Bitcoin extends losses after U.S. seizes most of Colonial ransom(cnbc.com)
cnbc.com
Bitcoin extends losses after U.S. seizes most of Colonial ransom
https://www.cnbc.com/2021/06/08/bitcoin-btc-price-slides-as-us-seizes-most-of-colonial-ransom.html
115 comments
I bet the folks who had a buy order sitting at $31,500 are happy with their purchase.
Correlation is not causation.
True, but chanting that at every correlation you see is a great way to never learn from anything.
To be honest it's a bit hard to believe this reporting has nothing to do with the price dropping ~10%, given that one of BitCoin's big parts of its value prop is precisely supposed to be that governments can't do this.
To be honest it's a bit hard to believe this reporting has nothing to do with the price dropping ~10%, given that one of BitCoin's big parts of its value prop is precisely supposed to be that governments can't do this.
Bitcoin says that whoever has the private key controls the funds. In this case, whoever was in custody before the FBI took the funds was seriously negligent in protecting their private key (which is not that hard to do).
Governments can simply take the private keys if they wish along with your computer. Come up with smart ways to avoid that (but I'll memorise the private key!) and they'll just lock you up instead.
In the case of coins moving through exchanges, they can simply take the coins instead by threatening the exchange.
In many other cases they can also catch you when you try to use the money by converting it into a currency that people actually use to transact like USD.
In the case of coins moving through exchanges, they can simply take the coins instead by threatening the exchange.
In many other cases they can also catch you when you try to use the money by converting it into a currency that people actually use to transact like USD.
That it is "easy" to protect private keys is the theory, yes. If it turns out not to be an accurate reflection of reality, that's going to affect the value proposition of BitCoin.
Do not mistake theory with reality.
Do not mistake theory with reality.
I... genuinely am confused. What is it here that a government isn't supposed to be able to do?
If you keep your key secure, government can't seize your assets, as they can with a bank.
As best I can tell, Bitcoin has moved more than [it has so far today, ~6%] on 42 days in the last year, and 38 days the year before that, considering open-to-open values.
10% daily moves happened four times in May: twice in each direction.
Statistically, we should consider it just a normal, unremarkable day for Bitcoin.
10% daily moves happened four times in May: twice in each direction.
Statistically, we should consider it just a normal, unremarkable day for Bitcoin.
True but the cryptocurrency world doesn't seem to understand that. They're always tying events to price rises, and making proclamations about what will happen to the price in the future as a result.
Indeed. $2.3 million dollars of BTC isn't too much.
It’s not, but it sets the precedent that the FBI will seize bitcoin without any kind of due process when it is able to recover proceeds from a criminal transaction
.
This jeopardizes the use of Bitcoin as a currency for cross-border criminal transactions which is a large if not majority share of its use case.
So it’s easy to see why its value went down — fewer criminals will want to use it.
This jeopardizes the use of Bitcoin as a currency for cross-border criminal transactions which is a large if not majority share of its use case.
So it’s easy to see why its value went down — fewer criminals will want to use it.
I'm still doubtful the things are causally correlated. Wouldn't privacy coins then increase in price immediately as well?
>This jeopardizes the use of Bitcoin as a currency for cross-border criminal transactions which is a large if not majority share of its use case.
Do criminals seriously expect that bitcoin (or any other cryptocurrency) is safe against the wallet being hacked? Hardware/cold wallets have been around for years, so this is more of an opsec issue than a technology issue.
Do criminals seriously expect that bitcoin (or any other cryptocurrency) is safe against the wallet being hacked? Hardware/cold wallets have been around for years, so this is more of an opsec issue than a technology issue.
It's a lot harder than tracing cashout after a SWIFT transfer.
Hell yeah they will, honestly it's about time we did some more aggressive offensive security operations.
But what does crypto have to do with criminals? Criminals just need to up their op sec game, they know that. BTC dropping is only related insofar as this stupid correlation is getting pushed hard in the media right now.
But what does crypto have to do with criminals? Criminals just need to up their op sec game, they know that. BTC dropping is only related insofar as this stupid correlation is getting pushed hard in the media right now.
> But what does crypto have to do with criminals?
Criminals are basically the only group making widespread use of Bitcoin as a currency rather than as an asset class.
Criminals are basically the only group making widespread use of Bitcoin as a currency rather than as an asset class.
I don't know enough to dispute that, but I am fairly skeptical that's true.
Who is buying stuff directly with Bitcoin? Companies buying out of ransomware, and maybe some HODLers buying Teslas.
Yeah, and it makes it even easier to do legally because nobody owns the network.
In science, yes. In the financial markets I’m not so sure the truism holds.
That is true - it is, after all, entirely possible that the BTC price drops caused the Colonial ransom seizure. [1]
Perhaps people are correctly estimating that as BTC is likely to lose another use case for it (ransomware)[2], there is now less demand for it, thus resulting in the downward price pressure we've seen over the past few weeks.
Perhaps criminals are correctly predicting that 'their' BTC might be taken away from them, thus causing them to liquidate their positions, thus resulting in downward price pressure. [3]
[1] I am, of course, making a joke.
[2] The writing is on the wall, due to the government reaction to the Colonial hack.
[3] No, Monero is not a solution for them, because the FBI is not stupid. XMR:BTC is largely sideways. If ransomware switches to it, it's likely that exchanges transacting in privatecoins will be treated as international money launderers. https://coincodex.com/convert/monero/bitcoin/?amount=1
Perhaps people are correctly estimating that as BTC is likely to lose another use case for it (ransomware)[2], there is now less demand for it, thus resulting in the downward price pressure we've seen over the past few weeks.
Perhaps criminals are correctly predicting that 'their' BTC might be taken away from them, thus causing them to liquidate their positions, thus resulting in downward price pressure. [3]
[1] I am, of course, making a joke.
[2] The writing is on the wall, due to the government reaction to the Colonial hack.
[3] No, Monero is not a solution for them, because the FBI is not stupid. XMR:BTC is largely sideways. If ransomware switches to it, it's likely that exchanges transacting in privatecoins will be treated as international money launderers. https://coincodex.com/convert/monero/bitcoin/?amount=1
True. But the prices of most of the ALT coins are correlated with BTC, which has also caused them to go down too (in the same way they went up with it before May).
I wonder if the future push towards Proof-of-Stake away from Proof-of-Work will one day stop this happening.
I wonder if the future push towards Proof-of-Stake away from Proof-of-Work will one day stop this happening.
Event 1 as story 2 happens. This always drives me nuts about financial reporting.
Recently I saw a WSJ article where they surprisingly couldn't find a story 2, and so it said something like: stock prices decline as investors sell risky assets
Which is almost a tautology, so idunno, maybe that's better than the usual thing, but then scroll down the article and it says bond prices were also down as investors also sold their less risky assets
Which is almost a tautology, so idunno, maybe that's better than the usual thing, but then scroll down the article and it says bond prices were also down as investors also sold their less risky assets
There were an equal number of investors how bought those risky assets, albeit at a lower price than the day before.
I don't have a problem with that part, calling something a sell off, or a buying frenzy. It's used to mean increased/decreased demand, nothing about the number of individual investors (which isn't necessarily equal, btw, but it's not a part of the meaning of the phrase.)
Yes, it's a dark pattern in journalism. They hint at causation while having plausible deniability. Used to bother me too when I checked Yahoo Finance, every other day the market would be up/down "as" whatever happened that day that might have anything to do with the economy.
To be fair, it's usually pretty hard to say why stock prices change. Even with hindsight.
Mostly because anticipation is so important.
Mostly because anticipation is so important.
The thing I learn early in my career when I was working in finance was that research analysts are pretty useless. There are too many factors that go into why a stock goes up and down including unknown parties executing large trades for their corporate strategy. I used to joke the weatherman has better predictions because at least he has a satellite. There are simply too many parties trading to truly know.
So: absent proof don't say anything.
Saying nothing doesn't sell ads and subscriptions.
something something incentives....
something something incentives....
Not just financial reporting. "Portland burns as Trump golfs" type stories were super common as well over the past 4 years or even "Politician X does Y as covid cases rise" if media wanted to throw shade on Politician X last year
And Portland was never burning to begin with. At least Trump was actually golfing, so there's that.
All news must be in the format of a 'story'.
My rule of thumb is that at least 50% of a financial headline is true. The up/down part is safe to assume as true (at least at the time of publication), and the “because of” part is almost always complete conjecture.
Now the drop seemed to happen at 2:45am UTC. Is that when the government seizure was revealed? That might give weight to a causal explanation.
If I had to guess, a better explanation might be that there is going to be downward pressure and regular dips of the prices of cryptocurrencies at least til fall as the covid stimulus programs wind down making less cash available for speculation and as things reopen providing more other places to spend money.
The news business makes no money if there isn't any news. And financial news has a high value audience for advertisers, so there's huge incentives to create drama where it may not exist.
Much harder to get clicks if your headlines are accurate. This would have to be the headline on most days:
"Millions of People Bought/Sold for Thousands of Competing Reasons Again Today, Short Term Randomness Continues"
Would anybody upvote that article on hacker news?
Much harder to get clicks if your headlines are accurate. This would have to be the headline on most days:
"Millions of People Bought/Sold for Thousands of Competing Reasons Again Today, Short Term Randomness Continues"
Would anybody upvote that article on hacker news?
Literally the definition of post hoc ergo propter hoc.
https://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc
https://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc
I find it amusing how all the news reports gloss over the fact that the FBI somehow got access to the wallet’s private key.
I’m also wondering why the hackers didn’t request payment in a currency that’s more difficult to trace.
I’m also wondering why the hackers didn’t request payment in a currency that’s more difficult to trace.
People should take care to distinguish pseudo-anonymous chains like btc from anonymous ones like zerocoin.
As soon as the ransom payment was transacted, the whole world could watch the chain and see the next step in its travel.
As soon as the ransom payment was transacted, the whole world could watch the chain and see the next step in its travel.
I think it's that BTC is easier to get victims to buy without oversight. There are Bitcoin ATMs. Buying Bitcoin from an ATM is like sending money via Western Union, but without the teller there to spot someone looking like they're under duress.
As for anonymity on the receiving end: the BTC can always just be exchanged for a more anonymous currency like Monero. You might think that'd require the criminal to KYC to a [centralized] exchange, but there are decentralized exchanges (i.e. DEXes — on-chain, crypto-for-crypto exchanges with no support for fiat deposit/withdrawal), and these have no need for KYC, since they don't touch the real banking system.
As for anonymity on the receiving end: the BTC can always just be exchanged for a more anonymous currency like Monero. You might think that'd require the criminal to KYC to a [centralized] exchange, but there are decentralized exchanges (i.e. DEXes — on-chain, crypto-for-crypto exchanges with no support for fiat deposit/withdrawal), and these have no need for KYC, since they don't touch the real banking system.
KYC?
Know Your Customer (KYC) — a compliance process required by Anti-Money Laundering (AML) laws, involving getting a unique government-issued identification document or other similar "identity proof" from your customers, before allowing them to use your service.
Any service that takes deposits or processes payments in certain countries is required to follow those countries' KYC/AML regulations.
The actual AML laws are mostly about noticing when a given person has processed $10k or more through your service in a single day. But note that that's "person", not "account." You have to de-anonymize your accounts, in order to associate them with people, in order to obey the law.
The conventional KYC "compliance" measures — gathering ID documents et al — are actually not part of the law itself, but rather are industry best-practices for following the AML laws. The KYC process gives service-providers the information needed to restrict each person to having only a single account; and therefore allow service-providers to treat each account as a person under the letter of the AML laws.
Any service that takes deposits or processes payments in certain countries is required to follow those countries' KYC/AML regulations.
The actual AML laws are mostly about noticing when a given person has processed $10k or more through your service in a single day. But note that that's "person", not "account." You have to de-anonymize your accounts, in order to associate them with people, in order to obey the law.
The conventional KYC "compliance" measures — gathering ID documents et al — are actually not part of the law itself, but rather are industry best-practices for following the AML laws. The KYC process gives service-providers the information needed to restrict each person to having only a single account; and therefore allow service-providers to treat each account as a person under the letter of the AML laws.
Client identification information that banks and brokerages are required to collect.
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> I’m also wondering why the hackers didn’t request payment in a currency that’s more difficult to trace.
Because they need to cash out somehow? Being crypto-currency rich doesn't mean much if you're unable to exchange the crypto-currency for real money.
Because they need to cash out somehow? Being crypto-currency rich doesn't mean much if you're unable to exchange the crypto-currency for real money.
No not really
People are content with crypto
They can invest, buy computer games, hardware and acquire general goods and services
There is no “I want to buy this flashy house/yacht how do I get crypto out”
Its easy to launder and easy to use without doing so, but also easy to launder whenever they get around to it
These guys didnt
People are content with crypto
They can invest, buy computer games, hardware and acquire general goods and services
There is no “I want to buy this flashy house/yacht how do I get crypto out”
Its easy to launder and easy to use without doing so, but also easy to launder whenever they get around to it
These guys didnt
In the real world? No, you can't buy a house or a yacht with crypto. You can't even buy groceries or pay at a restaurant or at a petrol station.
I’m saying two things:
1) These arent problems for ransomware hackers because they arent goals for ransomware hackers
2) even if these were goals for ransomware hackers these aren't problems either
It requires a special hubris to really think people that earn crypto want fiat. Just like people assume people that use Monero want clean bitcoin, its an absurdity that doesnt even consider that many just want and keep Monero. Its the same for fiat.
You would be more interested in discussing number 2 because I still say converting illicit funds to fiat isnt an unsolved or even difficult problem. But its so low on the list of priorities for this user story that its not really worth splitting hairs over. Ransomware hackers dont have an issue exchanging time for food and shelter, they are able to just accumulate and play in the crypto ecosystem which is what they really want to do already, with more. To many, its like someone stealing gold bars. Sure you go melt down an ingot or two eventually, but you’re really just hoarding the gold the sake of hoarding the gold. Crypto has the additional benefit of being internationally liquid for other digital assets and digital services instantly.
1) These arent problems for ransomware hackers because they arent goals for ransomware hackers
2) even if these were goals for ransomware hackers these aren't problems either
It requires a special hubris to really think people that earn crypto want fiat. Just like people assume people that use Monero want clean bitcoin, its an absurdity that doesnt even consider that many just want and keep Monero. Its the same for fiat.
You would be more interested in discussing number 2 because I still say converting illicit funds to fiat isnt an unsolved or even difficult problem. But its so low on the list of priorities for this user story that its not really worth splitting hairs over. Ransomware hackers dont have an issue exchanging time for food and shelter, they are able to just accumulate and play in the crypto ecosystem which is what they really want to do already, with more. To many, its like someone stealing gold bars. Sure you go melt down an ingot or two eventually, but you’re really just hoarding the gold the sake of hoarding the gold. Crypto has the additional benefit of being internationally liquid for other digital assets and digital services instantly.
But this won’t be a 100% closed ecosystem still right? You pay rent to your landlord in crypto, and they pay their employee in crypto, but somewhere there will be someone exchanging it for Fiat down the chain. And that’s invisible risk (unlike say, transacting in cash with your landlord knowing it can’t be traced).
Then launder all your crypto because you dont know if someone thinks you are a hacker from 20 transactions ago trying to cash out
This of course makes your legal actions indistinguishable from hackers laundering their own crypto, shifting the methods away from probable cause to completely benign
This of course makes your legal actions indistinguishable from hackers laundering their own crypto, shifting the methods away from probable cause to completely benign
Right, this makes a lot sense.
Slightly suspicious. Them wanting to get a message out there that criminals won't get away with far exceeds probability of them retrieving crypto imo.
If you do a memory dump on a hypervisor you can get all the memory of the VMs on that server including keys as they are being used.
Yeah the "follow the money" line from the FBI felt like a red herring. Yes you can follow the money through the addresses but it's not like they include routing numbers to tell you which bank manager to go convince to cooperate. Feels like Darkside got sloppy and left their private key unencrypted on their payment server which got seized/compromised.
I still don't believe the FBI actually seized the bitcoin. We have zero proof of anything.
We are just supposed to take the FBI on their word? There is a huge motivation for them to lie about seizing the BTC, in an effort to discourage other copycat crypto criminals.
We are just supposed to take the FBI on their word? There is a huge motivation for them to lie about seizing the BTC, in an effort to discourage other copycat crypto criminals.
I hope they start seizing Ethereum because it would show how not decentralized and not secure proof of stake system is.
If they get hold of your wallet's private key, they can seize it in any system.
They are more than welcome to do it if I break any law but I have to say you I'm not. By the way they can seize funds from your or my bank account as well there is nothing special about "crypto" coins they are not outside the law code is not law.
Excuse my ignorance but, how would it show that? Gaining credentials to a wallet does not appear to me to show that the Ethereum proof of stake system is not secure.
Read this what I wrote: https://news.ycombinator.com/item?id=27237700
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More detail on how they managed to get access to that password/private key?
Edit: I found the bitcoin address https://www.blockchain.com/btc/address/bc1q7eqww9dmm9p48hx5y...
Edit: I found the bitcoin address https://www.blockchain.com/btc/address/bc1q7eqww9dmm9p48hx5y...
I saw this in the news today. No idea if it's what happened, but it sounds like law enforcement runs infrastructure used by organized crime.
https://www.engadget.com/fbi-encrypted-chat-app-anom-crimina...
And this is on HN:
https://www.npr.org/sections/money/2012/11/20/165590860/epis...
https://www.engadget.com/fbi-encrypted-chat-app-anom-crimina...
And this is on HN:
https://www.npr.org/sections/money/2012/11/20/165590860/epis...
I'd wager it was passed as a message in the ANOM app.
I don't think it's coincidence that these were news-worthy on the same day.
I don't think it's coincidence that these were news-worthy on the same day.
Or the ANOM app is being leaked now to throw the blame off the honeypot tumbler they're still running.
If it was not hacked then I believe the implication is that the key was cracked.
Presumably, via brute force capability of unknown nature or a weakness in Bitcoin not known at this time.
Presumably, via brute force capability of unknown nature or a weakness in Bitcoin not known at this time.
> If it was not hacked then I believe the implication is that the key was cracked.
Is anyone here willing to say they believe the key was cracked? Seems extremely implausible to me.
Is anyone here willing to say they believe the key was cracked? Seems extremely implausible to me.
I’m open to alternatives, though I have felt that the response to this involved the highest level cyber warfare capabilities of the United States.
https://news.ycombinator.com/item?id=27156073
I would not be surprised to find out the US has this capability.
https://news.ycombinator.com/item?id=27156073
I would not be surprised to find out the US has this capability.
I would be surprised if they would reveal themselves as having it for $2.3 million.
See my comment here: https://news.ycombinator.com/item?id=27437342
It can be cracked if the keypair generator process is faulty. Some wallets have been known to be vulnerable due to poor rng implementation
Always easier to socially engineer in one way or another than to crack keys.
as far as I know the chances of doing this are far less possible than sending your 'tradicional forces' to get the private key..
More likely typical law enforcement methods than technical: they seized equipment with key, accessed an account where the key was transmitted (like email or a phone), wire-tapped an insecure channel, or strong-armed a defendant into revealing it.
ie, a $5 wrench
ie, a $5 wrench
I think this is more a case of "What actually happend": https://xkcd.com/538/
As others have pointed out in another post, you don't reveal that you've broken an important cryptographic algorithm over $2M.
This was not about $2M. It was a response to what was publicly interpreted as a nation-state cyber attack on infrastructure.
This was about principle and demonstration of capability.
If it is true the US has the ability to calculate BTC wallet keys as fast as it did, the price should fall.
This was about principle and demonstration of capability.
If it is true the US has the ability to calculate BTC wallet keys as fast as it did, the price should fall.
> This was about principle and demonstration of capability.
Still not worth it if a crpyto function has been broken. If it was because of the encrypted chat app honeypot they ran, it might be different, but even then, only if criminals are moving to something else.
They also don't have the perpetrator.
Still not worth it if a crpyto function has been broken. If it was because of the encrypted chat app honeypot they ran, it might be different, but even then, only if criminals are moving to something else.
They also don't have the perpetrator.
I disagree.
If the US has the ability to quickly break a BTC wallet, it is a public demonstration of warfare that should act as a deterrent in other theaters of war.
> They also don't have the perpetrator.
I don’t think we have a full manifest of who was involved in the colonial attack or the personnel that have made up Darkside.
Even if we did, successful pressure on the perpetrators or their successors does not require holding the individuals directly.
If the US has the ability to quickly break a BTC wallet, it is a public demonstration of warfare that should act as a deterrent in other theaters of war.
> They also don't have the perpetrator.
I don’t think we have a full manifest of who was involved in the colonial attack or the personnel that have made up Darkside.
Even if we did, successful pressure on the perpetrators or their successors does not require holding the individuals directly.
The most plausible theory I've heard is that the attackers used a BTC tumbler that was a honeypot controlled by feds.
But who knows, maybe the FBI has a quantum computer we don't know about.
But who knows, maybe the FBI has a quantum computer we don't know about.
they don't :(
Seems unlikely that the FBI sitting on a way to break ECDSA would use it to recover $2 million. Much more likely that there was a tumbler or exchange that they were able to link to the attacker and use to seize funds. Maybe they even have backdoors in some popular crypto wallets.
Might cost more than $2MM in compute, but could be worth it to demonstrate capability.
Sounds plausible, that one. Also perhaps the ransom gang had a staging server with a bunch of keys somewhere.
But the tumbler idea actually seems more plausible to me.
But the tumbler idea actually seems more plausible to me.
Guessing that it is malware or wallet vulnerability . I don't think it was server being siezed
Some educated guesses from ErgoBTC in this thread:
https://twitter.com/ErgoBTC/status/1402277984212557836
Apparently through the FBI docs...
Ransom was paid to darkside
Darkside tries to launder money on blockchain
Through blockchain explorer, the BTC ends up on Coinbase in attempt to liquidate. Coinbase has keys, and hands them over to FBI.
Ransom was paid to darkside
Darkside tries to launder money on blockchain
Through blockchain explorer, the BTC ends up on Coinbase in attempt to liquidate. Coinbase has keys, and hands them over to FBI.
Ah, it's very interesting if they were seized after having been transferred to a different wallet. That is going to reduce trust in Bitcoin considerably. It will be difficult to be sure that the coins you just bought are not subject to seizure by the authorities.
It’s well-known that money transfers are public in bitcoin and on/off ramp via virtual asset service providers like coinbase requires kyc and is subject to aml/ctf (anti money laundering and counter terrorism financing)
Did anyone really believe BTC was "untraceable"? You can literally trace every transaction. This feels like ignorance on the hand of BTC investors.
If they would have the bitcoin sent to a self-hosted wallet, the FBI probably never have known who received them, unless they cash them recklessly.
http://stonetoss.com/comic/hodl-on-tight/
(This comic about price fluctuations has as much place on HN as this blurb piece about price fluctuations. At least it's more relevant than the XKCD.)
(This comic about price fluctuations has as much place on HN as this blurb piece about price fluctuations. At least it's more relevant than the XKCD.)
6x returns over 8 months for no explicable reason after 3 years of going sideways was bound to unwind
The question is, is this a sign that froth in other markets will bubble away after everyone stops diddling in financial markets and gets back to work?
The question is, is this a sign that froth in other markets will bubble away after everyone stops diddling in financial markets and gets back to work?
Mike Saylor buys another 11000 btc. His past 7 purchases are all underwater. This is not sustainable. He is taking on so much debt. Really dumb
I agree with others about correlation, and bitcoin has been on a wild ride for the last few months, but shines light on one of bitcoin's few use cases as a currency--crime--not being as good as people used to claim.