Crypto CEO behind $2.5B 'rug pull' arrested

https://www.pcgamer.com/crypto-ceo-behind-dollar25b-rug-pull-arrested-faces-40564-years-in-prison/

by mrkramer • 4 years ago

107 96 4 years ago

Interpol had issued a red notice on Özer in April 2021, which basically means every police force in the world was asked to locate and arrest him.

Yikes. That's like 4 stars of wanted level.

thifhi• 4 years ago

I remember that one of the technical employees of the said exchange claimed cyber attacks to their servers were so rampant and many succesful that they were simply not able to continue business with all the stolen funds. I honestly believe that incompetentness might have played a huge role in this "fraud" story.

colechristensen4• 4 years ago

Being incompetent is far less illegal than covering up your incompetence with fraud.

If you don't cover up the first stolen funds, people will have a sense of the risk you pose and there will be less opportunity for future stolen funds because your customers will leave or beat you with a stick until your security improves.

ejb999• 4 years ago

He shouldn't worry, that sentence will probably be cut in half anyway, and with another 100 years off for good behavior.

75w• 4 years ago

With good behaviour he should be out by the time he’s 20,578 years old

zamalek• 4 years ago

Just in time for "The Year of Crypto."

coffeeblack• 4 years ago

So, will they keep him alive for 40k years or how does that work? Isn’t it a little silly?

delecti3• 4 years ago

Things like this aren't a single charge with a 40k year sentence, it's ~2000 charges of ~20 years, served sequentially. It means that if he's found not guilty of ~1999 of those charges, he still serves 20 years for the 2000th. And conversely, if he is found guilty of all ~2000 separate crimes, why shouldn't he receive a sentence for each? It might seem like a silly result, but what would you propose changing?

barbazoo3• 4 years ago

will they keep him alive for 40k years or how does that work?

Imagine how awful that would be.

~2000 charges of ~20 years

And that makes me wonder. Maybe that would be too harsh a sentence then. Do we want to basically "end" someone's life at an insane cost to the tax payer for something with no impact on others other than financial? I have no answer, it just feels somewhat suboptimal to me.

z3c0• 4 years ago

Why would they count the terms sequentially when prison sentences are typically served concurrently? Is that not the case here?

Analemma_• 4 years ago

Eventually, when we have brain uploading, we will make 2000 copies of the defendant and have them each serve a 20 year sentence, and then merge them back together at the end, leaving them with the memory of having served 40,000 years.

P5fRxh5kUvp2th• 4 years ago

This is prosecutors gaming the system to try and make something stick.

If you're comfortable with prosecutors being able to play games with people's lives because they've made a personal judgment call to maximize their ability to punish people, great! The system is working the way you want it to.

Not everyone is comfortable with that.

tzs• 4 years ago

In the US those would likely be grouped for sentencing, and he'd get somewhere near whatever the longest possible sentence is for fraud under the Federal Sentencing Guidelines with enhancements for the total amount of damage caused, maybe racketeering, and maybe a few others. It would essentially be treated as one big crime with 2000 victims, not 2000 separate crimes.

In the US whenever you see a story about an incredibly long sentence it is almost always because someone did not take into account grouping for sentencing, or they did not take into account that a person is often charges with multiple levels of a crime from the same act, and if convicted on more than one of those charges they are only sentenced on the most severe.

For example in most jurisdictions in if I were to shoot you to death the US there would be multiple degrees of murder that I might be charged with, maybe also multiple degrees of negligent homicide and manslaughter and maybe even others. My sentence if convicted would be the sentence of whichever of those has the longest sentence.

Unfortunately in the US when the Department of Justice issues a press release touting charging someone they don't take those things into account, and so the press release says the person is facing some number of years that can be several times too high.

I'd hold back on believing that he's really facing ~40k years in Turkey until someone familiar with Turkish law and sentencing verifies that things really so work that way in Turkey.

t_mann• 4 years ago

There's infinitely more than one way to turn a list of numbers into one number, not just summing them up. In some countries you serve the maximum sentence out of all those that you've been convicted for.

mikotodomo3• 4 years ago

I think a more fitting punishment would be to make an AI that measures how much pain he caused each of his customers, and then makes him sit through that pain. It would probably take hundreds of years, but the AI could make him live that long too. But I don't know if this is ethical. Someone chime in?

npteljes• 4 years ago

Sounds like "an eye for an eye". Apparently "it leaves the whole world blind", and that is why it's undesirable.

The second thing is that there's no way to measure pain, and also what we feel as pain is more like two things, actual pain, as in nervous system reaction, and suffering, which you create in your mind. There's two-way causation between the two by default, but the effect of one on the other is not deterministic, and can be learnt to that you feel pain, but do not suffer (as much you did previously). So we couldn't measure the pain before, and now we cannot measure the suffering to an even lesser degree.

The third thing is, which usually comes up with regards to crime, is punishment vs rehabilitation. What you describe with the AI, as it stands, is punishment. It's up the person being punished to learn something there. I don't have high expectation of someone who's returned to society after such lengthy torture (or are we killing them afterwards, or keeping them otherwise captive?). In case you're a victim of a crime, or just someone affected, it's natural to thirst punishment for the perpetrator. On a societal level however, it seems like that we're better off with rehabilitation. It creates a better social environment for all.

https://www.uib.no/en/news/100126/norwegian-prisons-rehabili...

paxys3• 4 years ago

Once again crypto investors have to be bailed out by the same government regulation they hate so much.

chollida1• 4 years ago

Once again crypto investors have to be bailed out by the same government regulation they hate so much.

Are they being bailed out by the government? I didn't see anything that said the government is making the investors whole here, do you?

paxys3• 4 years ago

Prosecution of crime discourages further crime, so yes the ecosystem is being helped directly by the government regardless of whether these few investors get their money back or not.

And while it is too early to say in this case, the government has reimbursed crypto victims in several cases in the US (see https://www.ftc.gov/news-events/news/press-releases/2020/11/... and https://www.theverge.com/2021/11/18/22789507/crypto-scam-gov... as examples).

hartator• 4 years ago

Are they being bailed out by the government? I didn't see anything that said the government is making the investors whole here, do you?

Isn't the whole thing that code is the new law?

If you transfer ownership to your cryptos to that exchange, they should be the "legitimate" owner if you follow that logic. However it seems that all of this is just avoid the actual law when it seems convenient and cry back when it's not.

ErikVandeWater2• 4 years ago

What value does this comment add to the discussion?

JumpCrisscross2• 4 years ago

What value does this comment add to the discussion?

Some of us advocate for a crypto tax to cover the cost of investigating, prosecuting and remunerating victims. This is currently borne by the public purse. Given the disproportionate contribution of crypto to fraud, and animated by the community’s general disdain for the law, this seems fair.

warkdarrior• 4 years ago

The standard expectation in the cryptocurrency space is that all problems are adjudicated via blockchain mechanisms (on chain, off chain, etc.) in a decentralized way. The fact that the government (a centralized, non-blockchain entity) has to step in to address a problem indicates a failure of the cryptocurrency ideal.

aqme282• 4 years ago

I always curious how this crime starts. You’re already presiding over a popular exchange with billions in customer funds. Surely you could just run that legitimately and still make a ton of money?

AdmiralAsshat• 4 years ago

Greed.

JumpCrisscross2• 4 years ago

Greed

This is often thrown out as a shorthand for systemic failures, e.g. renters blaming individual landlords for rising rents. But I think it applies here. Short-term optimisation at the expense of long-term value. Optimising for the margin at the risk of the whole. Irrational, self-destructive maximalism: greed.

KiranRao0• 4 years ago

A book named "How will you measure your life?" by Clayton Christiansen that dives pretty deeply into the topic, among other things.

The theory presented was called "The Trap of Marginal Thinking". On the margin, it may appear to make sense to do something or push some boundary or take on some more leverage because it, on the margin, is most likely going to work out. But by doing so, we end up putting ourselves and companies in a dangerous position when looking at the whole.

Bakary2• 4 years ago

I agree with his view overall, but the current atmosphere seems to reward boundary-pushing more and more. There's never been a better time to be a stress-resistant psychopath or its company equivalent.

api• 4 years ago

This assumes that you have a legitimate business at all. A lot of these ventures quickly discover that there's just not much there, that all of crypto is just people gambling on number go up. At that point what do they do? Go down with the ship or exit scam?

spaetzleesser• 4 years ago

Greed or hubris? Bernie Madoff had a legitimate successful business before he started his Ponzi scheme.

outworlder• 4 years ago

Most people don't preside over popular exchanges with billions in customer funds.

It's a self-selected group.

danans• 4 years ago

Some - not all - very wealthy people don't feel constrained by what is legal, moral, or enough. Being very wealthy can mean you don't derive your security from your community moral standing, but instead by purchasing security.

And they are not necessarily wrong in the logical sense, because as a society, we have allowed much financial crime to go unpunished or mildly punished so there is low deterrence effect for such people.

bombcar• 4 years ago

It all starts with making a mistake. To cover for the mistake, you make another gamble, and if it doesn't pay off, then the whole process begins.

This is why when you make the mistake, you open up and own it.

shagymoe• 4 years ago

I think many people are programmed to seek a continual sense of improvement and accomplishment to feel our life is progressing and not regressing or staying static. If you already have a billion dollars and everything you could possibly want, how do you achieve that feeling? Maybe through altruistic work, but that's not your MO. Your MO is making money, so the answer is: 2 billion.

papito• 4 years ago

That's an achievement just as much as starting the next bottle of bourbon after finishing the first one is an achievement. There is happiness hiding in that SECOND bottle/billion.

legohead• 4 years ago

Presumably he started with ill intentions.

Let's see.. 125mil right now, or 1mil over the next couple years.

JohnFen• 4 years ago

Because greed knows no limits.

sam_goody• 4 years ago

Pigs get slaughtered.

Example: Carlos Ghosn was simultaneously CEO of Renault, Nissan, and Mitsubishi. He turned two of those from bankruptcy into the 4th-largest auto group in the world. He met all the world's leaders and spoke in all the high places. And made probably $10M/month.

And he stole $8M.

Was caught, lost all his positions, and is living the life of a fugitive. Had to be smuggled out of Japan in a box.

Don't be a pig.

[Note, story is from memory, might have some details fuzzy - but easy to research.]

rvz• 4 years ago

So not exactly the great Houdini after all. [0] Oh well. You can run but you can't hide alive.

Now he has all the time to practice his disappearing tricks in prison. By the time he has perfected it, he would have already disappeared from life itself.

[0] https://news.ycombinator.com/item?id=26911159

ralmidani• 4 years ago

Just wait for Proof-of-Stake to be implemented. It will solve all of the problems people complain about with Crypto.

djschnei2• 4 years ago

ycta20223249009• 4 years ago

Along with the rapture and the year of the Linux desktop, I'm sure.

salawat• 4 years ago

Don't forget the ascension of Hurd as the globally preferred kernel.

aaaaaaaaata• 4 years ago

Chromebooks are being anti-trusted out of schools globally.

I think Desktop Linux came, won, left, and nobody wants to admit it.

bsedlm• 4 years ago

essentially turning that crytpo into the financial system that the original crypto (bitcoin) was trying to differentiate itself from (or make obsolete, we do not know satoshi's political intentions)

browningstreet• 4 years ago

What I most enjoy about crypto is the special language it has for everything.

knorker2• 4 years ago

It's how they can claim to "invent" things, as opposed to what's actually going on which is regurgitating failed and banned (for good reason) ideas.

dereg• 4 years ago

Really? Can you tell me where perpetual swaps and automated market makers were used in the past?

daenz• 4 years ago

The phrase "rug pull" is almost cartoonishly evil. It implies waiting until the victims are feeling nice and secure, and then you rip everything out from under them as quickly as possible. The fact that the phrase has become so closely related to crypto activities is really telling.

mikotodomo3• 4 years ago

What did you say, ?

jmyeet• 4 years ago

With good behavior he could be out in 28,395 years do he’s got that going for him.

We need more of this, more jail for corporate malfeasance. Fine just become the cost of doing business.

Compare this to China who executed two executives over contaminated infant formula [1] whereas we were almost rewarding Abbott for similar malfeasance.

[1] https://www.nytimes.com/2009/11/25/world/asia/25china.html

capableweb2• 4 years ago

The Albanian minister for internal affairs, Bledar Chuchi, said that the fugitive's identity was confirmed post-arrest by biometric results: Özer had apparently shaved his head.

Seems they might not even have realized who they arrested until they tested him, or they just re-confirmed who it was post-arrest. If the former, any idea what he initially got arrested for?

xmprt• 4 years ago

Different countries have different laws but generally you're allowed to arrest someone when you have reasonable suspicion that they've committed a crime (say 99%) and then only confirm it 100% once they're arrested.

capableweb2• 4 years ago

Yeah, I understand that, but you still need reasonable suspicion, and I don't think generally police in various countries are A) aware of all the faces on the Interpol lists and B) suspect people of fraudulently closing down cryptocurrency exchanges and running away from their countries.

gzer0• 4 years ago

Wouldn't it be easier to simply pay someone to hack you and then tell the public, "We were hacked and all of our funds were stolen"?

What prevents someone from doing this? It allows for perfect plausible deniability, and there is nothing that can be done about it.

MichaelCollins• 4 years ago

What prevents someone from doing this?

Paranoia probably. Is there anybody you could trust to do something that illegal with that much money, that wouldn't ghost you after they had it? Maybe close family or friends, but the closer they are to you, the easier the plot is for investigators to unravel.

senectus1• 4 years ago

Asking the wrong question, because "prevention" or prohibition never works.

We should be asking what drives people. if we can shift the drive from accumulating wealth to accomplishing great things...

perardi• 4 years ago

…um, that’s a funny definition of “perfect” when you have a hacker with a Signal message history that they can use to blackmail you to hell and back.

aqme282• 4 years ago

Why pay an anonymous hacker when you yourself can just be that anonymous hacker?

csense• 4 years ago

How could this possibly go wrong? Let me count the ways:

- You pay the hacker to hack you, the hacker takes the payment and disappears.

- The hacker hacks you, steals all the money for themselves and disappears.

- The hacker turns you in and collects a reward from the government, because the hacker has a moral conscience | is actually a Fed | decides getting a small amount of reward money legitimately from the government or potential victims has a better risk/reward tradeoff than conspiring with a stranger to steal a huge amount of money.

- The hacker hacks you, but keeps records of messages showing your complicity and blackmails you with them.

Basically it boils down to:

- No honor among thieves (you can't just trust the hacker to keep his word if he has a lot of incentives to break it)

- The courts won't help (generally if you say in court "I paid this guy to commit a crime and he took the money but didn't commit the crime," not only will the court refuse to enforce the contract and order the hacker to pay you, but you've now confessed -- under oath, no less! -- to being involved in a crime, which makes it quite likely you'll be arrested on the spot and prosecuted for your actions)

- Physical violence doesn't work well on the Internet. (Traditional organized crime enforces its "contracts" by threatening or carrying out physical violence against contract breakers or their family. This would only work if you knew your hacker's real name and location, and presumably the sort of people who sell illegal hacking services to anonymous strangers are quite, um, shy about giving their clients any information about their identity or location, for exactly the reason they don't want a crazed client to show up and physically attack them.)

rosnd2• 4 years ago

The guy steals over $100M and decides to hide in Albania of all places? What's the deal with that? He could've paid less than $10k to get into Schengen (super low risk, the "high end" operators will drop you from a plane with a skydiving instructor) and had much more places to hide and way better places to spend his money at.

bestbuyer__• 4 years ago

Or someplace where Interpol does not operate, or which doesn't have an extradition treaty with Turkey.

rosnd2• 4 years ago

Or someplace where Interpol does not operate

That's hard. But Interpol isn't a real concern anyways, how often have you had your fingerprints taken during your daily life?

Fake IDs aren't hard to come by, even manufacturing a good enough EU ID card at home isn't very hard.

Crypto CEO behind $2.5B 'rug pull' arrested

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