A German man is keeping $60M in Bitcoin from police(theverge.com)
theverge.com
A German man is keeping $60M in Bitcoin from police
https://www.theverge.com/tldr/2021/2/5/22268646/german-police-bitcoin-digital-wallet-missing-password
65 comments
Discussed yesterday, different article: https://news.ycombinator.com/item?id=26035663
yesterday: https://news.ycombinator.com/item?id=26035663 (70 comments)
> ensured the man cannot access [his] largesse
How? Sounds like his address / public key is known but only he (if anyone) as the private key. What steps from an authority, besides an exogenous threat like being charged again is any balance moves, could they take?
How? Sounds like his address / public key is known but only he (if anyone) as the private key. What steps from an authority, besides an exogenous threat like being charged again is any balance moves, could they take?
I think the explanation is simple: the person who wrote the article doesn't seem to understand how bitcoin works.
For all the police knows, the encrypted secret key could be backed up in a gazillion places (cloud, tape, paper wallet, hidden CD-ROM, USB key buried in garden, memorized 12 word seed, etc...).
For a properly prepared Bitcoin owner, there is no such thing as "preventing someone from accessing their Bitcoin" other than holding them in a jail cell with no internet access for the rest of their natural lives.
For all the police knows, the encrypted secret key could be backed up in a gazillion places (cloud, tape, paper wallet, hidden CD-ROM, USB key buried in garden, memorized 12 word seed, etc...).
For a properly prepared Bitcoin owner, there is no such thing as "preventing someone from accessing their Bitcoin" other than holding them in a jail cell with no internet access for the rest of their natural lives.
My suspicion is that he was not properly prepared and only had that single copy of the key. Usually when police raids you they take all your physical storage media. IF he were properly prepared, he could just leave the country, and access the money from there. Maybe he doesn't do it because he fears the police take his backup away, no idea.
So most likely, both police and him are in a situation where collaboration by both is needed to get access to the bitcoins.
So most likely, both police and him are in a situation where collaboration by both is needed to get access to the bitcoins.
> My suspicion is that he was not properly prepared and only had that single copy of the key.
Which, if I was in his situation, is exactly what I would tell the police regardless of reality.
Which, if I was in his situation, is exactly what I would tell the police regardless of reality.
They will also monitor the wallet and the moment it's accessed in any way more indictments follow. The money officially belong to the authorities now so touching them is theft. He can't claim it was hacked, there's no reasonable way to hack a wallet, and if there was there are far more valuable wallets to target.
He'll also never be able to report it if he's ever robbed of that money.
He'll also never be able to report it if he's ever robbed of that money.
Depends. He might be able to sell the keys to a third party (who those authorities have no access to), for a discount in say cash or something where the transaction isn’t logged, and then be obviously not touching it when transactions or moves occurs - perhaps in court talking to a judge, or something similar.
It’s hard to separate something like that from someone finding an old key/seed backup or the like, which I don’t think anyone would consider a proper prosecution.
There is also a plausible scenario like a gov’t or court appointee actually getting or cracking the password somehow and stealing it themselves, like what happened with a significant Bitcoin balance related to Silk Road that got seized and then stolen from under the gov’ts nose by a secret service agent.
It’s hard to separate something like that from someone finding an old key/seed backup or the like, which I don’t think anyone would consider a proper prosecution.
There is also a plausible scenario like a gov’t or court appointee actually getting or cracking the password somehow and stealing it themselves, like what happened with a significant Bitcoin balance related to Silk Road that got seized and then stolen from under the gov’ts nose by a secret service agent.
Germany has recently passed a law which allows the government to seize property where the source of the money is not clear. This was done originally to prevent arabic clans from buying rental properties around the country, but I can imagine it applying to whatever money he's got from that sale as well.
Which would require finding it, or it being within a jurisdiction they control, etc.
With internet crime becoming more international, and increased globalism, I expect nations to collaborate more on these issues in the future.
I'm wondering if we're starting to see a shift towards more closed off/nationalized internet actually - with COVID, borders closing, fights over 'fake news' and how to do something about it (with approaches as varied as Poland, US, China, Australia), it seems like globalization is unravelling in a bunch of angry yelling between Governments.
> He might be able to sell the keys to a third party
He might but it would certainly be illegal. The keys are to a wallet he does not own legally anymore, it belongs to the authorities.
And selling the wallet might be difficult when every buyer could have made a deal with the authorities. His best bet is to go far from the reach of German authorities and hope nobody broadcasts his location and the fact that he has access to $60M that he can't report stolen.
He might but it would certainly be illegal. The keys are to a wallet he does not own legally anymore, it belongs to the authorities.
And selling the wallet might be difficult when every buyer could have made a deal with the authorities. His best bet is to go far from the reach of German authorities and hope nobody broadcasts his location and the fact that he has access to $60M that he can't report stolen.
Sure. It remains unclear that anything is preventing him from going to a different country without extradition once his sentence is completed and withdrawing the coins there.
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Depends. They could have erased his pc, and have access to an encrypted file, in the hope that he has no backups of the keys anywhere. Of course that wouldn't work with either basic precautions or "memory" or "paper" wallets.
TLDR: either the prosecutor is stupid, or they lie. I'm not sure which is worse.
TLDR: either the prosecutor is stupid, or they lie. I'm not sure which is worse.
Or they look at how often normal people actually back things up?
Or they got a court order (or whatever the term of art is) saying, effectively “memo to all banks: this person owes us XYZ in Bitcoin, he’s paying that back out of future bank balances”?
Or they got a court order (or whatever the term of art is) saying, effectively “memo to all banks: this person owes us XYZ in Bitcoin, he’s paying that back out of future bank balances”?
>TLDR: either the prosecutor is stupid, or they lie. I'm not sure which is worse.
Or both.
Or both.
Something's off about the article:
"Authorities have seized his digital wallet"
How do you seize a digital wallet when all you need to access or recreate it is a private key (or recovery text)? What have they seized exactly?
"Authorities have seized his digital wallet"
How do you seize a digital wallet when all you need to access or recreate it is a private key (or recovery text)? What have they seized exactly?
They've seized the file, but don't have the key. So, they haven't seized anything really, as I am pretty sure the guy has a copy of that file.
Sure, ok, so they have an encrypted version of the private key!?
From the Wiki:
> The wallet.dat file is located in the Bitcoin data directory and may be encrypted with a password.
I guess they have the encrypted wallet.dat, but not the password for decrypting it.
> The wallet.dat file is located in the Bitcoin data directory and may be encrypted with a password.
I guess they have the encrypted wallet.dat, but not the password for decrypting it.
Obviously it has been seized. They put it in the /police/property/seized dir and therefore it is the government's!
More likely C:\Users\OfficerDibble\Desktop\
If he doesn't have a copy of the file, then even if the cops can't access it, semantically they could be said to have seized them?
He might know the 12 word key phrase. https://en.bitcoin.it/wiki/Brainwallet
If you have a paper wallet or memorized it, that file doesn't really matter though. Nothing was seized other than encrypted data.
Exactly. They have seized nothing, apparently. The author over at the verge apparently doesn‘t get it either. The only way this would make any sense is if we were looking at a multi-sig wallet where police has seized one out of two necessary keys, where the second one is a brain wallet or hidden somewhere.
I imagine that if he tries to spend it, that would be considered theft
The owner could hold and hope for another fork to happen if it ever does and spend on the fork side.
If they were determined and willing to break the law they'll probably wait to do a crypto swap. Trading BTC for another crypto that is easier to hide behind in the future.
The usual arguments I get is none of this matters because the individual won't be able to spend the crypto into anything of value. Government will monitor the wallet and then monitor any assets, securities, etc the German man has.
Nobody knows what the future will look like though and what happens if any country comes out supporting crypto as their default day to day currency? German man moves, becomes citizen, denounces his German citizenship to not need to report anything and is able to exchange crypto for assets and securities.
For $60M today and what might be +$100M when the time comes I'm sure there will be a path of spending 90%, keeping 10% and living a life of very little worry.
If they were determined and willing to break the law they'll probably wait to do a crypto swap. Trading BTC for another crypto that is easier to hide behind in the future.
The usual arguments I get is none of this matters because the individual won't be able to spend the crypto into anything of value. Government will monitor the wallet and then monitor any assets, securities, etc the German man has.
Nobody knows what the future will look like though and what happens if any country comes out supporting crypto as their default day to day currency? German man moves, becomes citizen, denounces his German citizenship to not need to report anything and is able to exchange crypto for assets and securities.
For $60M today and what might be +$100M when the time comes I'm sure there will be a path of spending 90%, keeping 10% and living a life of very little worry.
Who can argue with amazing arguments like "Bitcoin is the money of the future because it will allow a fraudster to keep the proceeds of his crimes!"
> Who can argue with amazing arguments like "Bitcoin is the
> money of the future because it will allow a fraudster to keep
> the proceeds of his crimes!"
>The owner could hold and hope for another fork to happen if it ever does and spend on the fork side.
Or move to the country next door.
For 60 mils, uprooting yourself is definitely an option.
Or move to the country next door.
For 60 mils, uprooting yourself is definitely an option.
You could exit the country and do whatever you want if it's come to that.
| How do you seize a digital wallet
You look at the culprit very, very sternly.
You look at the culprit very, very sternly.
Or (obligatory): https://xkcd.com/538/
this is actually good for bitcoin. just proves that no powerful government can touch money stored in bitcoin. Finally an alternative to digging gold bars in the woods :)
I am not German, but in North America, a Judge can rule you in contempt of court and held in custody until you comply with the terms of the judical order. There is no "oh, you ran out the clock, ok off you go you scamp!".
Yes, but they do tend to avoid doing so if you’ve, for instance, plausibly lost the ability to do what the order demands you do - like forgotten the password or lost the keys, and there is no evidence you have backups.
Additionally, ‘knowledge’ such as a password has been pretty consistently ruled as protected by the 5th amendment and in theory someone couldn’t be held in contempt for refusing to divulge it here in the US. However, if someone is already convicted or seizure of something is blocked by that knowledge (that may also be incriminating if someone has it?), that is less tested and probably not protected.
Even if you haven’t, it is very, very rare (and usually requires high profile political pressure) for being held over contempt to happen for very long.
Additionally, ‘knowledge’ such as a password has been pretty consistently ruled as protected by the 5th amendment and in theory someone couldn’t be held in contempt for refusing to divulge it here in the US. However, if someone is already convicted or seizure of something is blocked by that knowledge (that may also be incriminating if someone has it?), that is less tested and probably not protected.
Even if you haven’t, it is very, very rare (and usually requires high profile political pressure) for being held over contempt to happen for very long.
> it is very, very rare (and usually requires high profile political pressure) for being held over contempt to happen for very long.
I think it will be a lot less rare if digital currencies become a bigger thorn in a government's side.
I think it will be a lot less rare if digital currencies become a bigger thorn in a government's side.
It depends on how plausible/likely it was you actually have control or how much of an example they wanted to make I imagine.
Here is a story about such a case, but not crypto related - 17 years! [https://www.google.com/amp/s/abcnews.go.com/amp/2020/story%3...]
Here is a story about such a case, but not crypto related - 17 years! [https://www.google.com/amp/s/abcnews.go.com/amp/2020/story%3...]
60 million in bitcoin is pretty worthless to a man stuck in a concrete box.....
"Hey ma, if I'm locked up I need you to give this pass phrase to my lawyer - he'll know what to do".
Lots of multi-sig schemes you could invent to make your funds accessible.
Lots of multi-sig schemes you could invent to make your funds accessible.
Most comments I'm reading seem to assume the authorities, and the "journalist" reporting on it have some form of understanding of the Bitcoin space.
From reading the article, my bet is: neither do have any.
From reading the article, my bet is: neither do have any.
This is "seizure" in the sense that the ill gotten contents of the wallet now legally belong to the government, not in any kind of "digital possession, who can own a number", philosophical discussion.
The government can't liquidate the asset without the private key, but it is their asset now. If the original fraudster (or anyone else) accessed the assets it would be some variant of theft.
The government can't liquidate the asset without the private key, but it is their asset now. If the original fraudster (or anyone else) accessed the assets it would be some variant of theft.
> it would be some variant of theft.
The assumption you are making here is that the government has the right to steal that 60 million in the first place.
Basically the reason they can is because they have more people with guns. Turns out, when it comes to Bitcoin, those guns end up being less powerful.
This means that the basic assumption where a government can steal from its people is being turned up side down.
The assumption you are making here is that the government has the right to steal that 60 million in the first place.
Basically the reason they can is because they have more people with guns. Turns out, when it comes to Bitcoin, those guns end up being less powerful.
This means that the basic assumption where a government can steal from its people is being turned up side down.
No.
Governments have power because people lend them some of their own power.
People give governments power because governments promise to make them better off.
Breaking the concept of money has, historically, done the opposite of that.
Governments have power because people lend them some of their own power.
People give governments power because governments promise to make them better off.
Breaking the concept of money has, historically, done the opposite of that.
> it would be some variant of theft.
As long as the person who knows the key remains within the jurisdiction of the "owner".
As long as the person who knows the key remains within the jurisdiction of the "owner".
There are extraditions treaties. He can claim that someone else hacked his account, but I guess the judge will not believe this.
>There are extraditions treaties.
The extradition treaty matrix is - luckily - rather sparse.
For 60 mils, I think he has ample incentive to find an empty slot in the column of his country.
The extradition treaty matrix is - luckily - rather sparse.
For 60 mils, I think he has ample incentive to find an empty slot in the column of his country.
60 millions can buy a lot of friends in jurisdictions without extradition treaties. Maybe not the friends one wants to have but he didn't earn those money in a legal way, so he probably won't bother. Even if he has to give away most of them he'll still be well off.
Sometimes it's not so easy, if you have a giant 60 millions tag over your head some people will ask for more.
Perhaps he could have handled it better but take a look at https://en.wikipedia.org/wiki/John_McAfee#Legal_issues
Perhaps he could have handled it better but take a look at https://en.wikipedia.org/wiki/John_McAfee#Legal_issues
Stupid question: Could the state (or a large group of states) not effectively impose restrictions on bitcoin wallets? Say, I, the federal agency of crypto, publish a list of "legal" (i.e., with owners know to me and subject to my rules) wallets today and demand that everyone that accepts bitcoinust verify that the transaction comes from such a legal wallet (except for everything happening before today). Accepting anything else is a criminal act (like money laundering). Registering existing wallets, dealing with multiple jurisdictions, mining, and creating new wallets are technical details.
I think two things could happen: Either, Bitcoin collapses and vanishes into the darknet, because no one can buy anything legally with it. Or, if enough owners agree and register, it becomes fully transparent for the state, effectively making it useless for criminal payments.
I think two things could happen: Either, Bitcoin collapses and vanishes into the darknet, because no one can buy anything legally with it. Or, if enough owners agree and register, it becomes fully transparent for the state, effectively making it useless for criminal payments.
Doing something similar with cocaine, marijuana, LSD did definitely reduce the degree of commerce happening with them - but has definitely not caused them to go away. You’re presuming no money laundering for instance, or that one state entity controls enough of the endpoints that it would work well enough it could actually be enforced.
Not impossible (I guess), but practically not possible either.
Not impossible (I guess), but practically not possible either.
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Do people even use Bitcoin for criminal payments nowadays? Aren't there better options that do preserve privacy of transactions?
Still have a few hundred or so bitcoins from playing around with it a decade ago. It was just a toy. We were just sending them around to each other just to watch the tech work. Hell we gave them to a sites like bittap so other people could jump in and give it a test. My key was entropy based so I doubt I'll ever open my wallet, but it's no loss to me. I'd probably would have sold at $200 bucks and got a car or something.
The interesting thing is that it is large enough to make economic sense to do a prolonged decryption attack.
No, it doesn't. 160 bits of key space to search. Unless you come up with some quantum breakthrough, it's impossible tp do in our universe in reasonable time.
They have the key, it’s just password protected, unknown key space