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

by prostoalex • 5 years ago

75 112 5 years ago

cnbc.com

leugim• 5 years ago

Correlation is not causation.

jerf2• 5 years ago

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.

PretzelPirate• 5 years ago

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).

TameAntelope3• 5 years ago

I... genuinely am confused. What is it here that a government isn't supposed to be able to do?

teachingassist2• 5 years ago

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.

bdcravens4• 5 years ago

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.

sosuke2• 5 years ago

Indeed. $2.3 million dollars of BTC isn't too much.

api2• 5 years ago

A possible causal factor is that much of the crypto world actually thinks BTC is private. It's not. It's the opposite: a 100% public fully replicated ledger.

spoonjim3• 5 years ago

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.

elliekelly• 5 years ago

In science, yes. In the financial markets I’m not so sure the truism holds.

vkou• 5 years ago

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

satya71• 5 years ago

There are other uses of BTC?

ourcat• 5 years ago

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.

carreau• 5 years ago

Well ... https://www.smbc-comics.com/?id=2540

mmastrac• 5 years ago

Event 1 as story 2 happens. This always drives me nuts about financial reporting.

diego• 5 years ago

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.

eru2• 5 years ago

To be fair, it's usually pretty hard to say why stock prices change. Even with hindsight.

Mostly because anticipation is so important.

umvi• 5 years ago

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

rootusrootus• 5 years ago

And Portland was never burning to begin with. At least Trump was actually golfing, so there's that.

HPsquared• 5 years ago

All news must be in the format of a 'story'.

furyofantares2• 5 years ago

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

buzzdenver• 5 years ago

There were an equal number of investors how bought those risky assets, albeit at a lower price than the day before.

orev• 5 years ago

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.

BenoitEssiambre2• 5 years ago

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.

BenoitEssiambre2• 5 years ago

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.

pembrook• 5 years ago

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?

actually_a_dog2• 5 years ago

Literally the definition of post hoc ergo propter hoc.

https://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc

mypastself• 5 years ago

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.

imglorp• 5 years ago

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.

api2• 5 years ago

"Wouldn't it be great if we could get criminals to use a 100% public transparent ledger???"

Sparkyte2• 5 years ago

Bitcoin is literally about tracing transactions... criminal IQ smol.

derefr2• 5 years ago

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.

throwaway894345• 5 years ago

KYC?

lottin3• 5 years ago

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.

vmception4• 5 years ago

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

mpg33• 5 years ago

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.

bob33212• 5 years ago

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.

devonbleak• 5 years ago

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.

t0mbstone• 5 years ago

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.

mrkramer3• 5 years ago

I hope they start seizing Ethereum because it would show how not decentralized and not secure proof of stake system is.

eru2• 5 years ago

If they get hold of your wallet's private key, they can seize it in any system.

mrkramer3• 5 years ago

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.

tpl• 5 years ago

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.

mrkramer3• 5 years ago

Read this what I wrote: https://news.ycombinator.com/item?id=27237700

baby3• 5 years ago

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...

bredren5• 5 years ago

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.

ccczzz• 5 years ago

as far as I know the chances of doing this are far less possible than sending your 'tradicional forces' to get the private key..

tome5• 5 years ago

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.

bdcravens4• 5 years ago

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

Shacklz• 5 years ago

I think this is more a case of "What actually happend": https://xkcd.com/538/

dehrmann4• 5 years ago

As others have pointed out in another post, you don't reveal that you've broken an important cryptographic algorithm over $2M.

teachingassist2• 5 years ago

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.

lamontcg2• 5 years ago

Or the ANOM app is being leaked now to throw the blame off the honeypot tumbler they're still running.

dehrmann4• 5 years ago

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...

baby3• 5 years ago

https://twitter.com/adam3us/status/1402179970277982210?s=21

More on Krebs: https://krebsonsecurity.com/2021/05/darkside-ransomware-gang...

walexander• 5 years ago

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.

answertojob• 5 years ago

they don't :(

Taek• 5 years ago

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.

lordnacho• 5 years ago

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.

paulpauper3• 5 years ago

Guessing that it is malware or wallet vulnerability . I don't think it was server being siezed

thinkmassive• 5 years ago

Some educated guesses from ErgoBTC in this thread: https://twitter.com/ErgoBTC/status/1402277984212557836

jzchang• 5 years ago

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.

tome5• 5 years ago

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.

jorblumesea• 5 years ago

Did anyone really believe BTC was "untraceable"? You can literally trace every transaction. This feels like ignorance on the hand of BTC investors.

Black1012• 5 years ago

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.

Jach• 5 years ago

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.)

nly• 5 years ago

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?

paulpauper3• 5 years ago

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

dehrmann4• 5 years ago

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.

mikewarot• 5 years ago

I bet the folks who had a buy order sitting at $31,500 are happy with their purchase.

Bitcoin extends losses after U.S. seizes most of Colonial ransom

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