5 ms·

He emptied an entire crypto exchange onto a thumb drive

52 points by Bluestein 2y ago

gedy 2y ago
Not really involved with crypto, but if I had large sums of money in it, I would never store this on an exchange. Seems so risky. Can anyone ELI5 why people do this?
- dboreham 2y ago
  Lazy? Perhaps a bit of: whatever other option I use could be even less safe.
- deleted 2y ago
  [deleted]
- golergka 2y ago
  I often leave up to $1k on my account to pay for occasional stuff that I need to pay for. May be people who leave huge amounts of money there do the same, but they're rich and their stuff is much more expensive?
- deleted 2y ago
  [deleted]
- beaglesss 2y ago
  For trading with lower latency / no confirm time. Non-KYC exchanges outside the US and sharp deranged claws of the FTC and DoJ typically depend on exchange held crypto if you want near instant clearing for futures and securities trading etc.
  - _heimdall 2y ago
    In the case of something like bitcoin, lower latency / no confirm time means you are avoiding the very blockchain that is meant to be the bedrock of the currency's value. What's the point?
    - beaglesss 2y ago
      I think low latency traders don't much care about the value proposition, only that they can gamble on the trades. Much like forex day traders don't give a shit about the value proposition of the dollar
- phire 2y ago
  Two main reasons: 1. Self custody is hard. You need to understand how to setup a wallet. If you lose the keys to that wallet, your money is gone. Opening an account on an exchange is so much easier, and there is usually a way to reset your password if you forget it. Exchanges provide an online-banking style experience that most people are already familiar and comfortable with. 2. Access to markets. If you hold funds somewhere else, it takes quite a bit of time and effort to move it back onto the exchange so you can sell it later. It only really works for people who want to buy some coins and stuff them under their mattress until later. For anyone who wants to play the markets, you kind of need to keep your coins on the exchange. Additionally, holding coins on the exchange is free. You don't have to pay the transaction fees to withdraw and deposit, which can add up, especially on congested blockchains like bitcoin and ethereum.
  - beeflet 2y ago
    The whole selling point of cryptocurrency is to avoid the online-banking experience
    - amanaplanacanal 2y ago
      I thought the whole selling point was "line go up".
  - nyanpasu64 2y ago
    I found that many exchanges/custodial wallets (I've tested Kraken and CashApp) charge fees or imbalanced exchange rates for converting fiat into crypto and sending crypto to another address (often using a bulk transaction exchanging money between the exchange's wallet), so I wouldn't say you avoid transaction fees that way (they may or may not be reduced). I ended up using them anyway because it's easier to purchase crypto as a number on an exchange than to have it sent to your personal address.
- Kiro 2y ago
  Managing your own keys is stressful. You go around worrying that the hardware has failed or that the seed words won't work. Never again.
  - _heimdall 2y ago
    Legitimate question (I expected this will read poorly). If you don't trust that seed phrases, which are a fundamental piece of how bitcoin key pairs are designed, will work why would you ever consider investing in bitcoin? I totally get the stress of self custody. I just don't get why anyone that stressed about it would bother buying bitcoin.
    - Kiro 2y ago
      To make money, but it's not that I don't trust the technology. It's more that I don't trust myself. Maybe I wrote them down incorrectly or did some other mistake? I also once lost the paper after moving (but found it again), even though I was sure i had put it in the new safe.
      - gedy 2y ago
        I think this is the key thing I wasn't considering - I think of Bitcoin as primarily way to save currency, whereas a lot of people are treating like an investment for trading.
- m463 2y ago
  It all just reminds me of Steve Martin's old comedy routine about banks. I mean, like, take, say you get out college or whatever you're doing. You're gonna go into business; say you're going to open a bank. Now you, just for example, you've got to give it the right name. It's got to be something big and strong like Security First Trust and Federal Reserve. And you have to name a bank that because nobody is going to put their money in Fred's Bank. "Hi, I'm Fred. I have a bank. You got $1,500? I'll put it, I'll put it here, in my white suit. White suit, right-hand pocket. Ok, you gotta remember that." (you probably have to listen to get all of it)
- itake 2y ago
  To add on to the trading latency benefit: During the Terra collapse, there was a 2-day period where Terra's price was supported by a massive BTC reserve. Those with Luna on exchanges could quickly exit their positions, but those with Luna in wallets or locked in Anchor Protocol faced hours-long delays for their currency to be confirmed and traded.
- y04nn 2y ago
  By the way, because a lot of people are keeping their crypto on exchange, would it be possible for an exchange to have fractional reserves like for banks? It is probably doable for big exchanges as trades happen on a platform they control anyway and crypto only goes out when a customer sends money to an external address. They may be able to keep only a third of customers account balance and still operate as usual.
  - tomaskafka 2y ago
    Yes, the solid ones keep the rest in the cold storage, the remaining ones steal the rest and lie to clients about the money existing:).
  - immibis 2y ago
    Most exchanges are suspected to secretly run fractional reserves. Binance in particular has its own blockchain and gets to run fractional reserve on most of the assets bridged to that block chain - the bridge keeps the real copies of the assets while only "shadow copies" are "projected" onto the Binance chain and traded.
yieldcrv 2y ago
CTRL+F “AS “WANTED” FLIERS with Özer’s picture went up” if you actually want to continue what the headline was about This is long form essay has completely unnecessary exposition. Turkey has high inflation and alot of people buy crypto to escape it, one sentence. Next.
dools 2y ago
“Money is an agreement between a government and its society in terms of national unity. But on the other side of the medallion, if everyone leaves the fiat—if everyone leaves the social agreement of their nation—it could derail the world.” The sooner everyone actually learns what money is, the sooner we can stop with all of this foolishness. Money is a tax credit. It is a token that the sovereign who imposed the tax in the first place will accept back in payment of taxes. That's it. Without taxes, there's no money. The "social contract" part is more about resources than money. By imposing the tax, the sovereign creates unemployment in terms of a currency only it can issue, and thus is able to provision itself.
- methyl 2y ago
  > Without taxes, there's no money why?
  - nsomaru 2y ago
    I believe the argument goes like this: "fiat" depends on a declaration by a government that something has value. The way a government does that is by declaring something legal tender and accepting taxes denominated in that currency. Contrast with a time when currency was pegged to a physical asset like gold and GBP so no depreciation in something like 300 years. Savings actually had meaning.
    - XorNot 2y ago
      What happens to the price of bread if the rate of gold mining outstrips the rate of bread production?
    - dools 2y ago
      Not quite. The government imposes a tax, the tax is due in the state's unit of account. The government can then spend its unit of account into circulation, and later accepts it back in payment of taxes. > Contrast with a time when currency was pegged to a physical asset like gold Even when a currency is constructed from a commodity, it is not the commidity that is the money. It is a commodity that bears the stamp of the sovereign. > and GBP so no depreciation in something like 300 years. Savings actually had meaning. When money was constructed from a commodity there was a terrible shortage of coin to support the economy and it was a horror show for almost everyone. It's certainly possible to have price stability and full employment, but if you're going to choose, a bit of inflation is much, much better than deflation.
in_ab 2y ago
I don't think this was worth the long article. Sounds a lot like the SBF of Turkey.
crummy 2y ago
> Two days later my apartment in Istanbul was ransacked in a way that seemed like a stern message. The wood on my front door was split open by force, and the contents of every drawer and cabinet were tossed around. The lock to a safe was snipped open, its contents—expensive camera equipment and cash—remained untaken. Even a laptop on the entry table appeared untouched. I canceled the trip. This is a crazy part of this story! Presumably this means Ozer had friends in high places, but he didn't seem to implicate them in the trial?
oefrha 2y ago
Pretty bad article. Author is more interested in detailing their own hunt for the guy and inserting themself into the story (apartment trashed after booking a plane ticket?) than establishing basic facts about the crime. I’m not even sure about the most important thing after reading the entire article — how much did the guy actually steal? It’s reportedly $2B from 400k people at the time, but the dude claimed in court that there were only 2027 claimants claiming $45m (is that true? Should be easy to establish from court documents), and dude claimed to have paid back $10m to 1000 people, after which “when the cold wallet was empty, he threw it into the Ionian Sea” (wat?). There’s zero comment from the author on this two orders of magnitude discrepancy, wtf.
Bluestein 2y ago
- https://archive.is/H9Xcv#selection-595.0-595.76 https://archive.is/H9Xcv#selection-595.0-595.76
bradgranath 2y ago
[flagged]
- deleted 2y ago
  [deleted]
- throwaway48540 2y ago
  I'm not sure how is it relevant to crypto. You let someone manage your private keys and they ran away with them. Don't do that? I had my money in a bank that failed last year. I still can't access my money, I'm probably going to lose some of it, and my mortgage might have to be repaid much sooner than expected. Fiat is a good investment?
  - maxbond 2y ago
    Fiat is a terrible investment, as advertised. Central banks make it clear they are target inflation and that you should expect the asset to depreciate. I don't think anyone expects to get rich keeping their money under their mattress. May I ask if this bank was insured? What country was this in? I'm surprised, because this is something "tradfi" is usually very good at. At any rate, that really sucks and I wish you a full and speedy recovery of your money.
    - throwaway48540 2y ago
      European Union, yes the bank was insured, but the related court case is huge and moves slowly. No, I wouldn't say this is something that traditional finance are good at.
  - hobs 2y ago
    Well, sounds like you are trying hard not to draw the connection. Because pretty much only in crypto is owning a private key the same as permanent irrevocable access to your assets.
    - throwaway48540 2y ago
sixhobbits 2y ago
Maybe title could be changed to something less clickbaity like > Faruk Özer, Thodex Crypto founder - 11000 year sentence for $2 Billion Heist

52 points by Bluestein 2y ago

gedy 2y ago

Not really involved with crypto, but if I had large sums of money in it, I would never store this on an exchange. Seems so risky. Can anyone ELI5 why people do this?

dboreham 2y ago
Lazy? Perhaps a bit of: whatever other option I use could be even less safe.
deleted 2y ago
[deleted]
golergka 2y ago
I often leave up to $1k on my account to pay for occasional stuff that I need to pay for. May be people who leave huge amounts of money there do the same, but they're rich and their stuff is much more expensive?
deleted 2y ago
[deleted]
beaglesss 2y ago
For trading with lower latency / no confirm time. Non-KYC exchanges outside the US and sharp deranged claws of the FTC and DoJ typically depend on exchange held crypto if you want near instant clearing for futures and securities trading etc.
- _heimdall 2y ago
  In the case of something like bitcoin, lower latency / no confirm time means you are avoiding the very blockchain that is meant to be the bedrock of the currency's value. What's the point?
  - beaglesss 2y ago
    I think low latency traders don't much care about the value proposition, only that they can gamble on the trades. Much like forex day traders don't give a shit about the value proposition of the dollar
phire 2y ago
Two main reasons: 1. Self custody is hard. You need to understand how to setup a wallet. If you lose the keys to that wallet, your money is gone. Opening an account on an exchange is so much easier, and there is usually a way to reset your password if you forget it. Exchanges provide an online-banking style experience that most people are already familiar and comfortable with. 2. Access to markets. If you hold funds somewhere else, it takes quite a bit of time and effort to move it back onto the exchange so you can sell it later. It only really works for people who want to buy some coins and stuff them under their mattress until later. For anyone who wants to play the markets, you kind of need to keep your coins on the exchange. Additionally, holding coins on the exchange is free. You don't have to pay the transaction fees to withdraw and deposit, which can add up, especially on congested blockchains like bitcoin and ethereum.
- beeflet 2y ago
  The whole selling point of cryptocurrency is to avoid the online-banking experience
  - amanaplanacanal 2y ago
    I thought the whole selling point was "line go up".
- nyanpasu64 2y ago
  I found that many exchanges/custodial wallets (I've tested Kraken and CashApp) charge fees or imbalanced exchange rates for converting fiat into crypto and sending crypto to another address (often using a bulk transaction exchanging money between the exchange's wallet), so I wouldn't say you avoid transaction fees that way (they may or may not be reduced). I ended up using them anyway because it's easier to purchase crypto as a number on an exchange than to have it sent to your personal address.
Kiro 2y ago
Managing your own keys is stressful. You go around worrying that the hardware has failed or that the seed words won't work. Never again.
- _heimdall 2y ago
  Legitimate question (I expected this will read poorly). If you don't trust that seed phrases, which are a fundamental piece of how bitcoin key pairs are designed, will work why would you ever consider investing in bitcoin? I totally get the stress of self custody. I just don't get why anyone that stressed about it would bother buying bitcoin.
  - Kiro 2y ago
    To make money, but it's not that I don't trust the technology. It's more that I don't trust myself. Maybe I wrote them down incorrectly or did some other mistake? I also once lost the paper after moving (but found it again), even though I was sure i had put it in the new safe.
    - gedy 2y ago
      I think this is the key thing I wasn't considering - I think of Bitcoin as primarily way to save currency, whereas a lot of people are treating like an investment for trading.
m463 2y ago
It all just reminds me of Steve Martin's old comedy routine about banks. I mean, like, take, say you get out college or whatever you're doing. You're gonna go into business; say you're going to open a bank. Now you, just for example, you've got to give it the right name. It's got to be something big and strong like Security First Trust and Federal Reserve. And you have to name a bank that because nobody is going to put their money in Fred's Bank. "Hi, I'm Fred. I have a bank. You got $1,500? I'll put it, I'll put it here, in my white suit. White suit, right-hand pocket. Ok, you gotta remember that." (you probably have to listen to get all of it)
itake 2y ago
To add on to the trading latency benefit: During the Terra collapse, there was a 2-day period where Terra's price was supported by a massive BTC reserve. Those with Luna on exchanges could quickly exit their positions, but those with Luna in wallets or locked in Anchor Protocol faced hours-long delays for their currency to be confirmed and traded.
y04nn 2y ago
By the way, because a lot of people are keeping their crypto on exchange, would it be possible for an exchange to have fractional reserves like for banks? It is probably doable for big exchanges as trades happen on a platform they control anyway and crypto only goes out when a customer sends money to an external address. They may be able to keep only a third of customers account balance and still operate as usual.
- tomaskafka 2y ago
  Yes, the solid ones keep the rest in the cold storage, the remaining ones steal the rest and lie to clients about the money existing:).
- immibis 2y ago
  Most exchanges are suspected to secretly run fractional reserves. Binance in particular has its own blockchain and gets to run fractional reserve on most of the assets bridged to that block chain - the bridge keeps the real copies of the assets while only "shadow copies" are "projected" onto the Binance chain and traded.

yieldcrv 2y ago

CTRL+F “AS “WANTED” FLIERS with Özer’s picture went up” if you actually want to continue what the headline was about This is long form essay has completely unnecessary exposition. Turkey has high inflation and alot of people buy crypto to escape it, one sentence. Next.

dools 2y ago

“Money is an agreement between a government and its society in terms of national unity. But on the other side of the medallion, if everyone leaves the fiat—if everyone leaves the social agreement of their nation—it could derail the world.” The sooner everyone actually learns what money is, the sooner we can stop with all of this foolishness. Money is a tax credit. It is a token that the sovereign who imposed the tax in the first place will accept back in payment of taxes. That's it. Without taxes, there's no money. The "social contract" part is more about resources than money. By imposing the tax, the sovereign creates unemployment in terms of a currency only it can issue, and thus is able to provision itself.

methyl 2y ago
> Without taxes, there's no money why?
- nsomaru 2y ago
  I believe the argument goes like this: "fiat" depends on a declaration by a government that something has value. The way a government does that is by declaring something legal tender and accepting taxes denominated in that currency. Contrast with a time when currency was pegged to a physical asset like gold and GBP so no depreciation in something like 300 years. Savings actually had meaning.
  - XorNot 2y ago
    What happens to the price of bread if the rate of gold mining outstrips the rate of bread production?
  - dools 2y ago
    Not quite. The government imposes a tax, the tax is due in the state's unit of account. The government can then spend its unit of account into circulation, and later accepts it back in payment of taxes. > Contrast with a time when currency was pegged to a physical asset like gold Even when a currency is constructed from a commodity, it is not the commidity that is the money. It is a commodity that bears the stamp of the sovereign. > and GBP so no depreciation in something like 300 years. Savings actually had meaning. When money was constructed from a commodity there was a terrible shortage of coin to support the economy and it was a horror show for almost everyone. It's certainly possible to have price stability and full employment, but if you're going to choose, a bit of inflation is much, much better than deflation.

in_ab 2y ago

I don't think this was worth the long article. Sounds a lot like the SBF of Turkey.

crummy 2y ago

> Two days later my apartment in Istanbul was ransacked in a way that seemed like a stern message. The wood on my front door was split open by force, and the contents of every drawer and cabinet were tossed around. The lock to a safe was snipped open, its contents—expensive camera equipment and cash—remained untaken. Even a laptop on the entry table appeared untouched. I canceled the trip. This is a crazy part of this story! Presumably this means Ozer had friends in high places, but he didn't seem to implicate them in the trial?

oefrha 2y ago

Pretty bad article. Author is more interested in detailing their own hunt for the guy and inserting themself into the story (apartment trashed after booking a plane ticket?) than establishing basic facts about the crime. I’m not even sure about the most important thing after reading the entire article — how much did the guy actually steal? It’s reportedly $2B from 400k people at the time, but the dude claimed in court that there were only 2027 claimants claiming $45m (is that true? Should be easy to establish from court documents), and dude claimed to have paid back $10m to 1000 people, after which “when the cold wallet was empty, he threw it into the Ionian Sea” (wat?). There’s zero comment from the author on this two orders of magnitude discrepancy, wtf.

Bluestein 2y ago

- https://archive.is/H9Xcv#selection-595.0-595.76 https://archive.is/H9Xcv#selection-595.0-595.76

bradgranath 2y ago

[flagged]

deleted 2y ago
[deleted]
throwaway48540 2y ago
I'm not sure how is it relevant to crypto. You let someone manage your private keys and they ran away with them. Don't do that? I had my money in a bank that failed last year. I still can't access my money, I'm probably going to lose some of it, and my mortgage might have to be repaid much sooner than expected. Fiat is a good investment?
- maxbond 2y ago
  Fiat is a terrible investment, as advertised. Central banks make it clear they are target inflation and that you should expect the asset to depreciate. I don't think anyone expects to get rich keeping their money under their mattress. May I ask if this bank was insured? What country was this in? I'm surprised, because this is something "tradfi" is usually very good at. At any rate, that really sucks and I wish you a full and speedy recovery of your money.
  - throwaway48540 2y ago
    European Union, yes the bank was insured, but the related court case is huge and moves slowly. No, I wouldn't say this is something that traditional finance are good at.
- hobs 2y ago
  Well, sounds like you are trying hard not to draw the connection. Because pretty much only in crypto is owning a private key the same as permanent irrevocable access to your assets.
  - throwaway48540 2y ago

sixhobbits 2y ago

Maybe title could be changed to something less clickbaity like > Faruk Özer, Thodex Crypto founder - 11000 year sentence for $2 Billion Heist