Sophisticated $25M ethereum heist took about 12 seconds, DOJ says
- Thread starter JournalBot
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To receive such intellectual gifts and elite education and then only aspire to be crypto thugs...
Yet another harm from this cancer is that it diverts real talent into destructive / unproductive bullshit.
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EDIT, Responding to the "but there have always been smart criminals" argument: This feels like a re-application of the "gun control is dumb because knives exist" argument. The point isn't that smart people can't be criminals without crypto, the point is that it makes it easier for smart people to be criminals, which obviously leads to more criminals. It also attracts the attention of big money / power, who actively woo people into criminal enterprises. Would all the ransomware goons in Russia be doing something useful if crypto didn't exist? No. Would some of them? Almost certainly. I am completely comfortable saying the existence of crypto has increased both the amount and efficacy of crime in the world.
Yet another harm from this cancer is that it diverts real talent into destructive / unproductive bullshit.
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EDIT, Responding to the "but there have always been smart criminals" argument: This feels like a re-application of the "gun control is dumb because knives exist" argument. The point isn't that smart people can't be criminals without crypto, the point is that it makes it easier for smart people to be criminals, which obviously leads to more criminals. It also attracts the attention of big money / power, who actively woo people into criminal enterprises. Would all the ransomware goons in Russia be doing something useful if crypto didn't exist? No. Would some of them? Almost certainly. I am completely comfortable saying the existence of crypto has increased both the amount and efficacy of crime in the world.
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Legitimate question for legal minds here: how do you think the DOJ is going make their case and argument? Since the attack was against the blockchain validation mechanism and no individual financial institution, per se, will the argument hold up? It definitely passes the "if it smells like wire fraud and theft" test, but I'm curious if there is precedent for similar attacks or if this is a totally novel situation here.
EDIT: Or are they just being nailed on the shell companies?
EDIT2: Thanks, everyone, for the helpful explanations on the wire fraud charges. Basically, nothing novel to see here, just classic crook shenanigans.
EDIT: Or are they just being nailed on the shell companies?
EDIT2: Thanks, everyone, for the helpful explanations on the wire fraud charges. Basically, nothing novel to see here, just classic crook shenanigans.
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Part of me thinks “is this really wire fraud?” Wouldn’t it have to be a real security or currency for that? 
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They probably should have left the country before hitting the "steal $25 million" button.
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So victims are relying on "the old centralized system" and not the "unbreakable blockchain"?
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Steal $25 million of cryptocurrency because you found a way to change the "unchangeable" ledger: Arrested within a year and a half, charged with crimes and face 20+ years in prison.
Doesn't make their theft right, but it goes to show that wronging specific people will get you in trouble a lot faster than others. I hate this reality.
Edit changed my mind on one part of my rant.
Doesn't make their theft right, but it goes to show that wronging specific people will get you in trouble a lot faster than others. I hate this reality.
Edit changed my mind on one part of my rant.
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So smart enough to hack the Ethereum network. But not smart enough to use a VPN when planning a crime. Makes me wonder how much crypto money has been stolen that we don't hear about because the thefts are not as obvious.
Also way to go blockchain for again demonstrating that it is just like a regular database system but with extra useless complexity and more vulnerabilities.
Also way to go blockchain for again demonstrating that it is just like a regular database system but with extra useless complexity and more vulnerabilities.
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I'm not sure what issue you think you're identifying here. Wire fraud doesn't need to involve a specific financial institution, it just needs to involve some kind of financial fraud taking place across state lines. There's clearly a fraud here with identifiable victims who were harmed by the behaviour of the accused fraudsters. That the blockchain is an automated system that has no institutional oversight doesn't affect that at all.
That being said:
They should be given a medal for public service by calling the integrity of blockchains into question.
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Wow. A $25m heist without leaving the house.
I would think crypto fanatics might be a little concerned about such a possibility happening again, many times, in the future.
I would think crypto fanatics might be a little concerned about such a possibility happening again, many times, in the future.
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That's helpful. Like I said, I'm not a legal expert at the least. I was imagining it like someone handing you a bundle of cash to send to someone else, and you saying, "Nah, I'll just keep it," which to me, just sounded like regular old theft. Hence, my confusion with regards to their charges. So in essence, this is wire fraud, if done across state lines?
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I'm surprised that "someone manipulated the fundamental workings of the currency" didn't lead to any real price-change for ethereum. Surely smarter and less capturable foreigners are now working on an iteration of this attack.
2) The moment you point out it is useless as money thanks to volatile values and very slow and expensive processing, then it is a wonderful investment that you are supposed to hodl and never exchange for anything.
3) The moment you point out it is useless as an investment because cashing out is very hard to do, goto [1]
1) Crypto is a money-like form of exchange as long as it benefits a bros argument.
2) The moment you point out it is useless as money thanks to volatile values and very slow and expensive processing, then it is a wonderful investment that you are supposed to hodl and never exchange for anything.
3) The moment you point out it is useless as an investment because cashing out is very hard to do, goto [1]
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lol.
lmao.
Well, once again Ethereum pays exorbitant returns for the hungry Comedy GODL investor!
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Is ethereum defined as a financial fraud, any more than stealing v-bucks, simoleans, or isk would be thought of as financial fraud?
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The government should not help clean up these messes. Let people who want to trade in unregulated currency get the full scam experience.
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Yeah, it would have been funny if the DoJ was just like, this is some crypto bullshit, so whatever.
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I mean, I don't see how it matters where the attack originated if they defrauded the other people in the transaction.
If you induce me to give you something of value fraudulently (let's say in exchange for something you have no intent to give me), it shouldn't matter what method the fraud takes or how you get paid.
I'm pretty sure wire fraud covers even cash payments. The "wire" part just has to involve some element of the fraud. The statute merely required that some element of the fraud scheme be transmitted by wire or other electronic purposes. If you send me a text message telling me to leave a pile of cash at a specific drop spot, as part of the hypothetical fraud scheme I mentioned above, that ought to be sufficient to meet the wire part.
ETA: I am not an attorney and I do not practice criminal law. But I would still suggest this is a decent first-pass from skimming 18 USC 1343
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Half seriously: why bother prosecuting them? I detest crypto, and I mostly think the libertarian lunatics who love it have this kind of thing coming. A couple of MIT students burned arbitrage bots? So much the better. Code is law? You wanted to defang the state? Wishes granted.
To some degree, the DOJ getting involved in crypto lends the whole thing an air of legitimacy. Maybe if they let the libertarians figure it out amongst themselves, the whole thing would come crashing down--and the world would be a better (and literally cooler) place for it.
To some degree, the DOJ getting involved in crypto lends the whole thing an air of legitimacy. Maybe if they let the libertarians figure it out amongst themselves, the whole thing would come crashing down--and the world would be a better (and literally cooler) place for it.
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I'm gonna be bad for just a minute and say that this is impressive. Criminal, for sure, but impressive.
Blowing a gigantic hole in the whole "Blockchain is completely secure" trope really ought to earn these folks at least some leniency from the judge.
Blowing a gigantic hole in the whole "Blockchain is completely secure" trope really ought to earn these folks at least some leniency from the judge.
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As they say, all's fair in love and crypto. At least until you're the one getting screwed over, and then suddenly it becomes A Problem.
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Maybe Idiot Savant? Genius coders. Not so good at the ordinary how to not get caught parts.
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There have been intelligent criminals all throughout human history.
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wicked cool, more please. anything that damages the "reputation" of crypto is fine with me.
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Part of me thinks “is this really wire fraud?” Wouldn’t it have to be a real security or currency for that?
One of my more radical views is that crypto companies so desperately want to be outside government control, and try so hard to avoid paying taxes, that maybe we should let them, at least as concerns this kind of law enforcement. They don't want government control over anything, fine, they don't need to benefit from government-funded investigation and government-backed enforcement. You want to say Code Is Law, fine, the code says all that fake money belongs to the two kids from MIT. You're the one who thinks that should make it legal, stop expecting the rest of us to bail you out of your own bad designs and ideological choices.
I'm not. $25m of 'value' (scare quotes because good luck turning that into money you can actually use) is pretty modest on the scale of crypto heists. If there was any amount of 'the code is bad and you should feel bad because someone just stole all the fake money' was going to change any minds, it would have years ago.
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That’s what I was just wondering: how successful would they be arguing that everyone involved consented to use the system as implemented? It’s not like anyone can argue that they didn’t have a safe, reliable financial system available if that’s what they want to use instead.
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Part of me thinks “is this really wire fraud?” Wouldn’t it have to be a real security or currency for that?
Hah, technically this statute covers counterfeit currency as well. Admittedly, I don't think the authors anticipated a fraudulent transaction in which both parties were willingly exchanging counterfeit currency...
Still, my reading of it suggests that if you offered me a counterfeit Benjamin in exchange for one of my own hypothetical counterfeits, and you defrauded me in the process by not giving me yours (or whatever the equivalent here), this would still be illegal under the wire fraud statute, so long as you used some form of electronic communication in the process (which is almost inevitable).
To be clear, that would be the fraud of not giving me the counterfeit bill. It's not illegal to sell fake currency that is labelled as such (eg for use on stage). It's illegal to use counterfeit bills to defraud someone...and so thus it ought to be illegal to defraud someone out of counterfeit money as well.
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A VPN isn't going to hide much of anything from the authorities. Even TOR isn't much use against the FBI or NSA if they want to find you.
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