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Feds seized $311M in Bitcoin, then hacker stole it back
- 2Slow 4y ago
- bhaney 4y agolmao, even
- egberts1 4y agowallet address, wallet address, waller address, it’s the damn wallet address.
- smeagull 4y agoImagine calling this "stealing it back". Hilarious
- RichardCNormos 4y agoIt's not immediately clear to me that this is illegal. If anything, the Feds didn't "seize" the Bitcoin, they forcibly acquired a license to the wallet's private key. If they didn't understand that the license was non-exclusive, well, that's not the fault of the other licensees.
- TheJoeMan 4y agoEven funnier, when his brother moved the coins it was a “theft” from the feds? Can you imagine the feds saying we seized an iPhone with a banking app downloaded on it, and then someone else goes to the bank and withdraws the cash and now “stole” it?
- jeroenhd 4y agoFollowing this argumentation would imply that cryptocurrencies don't provide a real value and therefore can't be stolen (which also implies that your average cryptocurrency scam is fair game because nothing of value is lost). A bank account can be seized but that access is not a license. IP is irrelevant here.
- 8note 4y agoA crypto wallet isn't a bank account though. A bank account has controls on who has access, with an owner to grant and revoke it. Everyone has access to use every crypto wallet
- dvzk 4y agoIt may not technically be theft, but surely there’s an assortment of crimes committed by doing what he did, including but not limited to fraud, conspiracy, and interference with an investigation.
- drexlspivey 4y agoAre you just naming random crimes?
- andirk 4y agoIt is also up to and including, but not limited to wiretapping, tampering with evidence, and monetary regicide.
- dvzk 4y agoYes. To defer to the prosecution’s arguments, however, it seems that Gary was charged with the following crimes: - removal of property to prevent seizure (18 USC 2232) - money laundering (18 USC 1956) - obstruction of a criminal proceeding (18 USC 1512) - lying to federal law enforcement agents Also, the BTC were subject to forfeiture pending the resolution of the indictment against his brother.
- yieldcrv 4y agosure Bloomberg's headline uses the word "stole" as if that was the crime Gary is accused of money laundering and other crimes, because of the money laundering and other crimes. Money laundering is a tacked on charge that requires discovering an illicit origin of the funds. Then subsequent actions, such as the laundering through additional mixers, depositing in BlockFi for collateral with clean funds loaned against the dirty ones, and using those clean funds, can all be criminalized.
- 8note 4y agoI don't think license is the right word, but equal access to the FBI to that wallet
- JumpCrisscross 4y ago> not immediately clear to me that this is illegal Seizure is a legal term. A yacht registered in the Marshall Islands docked in Antigua can be announced seized even before it's physically secured. Stealing that yacht and claiming YOLO isn't a valid defense.
- yieldcrv 4y ago> He used most as collateral for a $1.2 million loan. Some of that went to buy a luxury condo in Cleveland, prosecutors said. ahahah Gary coming through with the oxymorons
- caminante 4y agoHey...laundering cash in CLE is hard!
- jandrese 4y agoThis was bound to happen eventually. People have been noting for awhile how often law enforcement just leaves the "seized" coins in the original wallet somehow thinking that no criminal would ever make a backup copy of their private keys.
- zie 4y agoThe FBI has a bitcoin wallet, and they routinely used to store seized BTC there. I'm not sure what they are doing now, I don't really pay attention, but last I looked that address was basically empty.
- px43 4y agoYeah, FBI wallets regularly get sold at GSA auctions.
- olalonde 4y ago> People have been noting for awhile how often law enforcement just leaves the "seized" coins in the original wallet Do you have any source on that?
- ENOTTY 4y agoImagine getting done in by your own Google Glass.
- synicalx 4y agoImagine owning a Google Glass though, that's arguably worse
- yieldcrv 4y agoIf you find yourself in the similar situation, use RenVM to get your bitcoin over to an EVM (Ethereum Virtual Machine, many networks use EVMs now), then you have many more options. You can still use Tornado cash. You can still withdraw from Tornado cash to new addresses. You can use those funds in those new addresses to buy and pump the price of the the smallcap tokens you already owned with your salary money. Decentralized exchanges that utilize liquidity pools remove the need for matching orders, liquidity pools are mixers on their own. It doesn't matter who you sell your pumped tokens to, you are just depositing them in the liquidity pool and getting the more liquid token back - USDC, Ether, etc. A couple 8,000% gains later and you're just another crypto trader that got in early and believed.
- yieldcrv 4y ago(other things to note: - for the bitcoin transaction, you should do this from a machine or VM running Tor system wide. - for the EVM transactions, you can do this from the Tor machine as well, but also consider running your own node because in EVMs the nodes do not know which node saw a transaction first. Whereas using a remote note such as Infura or Alchemy has lots of records. Most of the Ethereum stack is Javascript heavy so this undermines the desire to use Tor browsers and operating systems, but it doesn't really require Javascript, thats just what the communities built. It is tricky (but not impossible) to run an Ethereum node over Tor, as the default behavior is that the protocol cannot find the other nodes - but once it does it can download blocks just fine, so either tunnel or hardcode some nodes to connect to. But remote nodes over API connected via Tor may fit your use case well enough. Just things to be conscious of.)
- newZWhoDis 4y ago
- nullc 4y agoAlways good to have a post with someone explaining to engage in illegal money laundering and thus indirectly explain the NFT, ICO, and 1/4 of the altcoin ecosystem.
- ericabiz 4y agohttps://archive.ph/mBEXx https://archive.ph/mBEXx
- maerF0x0 4y ago
- froggertoaster 4y ago> Agents built a detailed financial picture of Larry. Inspecting his cloud accounts... Scariest part of the article.
- zepppotemkin 4y agowhy? i'm sure they had a warrent
- richbell 4y agohttps://en.wikipedia.org/wiki/PRISM https://en.wikipedia.org/wiki/PRISM
- kube-system 4y agoIrrelevant. If they have a warrant they can physically knock down your door and search your underwear drawer.
- richbell 4y agoSurely it's relevant to point out their long history of illegal surveillance and parallel construction? I'm not claiming that this was the case here, I just don't think the government deserves the benefit of the doubt.
- kube-system 4y agoWe don’t need to guess, the article says: > Working with Chainalysis, a blockchain analytics company, the agents studied thousands of Helix transactions, subpoenaed emails, and ultimately found one involving a website that allows users to buy gift cards with Bitcoin. An email associated with Larry was used to open the account. If you’ve got an email address associated with a Google account, it’s a plain old warrant.
- 6c737133 4y agoscary? did you just wake from a 15 year coma? you store anything in a big-corp cloud, which you haven't personally encrypted, with keys that only you possess, then assume it's all backed up in fed repos (somewhat hyperbolic, especially for non-crims, but not far fetched by any means) that's neither new, nor news (sadly)
- artdigital 4y ago> Agents built a detailed financial picture of Larry. Inspecting his cloud accounts, they found a Google Glass photo of a computer screen showing the Helix administrator page Wow, a picture taken with google glass is one of the things that got him
- faangiq 4y agoLikelihood that these are always on, dumping data directly to the Feds?
- dannyw 4y ago101%
- jen729w 4y agoZero, given that anyone can sniff the traffic.
- SV_BubbleTime 4y agoThere can never be a problem with OpenSSL or Log4j, they’re open source. Too many eyes on it to be a problem. Absolutes, cut it out.
- DonHopkins 4y agoTo quote Theo De Raadt: “My favorite part of the “many eyes” argument is how few bugs were found by the two eyes of Eric ([S Raymond] the originator of the statement). All the many eyes are apparently attached to a lot of hands that type lots of words about many eyes, and never actually audit code.”
- CamelCaseName 4y agoBased on the replies you received, somewhere between zero and 101%. Jokes aside, my guess is zero. Transmitting that much data would probably be a lot. Maybe you could take a picture every 30 minutes and hide it away with other data if you really wanted to, but Google Glass was so short lived I imagine they had bigger things to worry about.
- throw101010 4y ago> The prosecutors accuse Harmon of a very unusual crime: remotely swiping Bitcoin... As opposed to what, "locally" swiping Bitcoin? > ... Bitcoin stored on a computer device the government had already seized in another case Yeah that's your problem Mr. Prosecutor, you have no idea where bitcoins are "stored" or what the device you have seized is. Which leads me to think you are not qualified to "seize" this type of assets. It's 2022, Bitcoin has been working practically non-stop since 2009, and governments and the medias have been claiming that only criminals/terrorists use Bitcoin for almost as long... you would think people in his position would know what private keys are and how to secure Bitcoin funds they pretend to "seize". It's simple, like all crypto newbies this prosecutor has just learned: Not your keys, not your coins. This apllies if you have keys and you are not certain you are the only one to have them... anyone else with these keys can/will most likely claim them before you.
- deleted 4y ago[deleted]
- cantSpellSober 4y ago> as opposed to what? There are more words in that sentence. Are there other examples where someone "remotely [swiped] Bitcoin stored on a computer device the government had already seized in another case?" They seem to define "stored on service" in this case as "accessible only with access to device." It's an interesting case: is it harder to recover physical assets from a police storage locker than digital?
- giancarlostoro 4y ago> It's an interesting case because it's harder to recover physical assets from a police storage locker than digital. I feel like you missed the whole point the comment you replied to made. If the person who stored the cryptocoins on the physically seized computer had a copy of the private keys on another computer (COMPLETELY NORMAL) and the prosecutor never transferred the coins making the assumption that physically holding them was good enough, then that is an invaluable lesson they just learned. As the previous comment says, if two people have access to the private keys for a wallet, whoever gets to it first is the real owner.
- TakeBlaster16 4y ago> remotely swiping Bitcoin In other words, he used his own private key to send a transaction. How is that "hacking"?
- xvector 4y agoBecause Bloomberg articles are apparently written by clowns.
- oktwtf 4y agoSo did they seize it or not? What a farce.
- throwthere 4y ago80% of the way through the article you can read what actually happened. It's not that the Feds were incompetent and kept a "seized wallet" thinking only they had the private keys or something like that. The wallets were simply protected by a passphrase and Larry couldn't be compelled to give the passphrase. The feds even told the judge they didn't have control of the funds and they could be moved to family/friends before it happened.
- vikingerik 4y agoWhich means the feds didn't actually seize anything. A copy of the wallet without the passphrase is nothing. If the feds don't have the keys, they don't have the coins. It sounds like Michael Scott declaring bankruptcy - the feds declared "I seize Bitcoin" but nothing happened.
- JumpCrisscross 4y ago> Which means the feds didn't actually seize anything Seizure is tied to possession, a legal concept [1]. Not control. Courts commonly authorize the seizure assets not yet under the government's physical control. (I agree the terminology is misleading.) [1] https://www.law.cornell.edu/wex/seizure https://www.law.cornell.edu/wex/seizure
- arcticfox 4y agoThat's good to know! But the title is the part that is so misleading that it's essentially inaccurate - you can't steal something back that was never taken away. This would be like the feds "seizing" a car, and you drive it away before they actually come take possession of it. Hardly stealing it back, they simply never had it.
- JumpCrisscross 4y ago> you can't steal something back that was never taken away "Taken away" muddles legal possession and control. If someone takes control of your un-attended car, we call that stealing. > would be like the feds "seizing" a car, and you drive it away before they actually come take possession of it. Hardly stealing it back Legally, it is. Colloquially, that's silly phrasing. (Not disagreeing at all that the headline is silly. Hacker absconds with frozen coins would be clearer. Though we'd then have a page full of questions about what frozen coins are doing in transit.)
- kodah 4y agoThis reminds me of that time that a governor claimed a journalist hacked the state via right-click => view source.
- dicknuckle 4y agoThat was, what a year ago? 2?
- olliej 4y agoI'm sorry, this sounds like they essentially grabbed the post-it note with someone's bank account login from their screen, and then been surprised that the person logged in and then Zelle'd their money to a different bank account? (obviously replace bank+passcode with wallet seed or whatnot) Because it really seems like the obvious thing would be to immediately move the bitcoin or whatever from the original elsewhere on the assumption that they'd be recouping the transaction cost?
- 29athrowaway 4y agoThe only way to seize them is to immediately transfer them to another account.
- leeoniya 4y ago> To US prosecutors, it’s evidence that he suddenly came into a lot of money. it's a tub full of singles :_D https://assets.bwbx.io/images/users/iqjWHBFdfxIU/izKncFTLeKfY/v1/-1x-1.jpg https://assets.bwbx.io/images/users/iqjWHBFdfxIU/izKncFTLeKf... i've seen strippers leave the stage with more
- TedDoesntTalk 4y agoThere’s at least 20 bucks there!
- px43 4y agoDude, that guy's got to have like, 200 bucks! Wild!
- hda2 4y agoNo, Blooomberg. The "hacker" never "stole" the money back. The feds never seized it in the first place. All they seized was an encrypted wallet. Putting it in terms you might better understand: What the feds seized is equivalent to a foreign, chip-only banking card. They never seized the money behind it or the pin required to move that money.
- ForHackernews 4y agoITT: A bunch of cryptonerds arguing semantics about legal terminology they don't understand.
- teekert 4y agoCan you even say "stealing back" when the Feds just had some copy of a private key while there always have been (many) others? I mean, would you call it stealing back if the Feds seize a real key to a vault, know there may be others out there and then leave the fault completely accessible only to act surprised when the vault is empty after some time? Ownership of blockchain assets is defined by who has access to the private keys. It seems a bit ignorant to forget about this, much less write a piece ignoring this.
- mrguyorama 4y ago>Ownership of blockchain assets is defined by who has access to the private keys. Nope, like everything else in the world, the "owner" of a thing is purely defined by who the government will go to bat for. If the court says your bank account is now owned by the feds, and you withdraw money from it, that's not your money.
- tantalor 4y agoWas there a court order preventing him from accessing the Bitcoin? If not then I don't know what to tell you.
- dmje 4y agoLol, Larry and Gary. Man, some parents. Maybe there’s a Barry too
- Elizabeh 4y ago
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