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

[Office_Shredder]

All that and more, most of it happening fast and it seems as if almost all at once now, after some years of wild fluctuations in bitcoin value that are unlike anything that has been seen since the end of WW I in Germany, when it comes to how significant currencies perform.
It's been also in the news for a while.
I believe the two comments I wrote above, plus what numerous others have posted in this thread, already cover what needs to be explained here.
So I am moving on.

The difference is that bitcoin is basically a giant gambling game for most of the people involved, and only a fraction of the world is involved with it.

In Germany, the thing fluctuating actually represented the entire country's purchasing power. This hasa huge difference on the impact.

 

[OscarCP]

The difference is that bitcoin is basically a giant gambling game for most of the people involved, and only a fraction of the world is involved with it.

In Germany, the thing fluctuating actually represented the entire country's purchasing power. This hasa huge difference on the impact.

Office_Shredder, I do agree with you. But what I wrote I also believe is correct, even if it is arguable how much of a "significant" currency bitcoins are as a whole.
So, I can think of only one bigger currency catastrophe the current one can be compared to: that of post-WW I Germany when it was forced to pay enormous reparations to the winners, primarily the great powers of the day among them: Britain and France(the US was not in favor).
That one must have been bad for millions, but the current now under progress is affecting people at most levels of society: those who have both (a) money for and (b) faith to spare on those promoting the Ponzi schemes and in their own non-existent ability to get rich quick.

 

[Office_Shredder]

Office_Shredder, I do agree with you. But what I wrote I also believe is correct, even if it is arguable how much of a "significant" currency bitcoins are as a whole.
So, I can think of only one bigger currency catastrophe the current one can be compared to: that of post-WW I Germany when it was forced to pay enormous reparations to the winners, primarily the great powers of the day among them: Britain and France(the US was not in favor).
That one must have been bad for millions, but the current now under progress is affecting people at most levels of society: those who have both (a) money for and (b) faith to spare on those promoting the Ponzi schemes and in their own non-existent ability to get rich quick.

All of crypto at its peak was worth 2 trillion dollars. Sounds like a lot, but just the us stock market is 46 trillion dollars. In the scheme of things it's just not that much wealth lost when collectively spread out across the world.

 

[OscarCP]

All of crypto at its peak was worth 2 trillion dollars. Sounds like a lot, but just the us stock market is 46 trillion dollars. In the scheme of things it's just not that much wealth lost when collectively spread out across the world.

It is not the trillions, but the instability and fast collapse I am comparing to (brought first on by the Germans who were printing unbacked currency during the war, confident that they were going to cover all the resulting debt with what they were going to take from the defeated allies, only to find that things worked out the other way around and, on top of that, they had to comply with the punitive payments demanded by their victorious enemies).

And even in this day and age of ours, a trillion or two going off in a puff of smoke is not a minor little economic glitch. Or I am much mistaken, and something tells me I am not.
I already have covered this enough, I think. All I am going to add is this:
Please read what I wrote exactly when comparing the bitcoins crash and the aftermath of WW I. You'll find that I am agreement with some others here, including, I believe, you.

And while I am still spouting on this topic, this is for those who tend to comment on current USA inflation as a harbinger of the end of the world:

https://www.dailymail.co.uk/news/article-5088405/When-cash-worthless-Germany-World-War.html

With lots and lots of interesting old photos. Enjoy ... ?

 

[morrobay]

SBF to plead not guilty to all charges. I don't understand this logic at all. I expected him to plead guilty and get some slack on sentencing. This way he is in for a longer sentence.
https://www.reuters.com/legal/bankm...guilty-plea-ftx-fraud-case-source-2022-12-30/

 

[Office_Shredder]

SBF to plead not guilty to all charges. I don't understand this logic at all. I expected him to plead guilty and get some slack on sentencing. This way he is in for a longer sentence.
https://www.reuters.com/legal/bankm...guilty-plea-ftx-fraud-case-source-2022-12-30/

That's not how this works. You usually negotiate a deal for a light sentence in exchange for pleading guilty, you don't just plead guilty and hope for the best. You can strike the deal at any point - all we know is they haven't come to one yet. It's possible the prosecutor is confident enough in their case they don't feel the need to offer sbf anything worth taking - certainly the deals they struck with Gary and Caroline suggest they're trying to hit it big against sbf.

 

[morrobay]

But he is pleading not guilty . So what kind of exchange for a light sentence applies ? And isn't that just what I said: plead guilty for lighter sentence?

 

[Office_Shredder]

But he is pleading not guilty . So what kind of exchange for a light sentence applies ? And isn't that just what I said: plead guilty for lighter sentence?

His initial plea is not guilty. You can change it to guilty later once a deal is struck.

 

[Astronuc]

An article from earlier, April 2022
https://www.wired.com/story/tracers-in-the-dark-welcome-to-video-crypto-anonymity-myth/

When Bitcoin first appeared in 2008, one fundamental promise of the cryptocurrency was that it revealed only which coins reside at which Bitcoin addresses—long, unique strings of letters and numbers—without any identifying information about those coins’ owners. This layer of obfuscation created the impression among many early adherents that Bitcoin might be the fully anonymous internet cash long awaited by libertarian cypherpunks and crypto-anarchists: a new financial netherworld where digital briefcases full of unmarked bills could change hands across the globe in an instant.

Satoshi Nakamoto, the mysterious inventor of Bitcoin, had gone so far as to write that “participants can be anonymous” in an early email describing the cryptocurrency. And thousands of users of dark-web black markets like Silk Road had embraced Bitcoin as their central payment mechanism. But the counterintuitive truth about Bitcoin, the one upon which Chainalysis had built its business, was this: Every Bitcoin payment is captured in its blockchain, a permanent, unchangeable, and entirely public record of every transaction in the Bitcoin network. The blockchain ensures that coins can’t be forged or spent more than once. But it does so by making everyone in the Bitcoin economy a witness to every transaction. Every criminal payment is, in some sense, a smoking gun in broad daylight.

Within a few years of Bitcoin’s arrival, academic security researchers—and then companies like Chainalysis—began to tear gaping holes in the masks separating Bitcoin users’ addresses and their real-world identities.

 

[nsaspook]

https://arstechnica.com/information...calls-on-fbi-to-recover-3-6m-in-digital-coin/
Key bitcoin developer calls on FBI to recover $3.6M in digital coin

On New Year's Day, Dashjr took to Twitter to report that his entire bitcoin holdings—worth roughly $3.6 million—were “basically all gone.” He said the hack stemmed from the compromise of a PGP (Pretty Good Privacy) key that he used to ensure that his downloads of Bitcoin Core and a smaller app known as Bitcoin Knots weren’t laced with malware. He said all his computers were compromised and urged people to hold off downloading new versions for the time being.

“So to be clear: DO NOT DOWNLOAD BITCOIN KNOTS AND TRUST IT UNTIL THIS IS RESOLVED,” he wrote. “If you already did in the last few months, consider shutting that system down for now.”

Dashjr didn’t respond to an interview request.

In the same thread, the developer said he had contacted the FBI and police but hadn’t received a response.

“What the heck @FBI @ic3. Why can't I reach anyone???” he wrote. “I paid those taxes and the police don't care. What a scam.”
Click to expand...

So now you want the evil fiat currency government agents to find your fake money.
The game was opsec and encryption. You lost the game.

One takeaway, however, is clear, as evidenced by one of the most influential bitcoin developers calling on law enforcement to recover his stolen digital coin: The notion that cryptocurrencies provide a decentralized platform that cuts out established authorities is nothing short of a pipe dream.

 

[fluidistic]

https://arstechnica.com/information...calls-on-fbi-to-recover-3-6m-in-digital-coin/
Key bitcoin developer calls on FBI to recover $3.6M in digital coin

So now you want the evil fiat currency government agents to find your fake money.
The game was opsec and encryption. You lost the game.

As far as I know, the arstechnica article is a bit exaggerated. The dude lost about 200 BTC, which amount to roughly half of the amount of BTC he owns.
Despite that I don't agree with this dude on many, many things, I still feel it for him. He's still rich though.

 

[Vanadium 50]

I suppose one could insure bitcoin against theft. One might even imagine a setup where the premiums are in crypto and the payoff is in hard currency. This would provide an independent estimation of the value of crypto.

I suspect that's the last thing the crypto folks want.

 

[nsaspook]

As far as I know, the arstechnica article is a bit exaggerated. The dude lost about 200 BTC, which amount to roughly half of the amount of BTC he owns.
Despite that I don't agree with this dude on many, many things, I still feel it for him. He's still rich though.

Your keys… also not your coins.

 

[Astronuc]

FTX's ex-top lawyer is reportedly cooperating with investigators, revealing details about what Sam Bankman-Fried did with customer funds
https://www.yahoo.com/finance/news/ftxs-ex-top-lawyer-reportedly-110713859.html

 

[fluidistic]

Rumors are spreading that Huobi is about to bite the dust, the CEO has apparently withdrawn 1.5 giga dollars since October. Be prepared for an "FTX like scandal".

 

[Astronuc]

In November, the Wall Street Journal identified Singh, Bankman-Fried, Caroline Ellison, and Wang as the four FTX executives who knew that the exchange was using customer funds to prop up its sister trading firm Alameda Research.

Bankman-Fried entered a plea of not guilty to eight criminal counts including wire fraud and conspiracy to commit money laundering Tuesday, while Ellison and Wang both pleaded guilty to similar charges on December 22.

https://www.yahoo.com/finance/news/ftx-fraud-investigators-digging-deeper-135103368.html

 

[Astronuc]

The U.S. Securities and Exchange Commission (SEC) is examining whether investors in bankrupt crypto exchange FTX correctly followed due diligence procedures, Reuters reported on Thursday, citing two sources familiar with the inquiry.

In December, the SEC charged former FTX chief Sam Bankman-Fried with scheming to defraud equity investors who stumped up over $1.8 billion for the company – but is also probing whether those companies did their homework to ensure the investment was sound, the report said.

https://finance.yahoo.com/news/sec-investigating-ftx-investors-due-120738424.html

 

[nsaspook]

https://www.msn.com/en-us/news/us/b...ors-they-don-t-own-their-accounts/ar-AA161DA8

Bad news for thousands of crypto investors: They don’t own their accounts​

According to the bankruptcy court, however, there may be a limit to what the legal system can do when crypto companies are savvy enough to protect themselves. Investors and a number of states that joined their motion say the language was at least “ambiguous” in the rights it granted Celsius. But Glenn disagreed.

Lawyers for Celsius, Joshua Sussberg and Patrick J. Nash Jr., and lawyers for the creditors, Gregory Pesce and Andrea Amulic, did not respond to requests for comment.

The bankruptcy ruling focused specifically on whether Celsius as part of the restructuring can now sell $18 million in so-called stablecoins, a type of virtual currency, to help stay solvent. But its implications are much larger. By ruling that the money in the accounts wasn’t really owned by the 600,000 account holders, the court has basically said they are now just unsecured creditors. And “there simply will not be enough value available to repay” them, Glenn wrote.

 

[fluidistic]

Holy hell, a person lost 5000 usd due to a scam I had never heard of. He used to send cryptocurrencies to Binance, so he had memorized the first and last characters of Binance's address. Then, a scammer noticed this guy's address and saw he still had funds that he would likely send to Binance in a near future. So the scammer used a property of Ethereum's blockchain, he actually sent a 0 BUSD transaction to an address that looks like Binance's (the first and last characters match) using the honest person's wallet (this is crazy, but allowed!). When the honest person sent more funds to Binance, he just copied and pasted the last address his historial showed up, and it did look like Binance's at first and second glance. Unfortunately this was the hacker's address... and so he sent 5000 BUSD to the hacker...

 

[Vanadium 50]

And the real, clever thing is that formally cryptro isn't worth anything, so the government can't inflict any icky, nasty regulations on us! What could possibly go wrong with this?

 

[Astronuc]

FTX bankruptcy documents show list of investors set to be completely wiped out, including Tom Brady and Robert Kraft

https://www.yahoo.com/finance/news/ftx-bankruptcy-documents-show-list-170209957.html

As part of its bankruptcy process, FTX Monday released a list of its top equity holders, detailing just how many investors were set to be wiped out from the downfall of the crypto exchange.The document showed Brady, who was a brand ambassador for FTX and appeared in a commercial for the company, owned just over 1.1 million common shares of FTX. Meanwhile, Bündchen, Brady's ex-wife, owns just under 700,000 common shares of FTX.

The billionaire Robert Kraft, who owns the New England Patriots NFL team, was also listed in the FTX bankruptcy document. Through KPC Venture Capital, Kraft owns over 110,000 Series B preferred shares of FTX Trading, as well as 479,000 common shares and about 44,000 Series A preferred shares of West Realm Shires, the company that controls FTX's US exchange.

. . . .

Well-known funds run by Tiger Global, Thoma Bravo, Sequoia Capital, SkyBridge, and Third Point, among others, were listed as owning millions of both common and preferred shares of FTX.

Those investments are now virtually worthless, . . .

So much for being a safe investment.

 

[morrobay]

Some of these losses in the bankruptcy filings are based on valuations just before the crash. And that's not the same as the initial investment. Searched for Tom Brady's initial investment but cannot find it. For example if an initial investment was x not sure they can claim a loss of 10x.

 

[BWV]

But if Tom Brady received shares last year as part of compensation for being a spokesperson the full amount would be taxable just like his salary, and that would set his tax basis in the shares for calculating gains or losses if he later sold them. So he had to fork over cash equal to 37% of the value in Federal Taxes and now has worthless shares that he can only deduct against other long term capital gains(assuming he received the shares over a year ago)

 

[Astronuc]

Bankrupt cryptocurrency exchange FTX said it has located more than $5 billion in cash and other liquid assets and is hoping to sell hundreds of additional holdings with a book value of more than $4.6 billion.

https://www.msn.com/en-us/money/com...n-5-billion-in-cash-liquid-assets/ar-AA16dYJB

Those assets are valued as of FTX’s bankruptcy filing in November and don’t include $425 million held by authorities in the Bahamas, company lawyers said on Wednesday in the U.S. Bankruptcy Court in Wilmington, Del.

FTX lawyers also told the judge overseeing the bankruptcy case that the amount of the shortfall in FTX customer funds isn’t yet clear. The company is working on determining the size of the claims pool and potential recoveries for some 9 million customer accounts it has identified, FTX lawyer Andrew Dietderich said in the court hearing.
. . .

 

[artis]

Does anyone remember the Onecoin scam and it's leaders Sebastian Greenwood and Ruja Ignatjeva?
Apparently Ruja is still out there hiding and evading her capture with some of the money she got from all this, but her counterpart Sebastian just plead guilty to the crimes incriminated against him

https://www.justice.gov/usao-sdny/p...currency-pyramid-scheme-onecoin-pleads-guilty

The sad truth is that there were many smaller guys who were the local marketers of this scam who although they got far far less money out of it are free and no one will charge them with anything , but they knew exactly what sort of BS they were selling and all for their personal gain.

Either way for some weird reason onecoin youtube channel is still up and so is Sebastian's if you have free time you can check those con's out just to remind yourself how sleezy criminals look like.

 

[artis]

PS. I wrote her last name incorrectly , it's Ruja Ignatova
https://en.wikipedia.org/wiki/Ruja_Ignatova

 

[BWV]

 

[fluidistic]

Unconventional, but still relevant post:
The CEO of Binance saying Harmony's One hacker(s) tried to cash out from Binance (and then Huobi), they apparently retrieve 124 BTC out of the hacker. Very low level of sophistication from the hacker's part.

 

[Astronuc]

Crypto lender Genesis Global Capital filed for Chapter 11 bankruptcy protection in New York early Friday morning, marking the latest business in the industry to file for bankruptcy as the fallout from last year's collapse in crypto prices continues to ripple through markets.

https://finance.yahoo.com/news/crypto-lender-genesis-files-for-bankruptcy-protection-125411795.html

https://www.reuters.com/technology/crypto-lending-unit-genesis-files-us-bankruptcy-2023-01-20/

https://www.cnbc.com/2023/01/20/cry...tcy-barry-silbert-digital-currency-group.html

The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.

 

[morrobay]

The overview seems to be artificially inflating the value of a funds crypto coins through market manipulation, ie have a connected fund buy the very limited amount (10%) that is on open market. Then use the 90% that is in off market holdings as collateral for loans. Even though it would be difficult to sell that 90% for cash. https://dnyuz.com/2023/01/18/ftx-founder-gamed-markets-crypto-rivals-say/

 

[Astronuc]

Reuters reports Feds seized nearly $700 million from FTX founder Bankman-Fried
https://www.reuters.com/technology/...million-ftx-founder-bankman-fried-2023-01-21/

Jan 20 (Reuters) - Federal prosecutors have seized nearly $700 million in assets from FTX founder Sam Bankman-Fried in January, largely in the form of Robinhood stock, according to a Friday court filing.

Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, has pleaded not guilty to fraud charges. He is scheduled to face trial in October.

. . .
The ownership of the seized Robinhood shares, valued at about $525 million, has been the subject of disputes between Bankman-Fried, FTX, and bankrupt crypto lender BlockFi.

The most recent asset seizure reported by the DOJ took place on Thursday, when prosecutors seized $94.5 million in cash from an account at Silvergate Bank which was associated with FTX Digital Markets, FTX's subsidiary in the Bahamas. The DOJ seized more than $7 million from other Silvergate accounts associated with Bankman-Fried and FTX.

It would seem cryptocurrency is only of value if it can ultimately be exchanged for actual government-issued currency, or some tangible asset such as real estate, equity in a business, or some other physical asset that represents value in government-issued currency.

 

[phinds]

It would seem cryptocurrency is only of value if it can ultimately be exchanged for actual government-issued currency, or some tangible asset ...

Well, yeah, but it's actually also true that government issued currency is also only of value if it can ultimately be exchanged for a tangible asset. It CAN of course, because that's the system we use but it has no more intrinsic value than does cryptocurrency. It is protected by the "full faith and credit" of issuing governments which crypto is not and THAT is the big difference, not the intrinsic value, which neither one has.

 

[artis]

Well, yeah, but it's actually also true that government issued currency is also only of value if it can ultimately be exchanged for a tangible asset. It CAN of course, because that's the system we use but it has no more intrinsic value than does cryptocurrency. It is protected by the "full faith and credit" of issuing governments which crypto is not and THAT is the big difference, not the intrinsic value, which neither one has.

Exactly, if I am left on a deserted island then any currency is of no value , and dollars too are just green little papers one can wipe his behind with.
What has value then is food and resources to build stuff, but then again in the ordinary world food and resources also have pretty much the same value so in other words the only real value is in "stuff".
So one could say dollars are just a better "means to an end" if compared to crypto and that's it.

One doesn't have to look far to see that every dirty oligarch who has some smarts always tries to pour his dirty dollars into everything from real estate to yachts to gold bars to expensive jewelry etc.
Gemstones and expensive items are somewhat easier to conceal and more practical than money I think especially crypto given how it has lost it;s value just recently

 

[fluidistic]

Well, yeah, but it's actually also true that government issued currency is also only of value if it can ultimately be exchanged for a tangible asset. It CAN of course, because that's the system we use but it has no more intrinsic value than does cryptocurrency. It is protected by the "full faith and credit" of issuing governments which crypto is not and THAT is the big difference, not the intrinsic value, which neither one has.

Crypto is ''protected'' by cryptography and a rather complex system involving blockchain, which governements aren't. I can see pros and cons for both sides.

 

[phinds]

Crypto is ''protected'' by cryptography ...

What does that even mean in terms of its value?