He emptied an entire crypto exchange onto a thumb drive

https://www.wired.com/story/faruk-ozer-turkey-crypto-fraud/

by Bluestein • 2 years ago

52 57 2 years ago

wired.com

Bluestein• 2 years ago

- https://archive.is/H9Xcv#selection-595.0-595.76

sixhobbits• 2 years ago

Maybe title could be changed to something less clickbaity like

Faruk Özer, Thodex Crypto founder - 11000 year sentence for $2 Billion Heist

gedy2• 2 years ago

Not really involved with crypto, but if I had large sums of money in it, I would never store this on an exchange. Seems so risky. Can anyone ELI5 why people do this?

dboreham• 2 years ago

Lazy? Perhaps a bit of: whatever other option I use could be even less safe.

golergka• 2 years ago

I often leave up to $1k on my account to pay for occasional stuff that I need to pay for. May be people who leave huge amounts of money there do the same, but they're rich and their stuff is much more expensive?

beaglesss4• 2 years ago

For trading with lower latency / no confirm time.

Non-KYC exchanges outside the US and sharp deranged claws of the FTC and DoJ typically depend on exchange held crypto if you want near instant clearing for futures and securities trading etc.

_heimdall2• 2 years ago

In the case of something like bitcoin, lower latency / no confirm time means you are avoiding the very blockchain that is meant to be the bedrock of the currency's value. What's the point?

phire• 2 years ago

Two main reasons:

1. Self custody is hard. You need to understand how to setup a wallet. If you lose the keys to that wallet, your money is gone. Opening an account on an exchange is so much easier, and there is usually a way to reset your password if you forget it.

Exchanges provide an online-banking style experience that most people are already familiar and comfortable with.

2. Access to markets. If you hold funds somewhere else, it takes quite a bit of time and effort to move it back onto the exchange so you can sell it later. It only really works for people who want to buy some coins and stuff them under their mattress until later. For anyone who wants to play the markets, you kind of need to keep your coins on the exchange.

Additionally, holding coins on the exchange is free. You don't have to pay the transaction fees to withdraw and deposit, which can add up, especially on congested blockchains like bitcoin and ethereum.

beeflet• 2 years ago

The whole selling point of cryptocurrency is to avoid the online-banking experience

nyanpasu64• 2 years ago

I found that many exchanges/custodial wallets (I've tested Kraken and CashApp) charge fees or imbalanced exchange rates for converting fiat into crypto and sending crypto to another address (often using a bulk transaction exchanging money between the exchange's wallet), so I wouldn't say you avoid transaction fees that way (they may or may not be reduced). I ended up using them anyway because it's easier to purchase crypto as a number on an exchange than to have it sent to your personal address.

Kiro2• 2 years ago

Managing your own keys is stressful. You go around worrying that the hardware has failed or that the seed words won't work. Never again.

_heimdall2• 2 years ago

Legitimate question (I expected this will read poorly).

If you don't trust that seed phrases, which are a fundamental piece of how bitcoin key pairs are designed, will work why would you ever consider investing in bitcoin?

I totally get the stress of self custody. I just don't get why anyone that stressed about it would bother buying bitcoin.

m463• 2 years ago

It all just reminds me of Steve Martin's old comedy routine about banks.

I mean, like, take, say you get out college or whatever you're doing. You're gonna go into business; say you're going to open a bank. Now you, just for example, you've got to give it the right name. It's got to be something big and strong like Security First Trust and Federal Reserve. And you have to name a bank that because nobody is going to put their money in Fred's Bank. "Hi, I'm Fred. I have a bank. You got $1,500? I'll put it, I'll put it here, in my white suit. White suit, right-hand pocket. Ok, you gotta remember that."

(you probably have to listen to get all of it)

itake• 2 years ago

To add on to the trading latency benefit:

During the Terra collapse, there was a 2-day period where Terra's price was supported by a massive BTC reserve. Those with Luna on exchanges could quickly exit their positions, but those with Luna in wallets or locked in Anchor Protocol faced hours-long delays for their currency to be confirmed and traded.

y04nn• 2 years ago

By the way, because a lot of people are keeping their crypto on exchange, would it be possible for an exchange to have fractional reserves like for banks? It is probably doable for big exchanges as trades happen on a platform they control anyway and crypto only goes out when a customer sends money to an external address. They may be able to keep only a third of customers account balance and still operate as usual.

tomaskafka• 2 years ago

Yes, the solid ones keep the rest in the cold storage, the remaining ones steal the rest and lie to clients about the money existing:).

immibis4• 2 years ago

Most exchanges are suspected to secretly run fractional reserves.

Binance in particular has its own blockchain and gets to run fractional reserve on most of the assets bridged to that block chain - the bridge keeps the real copies of the assets while only "shadow copies" are "projected" onto the Binance chain and traded.

yieldcrv• 2 years ago

CTRL+F “AS “WANTED” FLIERS with Özer’s picture went up” if you actually want to continue what the headline was about

This is long form essay has completely unnecessary exposition. Turkey has high inflation and alot of people buy crypto to escape it, one sentence. Next.

dools10• 2 years ago

“Money is an agreement between a government and its society in terms of national unity. But on the other side of the medallion, if everyone leaves the fiat—if everyone leaves the social agreement of their nation—it could derail the world.”

The sooner everyone actually learns what money is, the sooner we can stop with all of this foolishness.

Money is a tax credit. It is a token that the sovereign who imposed the tax in the first place will accept back in payment of taxes.

That's it. Without taxes, there's no money. The "social contract" part is more about resources than money. By imposing the tax, the sovereign creates unemployment in terms of a currency only it can issue, and thus is able to provision itself.

methyl• 2 years ago

Without taxes, there's no money

why?

nsomaru• 2 years ago

I believe the argument goes like this: "fiat" depends on a declaration by a government that something has value. The way a government does that is by declaring something legal tender and accepting taxes denominated in that currency.

Contrast with a time when currency was pegged to a physical asset like gold and GBP so no depreciation in something like 300 years. Savings actually had meaning.

pstrateman• 2 years ago

It's the only thing you really need money for.

If you don't pay your taxes in your nations currency you go to prison.

beaglesss4• 2 years ago

What would drive a currency with no demand? Money almost always ends up as a commodity itself (gold/silver/ramen packets/cigarettes), commodity backed, or as a token to prevent the state from tossing me in a tiny cage.

In most crypto, the commodity isn't very clear. I attribute it's rise largely to the tax authorities and the FATF snuffing out anonymous banking and bearer shares and most high denomination notes around that time, creating massive demand for an alternative that crypto largely fills.

Log_out_• 2 years ago

https://en.m.wikipedia.org/wiki/Somali_shilling

thaumasiotes2• 2 years ago

Surprisingly many people are willing to argue for positions that are directly falsified by even the most cursory investigation, that's why.

Money is considerably older than taxation in money is.

dotancohen2• 2 years ago

Hard disagree, even if you are quoting someone famous.

Money is a fungible form of exchange so that I can sell widgets and can buy foobars later. Many of my Bedouin neighbors pay no taxes, but they use the same money I do - both accepting it and paying in it.

dools10• 2 years ago

Many of my Bedouin neighbors pay no taxes, but they use the same money I do - both accepting it and paying in it.

The demand for that currency traces back to the willingness of the issuer to accept it back in payment of taxes.

People use the USD in all sorts of places where taxes aren't due in USD, but if the US government said "you can't pay your taxes in USD anymore" then it wouldn't take long for the USD to have no value.

Even when money is constructed from a commodity, its value is derived mostly from the nominal value ascribed to it by the sovereign.

That's why ancient coins still exist.

EGreg• 2 years ago

Warren Mosler, is that you?

Seriously, though, I had this exact conversation with him when I first launched Intercoin back in 2018 and reached out about advising us on economics (I had interviewed many economists since then). He said he never saw any currency that was in use that wasn’t accepted for taxes. I asked what about Bitcoin and all those other cryptos.

Actually, money doesn’t require government. It simply requires a network effect, same as language, religion and culture (which also don’t require government force). Money is just the most liquid asset in a specific network. Its value comes from others accepting it for goods and services.

You may want to watch some of my discussions with economists of different schools:

https://www.youtube.com/intercoin

Or you might want to read articles like:

https://community.intercoin.app/t/rolling-out-voluntary-basi...

https://community.intercoin.app/t/local-community-currencies...

dools10• 2 years ago

I asked what about Bitcoin and all those other cryptos.

They're not money, they're a hybrid of commodity and payment system.

in_ab• 2 years ago

I don't think this was worth the long article. Sounds a lot like the SBF of Turkey.

crummy• 2 years ago

Two days later my apartment in Istanbul was ransacked in a way that seemed like a stern message. The wood on my front door was split open by force, and the contents of every drawer and cabinet were tossed around. The lock to a safe was snipped open, its contents—expensive camera equipment and cash—remained untaken. Even a laptop on the entry table appeared untouched. I canceled the trip.

This is a crazy part of this story! Presumably this means Ozer had friends in high places, but he didn't seem to implicate them in the trial?

oefrha• 2 years ago

Pretty bad article. Author is more interested in detailing their own hunt for the guy and inserting themself into the story (apartment trashed after booking a plane ticket?) than establishing basic facts about the crime.

I’m not even sure about the most important thing after reading the entire article — how much did the guy actually steal? It’s reportedly $2B from 400k people at the time, but the dude claimed in court that there were only 2027 claimants claiming $45m (is that true? Should be easy to establish from court documents), and dude claimed to have paid back $10m to 1000 people, after which “when the cold wallet was empty, he threw it into the Ionian Sea” (wat?). There’s zero comment from the author on this two orders of magnitude discrepancy, wtf.

He emptied an entire crypto exchange onto a thumb drive

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