Bitcoin exchange owner gets 14 months in jail for lying about hack to SEC | Hacker News Reader

Bitcoin exchange owner gets 14 months in jail for lying about hack to SEC

decrypt.co

41 pointsnotlukesky13 comments

What's the incentive of lying that the hack didn't happen and he still had the funds? Just shame? I don't think it is very sensible to lie at that point. You will just get caught later and it will be more painful.

Most humans aren't cold thinking machines,so... mistakes are made.

Fraud and embezzlement are fraudogenic because people often make the choice to continue the game rather than accept a punishment for X, which requires putting a discoverable lie on the record and then increasing the stakes (and the rate at which the shadow liability grows). This causes frauds to often expand until they implode.

This is covered at length in a great book, Lying for Money. Specific examples in Bitcoinland include Mt. Gox, which survived through fraud for 3 years after it needed to wind up, and Bitfinex/Tether, which has not yet collapsed from the billion dollar fraud they are perpetuating.

>Bitfinex/Tether, which has not yet collapsed from the billion dollar fraud they are perpetuating.

Citation very much needed.

> After the theft, Montroll transferred some of his own bitcoin holdings to conceal the losses, according to the DOJ’s complaint. > https://www.cnbc.com/2018/03/05/founder-of-defunct-bitcoin-e...

Perhaps he thought he could just cover it up by using his own funds to cover the losses.

perhaps

> Founder and operator of defunct bitcoin exchange Bitfunder gets 14 months jail time for lying to regulators about the loss of more than 6,000 bitcoins.

In the early days, it was common to see "bitcoin" used as a mass noun - without the plural. For example: "He lost 6,000 bitcoin." More recent usage seems to have switched to the countable noun version (e.g.: "He lost 6,000 bitcoins.").

I speculate that countable noun usage causes problems when users try to reason about how Bitcoin transactions work. Many think of Bitcoin as an account system, where a transaction debits from one account and credits to another account.

Not true.

A bitcoin transaction is much more like giving another user a specific mass of metal in the form of one or more ingots, each one measured to the nearest microgram. Only, this is done by melting/recasting enough metal on hand into one more more new ingots with some combination of masses exactly equal to the the asking price.

The merchant then can combine or split the ingots she receives in the same to make a purchase later. There is no concept of an "account," only splittable and combinable pieces of metal with masses measured to the nearest microgram.

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

> In English (and in many other languages), there is a tendency for nouns referring to liquids (water, juice), powders (sugar, sand), or substances (metal, wood) to be used in mass syntax, and for nouns referring to objects or people to be count nouns. ...

Worse still, the use of the countable noun "bitcoins" encourages two misconceptions:

- a full bitcoin must be transacted because the countable noun version conjures and integral entity

- 21 million bitcoin(s) is too few to work as a world currency (no division)

Another currency with confusion around mass/countable noun status is the euro:

https://english.stackexchange.com/questions/13551/€10-ten-eu...

(long story short, both forms are used)

I would argue that the case for mass noun usage in Bitcoin is even stronger than for the euro, given the way it neatly maps as a real-world analogy to the underlying protocol.

You make all of these claims, and yet when I say I gave someone "3 dollars" no one thinks "a full dollar must be transacted because the countable noun version conjures an integral entity", and it isn't because of the existence of "cents": one often says "three and a half dollars". Meanwhile, the word "dollar" was itself originally _a unit of weight_ that represented a quantity of silver (371 4/16th grains), and so was in point of fact "much more like giving another user a specific mass of metal in the form of on or more ingots"... at which point you hopefully realize that, in most English, units of weight use countable nouns: we don't talk about "3 gram", we say "3 grams". Essentially, this becomes some kind of semantic question about whether "Bitcoin" is the measure (like dollars) or the metal (like silver), but as that distinction has been blurred now for a long long time with common currencies (such as the US dollar, which is measured in dollars), it seems like a totally pointless argument that, in fact, causes no practical confusion to anyone.

Shame they didn’t do anything like this in 2008.

14 months in jail in exchange for 70 million

IIRC, 6000 bitcoin would have been worth less than a million dollars when this occurred.

Not really. Wall Street and its captured regulatory body, the SEC want to kill the viability of Bitcoin as an alternative to their dollar for everyday purchases and widespread adoption. Part of that means throwing the book at everyone who runs a legitimate Bitcoin bussness.

People in the politically connected traditional banking industry do much worse than this guy on a daily basis and are never charged with a crime.

Not sure why this guy is getting downvoted. The things you can get away with as part of the established power structures in society is incredible.

How many years will John Corzine or Ken Lewis spend in jail?

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