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Feds: Brothers stole $25M in crypto in 12 seconds. Defense: outsmarted bots

40 points by pseudolus 1y ago

pseudolus 1y ago
https://archive.ph/FDpSu https://archive.ph/FDpSu
ano-ther 1y ago
Reminds me of this recent court case in Germany. https://www.heise.de/en/news/Higher-Regional-Court-Virtual-theft-of-crypto-assets-remains-unpunished-10484844.html https://www.heise.de/en/news/Higher-Regional-Court-Virtual-t...
- busterarm 1y ago
  That one made my eyebrows hit the ceiling. If crypto can't be stolen because it isn't a physical asset, what does that mean for money that's in your bank account? Wait, maybe that's the point.
  - saubeidl 1y ago
    Crypto isn't money.
    - busterarm 1y ago
      The point isn't whether or not it's money, it's about whether or not it can be property. Money is property. If crypto isn't property and can't be protected by property rights, then it's quite foolish to spend money to obtain it.
    - immibis 1y ago
      In Germany (IIRC) crypto is legally money and that's why you don't have to pay taxes on your trading gains, because it's just currency conversion. (IANAL; consult a lawyer before attempting to legally not pay taxes)
lando2319 1y ago
I'm not a lawyer but it seems like if they booked a transaction based on a basket of goods, and then seconds later changed that basket of goods, seems like in the physical world that would be fraud
- duttish 1y ago
  Cryptocurrency markets keep reinventing fraud and fraud mitigation one century at a time.
  - gdulli 1y ago
    The fraud is coming from inside the house!
  - dbdr 1y ago
    In this case the "fraud mitigation" seems to be a bugfix: https://github.com/flashbots/mev-boost-relay/commit/3025635e3ae2837c66466cf089b7eb4e2d7da6ed https://github.com/flashbots/mev-boost-relay/commit/3025635e... It's an interesting legal question what will be decided for this case, but it's also satisfying that the underlying bug can be fixed. That seems quite different from a traditional fraud, which can be done over and over again, and needs to be prosecuted every time.
- Deukhoofd 1y ago
  And the defence of "there was no communication between the two brothers and the traders" feels really weak as well. Of course there was a communication, they put a trade offer online, and it was accepted by a trader, albeit automatically. The search terms for how to evade fraud is also not going to help them. I wonder if their lawyer advised them not to take the plea deal, it doesn't sound like they have a high chance of getting away with it.
  - crote 1y ago
    > The search terms for how to evade fraud is also not going to help them. If you're trying to do large-scale taxes, that's just called a "ruling": not sure if the sketchy-looking loophole you found is legal? Ask the tax man for legally-binding advice!
deleted 1y ago
[deleted]
lm28469 1y ago
> wants deregulation > gets deregulation "b-bu-but no not like this"
deleted 1y ago
[deleted]
pavel_lishin 1y ago
I feel like our discussions of whether this was fraud or not - in the practical and ethical sense, if not the legal one - hinges entirely on the details of what these guys did, details that are not present in the article. So not only are we not lawyers, we're barely even readers.
- postflopclarity 1y ago
  you can read what happened here: https://hackmd.io/@dmarz/total-eclipse-of-the-relay https://hackmd.io/@dmarz/total-eclipse-of-the-relay
  - pavel_lishin 1y ago
    This is going to be fun to explain to a presumably non-technical jury.
- mindslight 1y ago
  Something we can easily infer is that the counterparty must be a connected Trump donor. I have to wonder if there is some deeper connection whereby the introduction of this large not-yet-regulated economic sector actually creates pressure to move our whole society towards an oligarchic mobster/patronage style government. In a steady state where laws are widely known, it's harder to eek out an edge by breaking laws and then buying your way out of trouble - with the law being clear, the Schelling point is to be opposed to you. And an aggrieved counterparty can spend some resources to make sure it stays that way, even if they're not necessarily in favor with the ruling party. Whereas with this case, nobody actually knows what the law "is" or really even what it "should be". Cryptocurrency was designed on a strong assertion of "code is law". But this doesn't keep governments from inserting their own semantics after the fact. Since there is no clear diving line, most people are not predisposed to thinking it should go one way or the other. This makes having a connection to the big boss man who can put his finger on the scale become much more relevant, and therefore much more valuable.
  - pavel_lishin 1y ago
bfkwlfkjf 1y ago
It's gonna be difficult to explain why they were looking for lawyers, laundering, and statutes of limitations, if they didn't think they were doing anything wrong.
- blueprint 1y ago
  I'm curious how their search queries were able to be found, if anyone happens to know details about this.
  - bfkwlfkjf 1y ago
    I don't know details of how, but it's commonplace in serious crimes. If you spend a little time listening to crime YouTubes, many of them go "oh and he was googling how to get rid of the body". I assumed it was as straightforward as the police gets a warrant to get the info from Google.
  - HypocritePS 1y ago
    [dead]
  - immibis 1y ago
    When you're under criminal investigation they (1) seize your computer and look at the browser history, and (2) ask Google what you searched for. Pretty simple, routine police work in the electronic era.
- iAMkenough 1y ago
  First it falls to the prosecution to prove without a doubt that those searches were conducted by one of the individuals. The article posted here takes the prosecution's word at face value.
xrd 1y ago
Am I wrong if this feels like high frequency trading bots here, doing their own dubious things (within the bounds of the law, but not the spirit), got baited into doing something stupid and someone smarter took advantage of that stupidity. It's a fun game to watch.
- Ekaros 1y ago
  To me it sounds like they tried to exploit someone else, but got exploited in turn.
soared 1y ago
Why are the authors so aggressive in using scam/fraud/etc terms when discussing the crime, but then spend so little time explaining the defense? This article seems wildly one sided and I’m not a fan of how it’s written. It looks like both of the author just do clickbait articles - their last ~10 articles are solely about “diddy”.
squokko 1y ago
What does it mean to steal crypto if "code is law"?

40 points by pseudolus 1y ago

https://archive.ph/FDpSu https://archive.ph/FDpSu

Reminds me of this recent court case in Germany. https://www.heise.de/en/news/Higher-Regional-Court-Virtual-theft-of-crypto-assets-remains-unpunished-10484844.html https://www.heise.de/en/news/Higher-Regional-Court-Virtual-t...

busterarm 1y ago
That one made my eyebrows hit the ceiling. If crypto can't be stolen because it isn't a physical asset, what does that mean for money that's in your bank account? Wait, maybe that's the point.
- saubeidl 1y ago
  Crypto isn't money.
  - busterarm 1y ago
    The point isn't whether or not it's money, it's about whether or not it can be property. Money is property. If crypto isn't property and can't be protected by property rights, then it's quite foolish to spend money to obtain it.
  - immibis 1y ago
    In Germany (IIRC) crypto is legally money and that's why you don't have to pay taxes on your trading gains, because it's just currency conversion. (IANAL; consult a lawyer before attempting to legally not pay taxes)

lando2319 1y ago

I'm not a lawyer but it seems like if they booked a transaction based on a basket of goods, and then seconds later changed that basket of goods, seems like in the physical world that would be fraud

duttish 1y ago
Cryptocurrency markets keep reinventing fraud and fraud mitigation one century at a time.
- gdulli 1y ago
  The fraud is coming from inside the house!
- dbdr 1y ago
  In this case the "fraud mitigation" seems to be a bugfix: https://github.com/flashbots/mev-boost-relay/commit/3025635e3ae2837c66466cf089b7eb4e2d7da6ed https://github.com/flashbots/mev-boost-relay/commit/3025635e... It's an interesting legal question what will be decided for this case, but it's also satisfying that the underlying bug can be fixed. That seems quite different from a traditional fraud, which can be done over and over again, and needs to be prosecuted every time.
Deukhoofd 1y ago
And the defence of "there was no communication between the two brothers and the traders" feels really weak as well. Of course there was a communication, they put a trade offer online, and it was accepted by a trader, albeit automatically. The search terms for how to evade fraud is also not going to help them. I wonder if their lawyer advised them not to take the plea deal, it doesn't sound like they have a high chance of getting away with it.
- crote 1y ago
  > The search terms for how to evade fraud is also not going to help them. If you're trying to do large-scale taxes, that's just called a "ruling": not sure if the sketchy-looking loophole you found is legal? Ask the tax man for legally-binding advice!

deleted 1y ago

[deleted]

lm28469 1y ago

> wants deregulation > gets deregulation "b-bu-but no not like this"

deleted 1y ago

[deleted]

pavel_lishin 1y ago

I feel like our discussions of whether this was fraud or not - in the practical and ethical sense, if not the legal one - hinges entirely on the details of what these guys did, details that are not present in the article. So not only are we not lawyers, we're barely even readers.

postflopclarity 1y ago
you can read what happened here: https://hackmd.io/@dmarz/total-eclipse-of-the-relay https://hackmd.io/@dmarz/total-eclipse-of-the-relay
- pavel_lishin 1y ago
  This is going to be fun to explain to a presumably non-technical jury.
mindslight 1y ago
Something we can easily infer is that the counterparty must be a connected Trump donor. I have to wonder if there is some deeper connection whereby the introduction of this large not-yet-regulated economic sector actually creates pressure to move our whole society towards an oligarchic mobster/patronage style government. In a steady state where laws are widely known, it's harder to eek out an edge by breaking laws and then buying your way out of trouble - with the law being clear, the Schelling point is to be opposed to you. And an aggrieved counterparty can spend some resources to make sure it stays that way, even if they're not necessarily in favor with the ruling party. Whereas with this case, nobody actually knows what the law "is" or really even what it "should be". Cryptocurrency was designed on a strong assertion of "code is law". But this doesn't keep governments from inserting their own semantics after the fact. Since there is no clear diving line, most people are not predisposed to thinking it should go one way or the other. This makes having a connection to the big boss man who can put his finger on the scale become much more relevant, and therefore much more valuable.
- pavel_lishin 1y ago

bfkwlfkjf 1y ago

It's gonna be difficult to explain why they were looking for lawyers, laundering, and statutes of limitations, if they didn't think they were doing anything wrong.

blueprint 1y ago
I'm curious how their search queries were able to be found, if anyone happens to know details about this.
- bfkwlfkjf 1y ago
  I don't know details of how, but it's commonplace in serious crimes. If you spend a little time listening to crime YouTubes, many of them go "oh and he was googling how to get rid of the body". I assumed it was as straightforward as the police gets a warrant to get the info from Google.
- HypocritePS 1y ago
  [dead]
- immibis 1y ago
  When you're under criminal investigation they (1) seize your computer and look at the browser history, and (2) ask Google what you searched for. Pretty simple, routine police work in the electronic era.
iAMkenough 1y ago
First it falls to the prosecution to prove without a doubt that those searches were conducted by one of the individuals. The article posted here takes the prosecution's word at face value.

xrd 1y ago

Am I wrong if this feels like high frequency trading bots here, doing their own dubious things (within the bounds of the law, but not the spirit), got baited into doing something stupid and someone smarter took advantage of that stupidity. It's a fun game to watch.

Ekaros 1y ago
To me it sounds like they tried to exploit someone else, but got exploited in turn.

soared 1y ago

Why are the authors so aggressive in using scam/fraud/etc terms when discussing the crime, but then spend so little time explaining the defense? This article seems wildly one sided and I’m not a fan of how it’s written. It looks like both of the author just do clickbait articles - their last ~10 articles are solely about “diddy”.

squokko 1y ago

What does it mean to steal crypto if "code is law"?