as long as the end transactions (crypto -> fiat) is private, right?
- iskander 5y ago
  There are very few exchanges left which don't require KYC and even then the real final step is cashing to some kind of bank account. I don't think crypto->fiat privacy is possible beyond a certain level of wealth.
  - 35fbe7d3d5b9 5y ago
    OFAC has broadened enforcement to the point that pretty much any financial transaction across the world has a US nexus. Moving that much stolen crypto without the feds noticing? No chance.
paulpauper 5y ago
where do mention?

tsimionescu 5y ago

Well, the police had a search warrant, so the police could have found them if they had had them in their possession anyway. Sure, they could have destroyed them, losing the money but maybe not getting arrested?

AlexanderTheGr8 5y ago
vitalik (ethereum founder) used an interesting system. He split the key in 2. Wrote both on paper. Gave 1 paper to family and kept the other. Even if the police raid him (hypothetically), they cannot raid the houses of his family and friends at the same time This way the police or anybody else cannot get your private key.
- deleted 5y ago
  [deleted]
- diego 5y ago
  No, but if you don't have your half memorized and they take it from you, the other half is useless. This is more useful if you want to leave your crypto to your family if you die, provided that you make it easy for them to find your half if you're not around.
  - AlexanderTheGr8 5y ago
    Excellent point! I never considered this.
- chrisfosterelli 5y ago
  > Even if the police raid him (hypothetically), they cannot raid the houses of his family and friends at the same time ...why not? Police coordinate raids all the time.
  - AlexanderTheGr8 5y ago
    How many raids? 1 on him, 5 on family, 20 on friends? Isn't that impractical? Also how were the police supposed to know that he used this system?

A4ET8a8uTh0 5y ago

While I do partially agree that some of it may be grandstanding. The whole: "Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.” and suggesting AEC and chain hopping is futile is an effective propaganda tool. I mean its possible something major changed, but I think your thoughts are closer to reality. If true, this is interesting, because apparently fake identity accounts on exchanges are cheap ( partially 'thanks' to all the breaches over the years ). edit: added '' to thanks

AlexanderTheGr8 5y ago
I agree. Propaganda is very effective here. And it's actually good - it deters potential criminals. But if someone who knew how crypto works wanted to commit a crime, they can. That's scary.
- A4ET8a8uTh0 5y ago
  Sorry, yes. I used the term propaganda, but I briefly forgot its negative connotation. In this particular instance, I meant it more along the lines of 'shock and awe' your adversaries. I am hardly cheering on an alleged hacker/thief/launderer. The point stands, but thank you for pointing the perception issue out.
salawat 5y ago
...any system appropriate for shluffing around value by definition comes with being able to trace things with enough attention to detail.
xwolfi 5y ago
At the same time this crime shows the weakness of crypto: with an ever appreciating linked asset with no ability to truly "gap" transfers, you can always trace where the money goes, even with a mixer (you just then need to track many more targets, but eventually the money re-concentrate somewhere you can see), transfering just once with someone who knows your name instantly gives you traceback ability to all the transaction (can't fund a wallet without tracing back to the first ever source of fund on chain), and the fact it appreciate is the greatest enemy of money laundering: where a Mexican kingpin would understand that there's value in losing 40% of their money rather than have it stashed in USD bills in a warehouse, crypto is tempting to keep, this guy couldn't realistically forfeit a large majority of the fund by for instance randomly giving it to 5000 honest wallets with 1 being his for instance. It's great for us non criminals, but it's one more utility of crypto going down the drain. What is it good for, if not even crime.

not2b 5y ago

The (alleged) criminal only has to make one mistake to get caught, if the pursuers are good. Steal enough money and the best pursuers will be assigned to catch the perp.

AlexanderTheGr8 5y ago
Agreed. But the (alleged) criminal kept private keys on cloud AND used weak encryption. These are extremely silly mistakes. They could have used bitwarden (or a password manager) and they would be good to go. Also the best pursuers needs 6 years (2022 - 2016) to catch them. Plenty of time for the perps to take a lot of measures.
- netheril96 5y ago
  I don’t think Bitwarden would be helpful. You still need to protect your master password and the company is still subject to the will of law enforcement.
paulpauper 5y ago
John Ruffo who stole $300 million still at large after 20 years
- aksss 5y ago
  https://en.m.wikipedia.org/wiki/John_Ruffo https://en.m.wikipedia.org/wiki/John_Ruffo $25,000 bounty seems pretty small, considering.
- axiosgunnar 5y ago
  might be dead by now?

paulpauper 5y ago

Tornado only works for eth. they would need a bridge. they were done-in by I am assuming to be a weak password, enough entropy would have made it uncrackable

AlexanderTheGr8 5y ago
good point. If they had tried to use a bridge to convert their bad bitcoin with good ethereum, would they have been denied service since everyone knew that these btc were bad? As to your 2nd point, I agree. Another mistake was uploading private keys to google drive.
EVa5I7bHFq9mnYK 5y ago
I would guess a keylogger

soco 5y ago

This would have happened: https://xkcd.com/538/ https://xkcd.com/538/

AlexanderTheGr8 5y ago
lol using a mixer means that the feds don't know which account contains the bad funds. So they don't find the identity of the perp. So no possibility of beating the perp.

paulpauper 5y ago

3) they made the big blunder of keeping their private keys in their online account. Most likely a txt file in google drive. That is such a silly blunder. Without the private keys, the police has zero proof of anything. They could have made a hundred excuses for how they got money in their bank account, as long as the police didn't have the private keys. Who keeps their private keys in an online account? Not necessarily. If they can spend stolen $, presumably that may be enough to persuade a jury they own it.

AlexanderTheGr8 5y ago
I agee. Also, intimidation tactics can work here - e.g. telling them they might go to prison for life bec justice wants to make an example out of them.

mardifoufs 5y ago

You have to keep in mind that a lot of those highlighted "trivial" series of mistakes can be just the result of parallel construction, and what evidence really "did them in" can be completely different from what's stated by the prosecution. It is very easy to find tons of small mistakes once you already know what you have to look for thanks to an undisclosed huge exploit/honeypot/technically-illegal-seizures that you can use. Proving this is hard by design, but a good example of that would be how they used the Hansa market as a honeypot by running the market themselves for months. The entire investigation around Alphabay and how they got to the owner is a bit shady, too, and there have been tons of rumors of the entire official case being based on ad-hoc parallel construction.

digianarchist 5y ago
Tracking down Alex Cazes wasn’t shady at all. Shortly after he committed suicide I pulled up the French language technical board where he had linked an alias to a real email address. Which mirrors the same mistake as the Silk Road operator. When you dig deeper into these cases it’s clear that they aren’t properly washing the money. There’s no placement or layering. They go straight to laundering on a public ledger and cash out under their own names. The simplest explanation is usually the correct one.
- mardifoufs 5y ago
  I think my comment was not really clear. Yes, the apparent mistake Alex made was glaring and obvious, but the entire operation was very weird. They shut down alphabay right before turning off The Hansa, which they had been operating for months at that point. It was the coup de grace, basically trying to get as many people to sign in to the Hansa before it also goes off. To me that indicates they have been able to turn off alphabay for a long time, considering how easily and well timed they did it. That also means they have had tons of time to build the case. Of course you can argue that the simplest explanation is the best one but considering law enforcement literally operated the biggest DNM for months, completely under the radar I'm not sure why "they found an email he used for a few weeks 4 years ago" would be more simple. You can read what DeSnake, another admin of the website had to say about the takedown. He's extremely security conscious (he hasn't been caught yet afaik which is another can of worms) and he's adamant that it was not a simple bust. Actually, the whole thing was kind of a mess, with some mods getting arrested (even without making obvious mistakes like Alex did ). You can read up on the confusion here: https://www.darkowl.com/blog-content/alphabay-marketplace-returns/ https://www.darkowl.com/blog-content/alphabay-marketplace-re... If I had to guess, some mod/admin informed on him (maybe even snake!) hence why they had access to an early email. But who knows? Now in cases like the silk road I'd agree that it was simply trash OPSEC but the Alphabay/Hansa takedown was so sophisticated that anything is possible

young_unixer 5y ago

Even I encrypt my keys before uploading them to the cloud, and I don't give them a descriptive name, and I have less than $2000 worth of cryptocurrencies, and it wasn't stolen.

BLKNSLVR 5y ago

There's an unbalanced relationship there, however, in that the criminal only has to be an idiot (or even just "not smart enough") once, to ruin an entire chain of previously smart actions. Law enforcement may only need one thread to unravel an otherwise finely crafted crime. There's also a lot of time for law enforcement to try and find these threads as well, meaning the perpetrator could well be living in paranoia for as long as the statute of limitations lasts. People that are capable of getting away with life-changing money type crimes would often be better off being entrepreneurs at the edges of existing regulation. Hello cryptocurrency...