News BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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The discussion highlights significant security issues surrounding Bitcoin exchanges, particularly focusing on the infamous Mt. Gox, which suffered a major theft leading to its bankruptcy. The exchange's management ignored critical warnings about its software's security flaws, resulting in millions lost and a tarnished reputation for Bitcoin. Other exchanges like Flexcoin and Canadian Bitcoins also reported substantial losses due to hacks and social engineering attacks. The conversation underscores the ongoing risks associated with Bitcoin transactions and the need for improved security measures in the cryptocurrency space. Overall, these incidents illustrate the vulnerabilities within the Bitcoin ecosystem that can lead to significant financial losses for users.
  • #931
The more I think about it, the more I think the Beanie Baby argument may do the crypto-world more harm than good. Why? Mining.

"We have millions of people making Beanie Babies for is."
"Great! How much do you pay them?"
"Um...nothing. We let them keep a fraction of what they make for us."

In addition to the existing tax issues, this makes mining look a lot like self-employment, which means that not only are the profits taxable, Schedule C may apply as well. That's over 15%.,
 
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  • #932
Doomed crypto firm Terraform Labs files for bankruptcy in the US
Co-founder Do Kwon is still jailed in Montenegro for using forged passports.

https://news.yahoo.com/doomed-crypt...files-for-bankruptcy-in-the-us-055731287.html

Terraform Labs, the company that wiped out $40 billion from the crypto market with the collapse of its TerraUSD and Luna stablecoins, has finally filed for Chapter 11 bankruptcy protection on Sunday. Bloomberg reports that the crypto firm's estimated assets and liabilities are both in the range of $100 million to $500 million, with the estimated number of creditors being somewhere between 100 and 199. Co-founder and former CEO Do Kwon is listed as the majority shareholder at 92 percent, with an address registered in Singapore — where the company is incorporated.

Following the arrest of Kwon and his associate in Montenegro for traveling with forged passports last March, Kwon is currently still in jail until his extradition to the US — likely by mid-March, according to Bloomberg — where he will face securities fraud charges. The entrepreneur is also wanted in his home country, South Korea, for similar charges, which reportedly led to him, his family and some key Terraform Labs personnel fleeing to Singapore between April and May 2022. Shortly before Interpol placed him on the "red notice" list in September that year, Kwon denied that he was "on the run," but the eventual discovery of his fake passports would suggest otherwise.
 
  • #933
Sneaking off to a place where there is no extradition treaty with the US, carrying three different passports? No....nothing sketchy about that.
 
  • #934
https://news.yahoo.com/colorado-pastor-accused-pocketing-1-044526435.html
Ex-con and his wife created an unlicensed exchange and unregistered security, INDXcoin cryptocurrency, despite having no experience with either.

Regalado claimed that --- told him investors would become wealthy if they put money into INDXcoin, promoting it as a low-risk, high-profit investment pegged to the average value of the top 100 cryptocurrencies, the Securities Division said.

In reality, INDXcoin was "illiquid and practically worthless," the Securities Division said in its release. The cryptocurrency was available only in Kingdom Wealth Exchange, which the Regalados shut down. It can no longer be sold anywhere.
 
  • #935
God told him to?

If he wants to go old school, how about a good old-fashioned stoning? That might cause the next con artist to think twice.
 
  • #937
The Guardian said:
Dozens of customers have complained that they are being shortchanged by the use of November 2022 prices. The price of bitcoin has risen to about $43,300 from its November 2022 price of $16,872, for example.

They don't get it. No wonder they were easy to fleece.

They are getting 100% of $16,872 because that's how much money is left. Yes, they could get $43,300, but then they would only get 40% of it. What happened to the rest? It was stolen. That's what the whole trial was about.

(In principle, people could argue that some creditors should get more and others less, but that will certainly prolong the process. The group that will benefit the most will be the lawyers)
 
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  • #938
Vanadium 50 said:
(In principle, people could argue that some creditors should get more and others less, but that will certainly prolong the process. The group that will benefit the most will be the lawyers)
Yes some customers will get more and others less . Seems they should only be able to claim their initial investment at time and price.
Screenshot_2024-02-02-06-58-24-975_com.android.chrome.jpg
 
  • #939
Vanadium 50 said:
that's how much money is left. Yes, they could get $43,300, but then they would only get 40% of it. What happened to the rest? It was stolen. That's what the whole trial was about.
Usually the 'that much left' is far more accurate than the 'stolen', I think.

I often find the usage of the word 'theft' in the context of investment(-ish) things disturbing. Suggests that the 'investor' has no idea of prices, risks, mismanagement and such.
 
  • #940
Rive said:
Usually the 'that much left' is far more accurate than the 'stolen', I think.

I often find the usage of the word 'theft' in the context of investment(-ish) things disturbing. Suggests that the 'investor' has no idea of prices, risks, mismanagement and such.
1706905952981.png


Usually but not in this case. It was stolen by convicted criminals using tried and true old-school criminal tactics called fraud.
https://www.marketwatch.com/story/a...as-a-scam-from-the-very-beginning-11671029303

A framework for fraud: How FTX was a scam from the very beginning​

The method by which Sam Bankman-Fried siphoned FTX customer funds into the coffers of his trading firm, Alameda Research, had been baked into the structure of the crypto exchange from the day it opened in 2019, U.S. authorities said.

https://www.nytimes.com/2022/12/13/business/ftx-sam-bankman-fried-fraud-charges.html

Prosecutors Say FTX Was Engaged in a ‘Massive, Yearslong Fraud’​

A criminal indictment unsealed on Tuesday and a complaint by the S.E.C. describe years of wrongdoing in Sam Bankman-Fried’s crypto empire.
 
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  • #941
Rive said:
Usually the 'that much left' is far more accurate than the 'stolen', I think.
Why do you think that?

While the defense tried to paint this as a complicated financial situation that mere mortals could not possibly understand, let alone comply with all the regulations, the truth is simple. Customers deposited money, and the leadership of FTX went out and spent that money.

It's really no more complicated than that.
 
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  • #942
https://www.cnbc.com/2024/02/02/three-people-indicted-in-400-million-ftx-hack-conspiracy.html

Three people indicted in $400 million FTX crypto hack conspiracy​

Three people were indicted for an identity theft conspiracy that allegedly included the $400 million hack from FTX on the same day in November 2022 that the doomed cryptocurrency exchange filed for bankruptcy protection, court records show.

Robert Powell, the 26-year-old alleged ringleader of the SIM-card swapping group that drained that crypto out of FTX’s virtual wallets, was ordered released on a $10,000 bond after a detention hearing Friday in Chicago federal court. Powell’s attorney Gal Pissetzky declined to comment.

That's so wrong, stealing from a conman when he's down.
 
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  • #943
It would be funny if all they got were SamCoins.
 
  • #944
An interesting identity theft indictment 2 weeks ago. Three 20-somethings were indicted in a SIM-swapping scam. They would make a fake drivers license, use it to get a duplicate of the victim's SIM card, and now they have access to texts and one factor of 2-factor authentication.

One of the victims was an FTX executive, and $400M disappeared from FTX the dayt before they declared bankruptcy. This has somehow been traced to this ring, but the money has been tracked to Russia.

Amazingly, after stealing $400M, they kept on going for six more months.
 
  • #945
Vanadium 50 said:
An interesting identity theft indictment 2 weeks ago. Three 20-somethings were indicted in a SIM-swapping scam. They would make a fake drivers license, use it to get a duplicate of the victim's SIM card, and now they have access to texts and one factor of 2-factor authentication.

One of the victims was an FTX executive, and $400M disappeared from FTX the dayt before they declared bankruptcy. This has somehow been traced to this ring, but the money has been tracked to Russia.

Amazingly, after stealing $400M, they kept on going for six more months.
https://www.physicsforums.com/threa...ts-hacks-scams-and-losses.740560/post-7055286
 
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  • #946
Well, I don't know how I missed that. The recent news was that they somehow linked the $400M to the trio, although it was pretty obvious. If someone steaks $400 and on the same day, someone else has $400 appear in their account, you don't know there was a causal relationship. But if it's $400 000 000, you're pretty sure.

It has caused me to rethink two-factor authentication using a cell phone. There are those who seem to think it will stop attacks by major world governments, but it didn't even stop three Millennials. It also makes me wonder who made the decision not to spring the $40 for a Yubikey or similar.
 
  • #947
Vanadium 50 said:
It has caused me to rethink two-factor authentication using a cell phone. There are those who seem to think it will stop attacks by major world governments, but it didn't even stop three Millennials. It also makes me wonder who made the decision not to spring the $40 for a Yubikey or similar.
I thought it was well known it's worst than single factor authentificatikn due to impersonalization.

Some crypto hardware wallets have FIDO2 compatibility and can be used for 2FA.
 
  • #948
https://www.theguardian.com/technology/2024/feb/27/crypto-mining-electricity-use
US judge halts government effort to monitor crypto mining energy use
The federal government has said it needs better information about major miners’ power use, but estimates that up to 2.3% of the US’s total electricity demand last year came from just 137 mining facilities. Globally, crypto miners are thought to soak up as much as 1% of all electricity demand, which is the same as the entire country of Australia, with bitcoin mining’s energy use doubling just last year.

This new thirst for electricity risks worsening the climate crisis, campaigners say. In the US, where nearly four in 10 of all bitcoin are now mined, up to 50m tons of carbon dioxide is released each year due to the mining operations, according to RMI, a clean energy thinktank.
In Texas crypto-farms are operating on an independent power grid, so I'm not sure what the feds can do about it.
 
  • #951
fluidistic said:
Make a push request to switch to PoS like Ethereum did.
Sure, It's that easy.
https://hackernoon.com/exploring-the-feasibility-of-transitioning-btc-from-pow-to-pos

Conclusion​

By analyzing several factors (such as technical, economic, political, and social factors) and available resources associated with the likelihood of switching Bitcoin's consensus algorithm, it is concluded that the transition of Bitcoin to PoS is unlikely to happen in the near future. But, based on the pace of technology and the majority consensus to change Bitcoin’s algorithm among the Bitcoin community, everything is possible in the future to fulfill the majority of demands. In addition, developers and experts in the related field are continuously striving to find the best possible solutions to solve the scalability and over-energy consumption issue of the biggest public blockchain Bitcoin. So, just not sticking to the PoS consensus algorithm, let’s hope there will be an advanced, highly secure, and truly decentralized consensus algorithm for Bitcoin in the future.
 
  • #952
nsaspook said:
Bankman-Fried argues for 63 to 78 month
Roughly one minute per theft. One minute per $7000 stolen.

Guy holds up a gas station and steals a few hundred bucks and gets a few years in the joint. I guess the lesson isn't "crime doesn't pay". It's "blue collar crime doesn't pay".
 
  • #953
nsaspook said:
https://www.theguardian.com/technology/2024/feb/27/crypto-mining-electricity-use
US judge halts government effort to monitor crypto mining energy use

In Texas crypto-farms are operating on an independent power grid, so I'm not sure what the feds can do about it.
Make a push request to switch to PoS like
nsaspook said:
Sure, It's that easy.
https://hackernoon.com/exploring-the-feasibility-of-transitioning-btc-from-pow-to-pos

Conclusion​

By analyzing several factors (such as technical, economic, political, and social factors) and available resources associated with the likelihood of switching Bitcoin's consensus algorithm, it is concluded that the transition of Bitcoin to PoS is unlikely to happen in the near future. But, based on the pace of technology and the majority consensus to change Bitcoin’s algorithm among the Bitcoin community, everything is possible in the future to fulfill the majority of demands. In addition, developers and experts in the related field are continuously striving to find the best possible solutions to solve the scalability and over-energy consumption issue of the biggest public blockchain Bitcoin. So, just not sticking to the PoS consensus algorithm, let’s hope there will be an advanced, highly secure, and truly decentralized consensus algorithm for Bitcoin in the future.
Unfortunately Bitcoin devs are very conservative. The problem is that they want to stick to Nakamoto's original ideas, thinking he was a God, whereas in reality if Nakamoto was still active, he would probably embrace more efficient systems.

Nakamoto failed in several things. He wasn't able to design an anonymous use of Bitcoin (smarter people in privacy matters, did however, and they created Monero). He came up with PoW as a solution to double spending problem, which works in practice, but isn't the most efficient system, by an immense margin. He himself said he hadn't found a better way than PoW. There are other things he failed, too, that got fixed over time.

Shame to the current Bitcoin devs.
 
  • #954
Very conservative here means protecting the current system investment. IMO that Nakamoto worship is a cover. It's the large Bitcoin holders (whales) and miners that control what happens, the Bitcoin devs know what's good for them. The miners would fork off a backwards compatible PoW version of Bitcoin in an instant causing the new PoS (with Bitcoin now one of many PoS coins :wink: ) version to die a quick death unless the miners get a large slice of the action from those that don't want to give it away.
 
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  • #955
U.S. Government Crypto Wallets Transfer Nearly $1B of Bitcoin Seized From Bitfinex Hacker
https://www.msn.com/en-us/money/com...tcoin-seized-from-bitfinex-hacker/ar-BB1j4cpj

Two crypto wallets tagged as holding funds seized by the U.S. government related to the infamous Bitfinex hack have just transferred nearly $1 billion of bitcoin to unidentified addresses.

A wallet that's one of at least three tagged by the blockchain-data firm Arkham Intelligence as holding seized Bitfinex hacker funds, on behalf of the government, initially transferred 1 BTC around 18:39 UTC (1:39 pm ET). Roughly a half-hour later, the remaining 2,817 BTC in the wallet were sent, leaving the wallet empty. Together they represented about $173 million worth of bitcoin.
 
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  • #956
A Florida woman had $500K in the bank and a mortgage-free home. Now she’s broke — thanks to her husband — and joining a surge of Americans facing bankruptcy

https://news.yahoo.com/finance/news/m-contemplating-bankruptcy-florida-woman-110300154.html

The woman thinks her husband spent some or much of the money on crypto-investments.

Crypto has become a common financial secret within relationships. Bread Financial’s survey revealed that 16% of people (12% of men and 4% of women) admitted to hidden crypto ownerships. Though the survey didn’t delve into the whys, it’s likely because cryptocurrency is often considered a risky investment and respondents didn’t want to risk upsetting their partners.
 
  • #957
https://www.coindesk.com/policy/202...-didnt-author-bitcoin-whitepaper-judge-rules/
Craig Wright Is Not Satoshi, Didn't Author Bitcoin Whitepaper, Judge Rules
"I will make certain declarations, which I am satisfied are useful and are necessary to do justice between the parties. First, that Dr. Wright is not the author of the Bitcoin white paper. Second, Dr. Wright is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period 2008 to 2011. Third, Dr. Wright is not the person who created the Bitcoin System. And, fourth, he is not the author of the initial versions of the Bitcoin software. Any further relief will be dealt with in my written judgment," Judge Mellor said.

1710432614271.png

Scratch Aussie.
1710432743713.png
 
  • #958
If I were Satoshi Nakamoto, I might be very pleased with a court ruling saying I wasn't. I'd still have my zillion dollars in Bitcoin. I would slowly unwind my holdings, paying full income tax on it. My defense against ever being a co-defendant is "It's not me. The courts said so."
 
  • #959
Sam Bankman-Fried gets sentenced Thursday. He faces up to 119 years. The prosecution asked for 40-50 and the defense 6 or less.

I have not heard about the sentences of his former co-workers. I don't think its happened yet. I'm not sure what they are waiting for, as they have guilty pleas already. Perhaps it is to avoid the possibility of harsher sentences to the ones who cooperated. I don't know.

Anyone want to guess the sentence? I hope it included a lifetime ban from the financial services industry.