The fact that their coins were apparently easily stolen also debunks another favourite talking point of the crypto people that it secures your money from government access. Clearly, ways and means have been developed to do just that if necessary.
That's not what you do if you just stole everyone's money / should run...
In order to seize someone's cryptocurrency, the government has to literally seize the private keys used to sign transactions. This could be as easy as seizing computers containing the key but it could also be as hard as torturing people until they reveal their seed phrase.
They can't simply order the banks to freeze people's assets. They have to physically go there and try to seize them. This puts a limit on the scope of their operations. It's just like surveillance: encryption makes dragnet espionage harder but it's still perfectly possible for a target to be attacked directly.
https://www.treasury.gov/ofac/downloads/sdnlist.txt
> Digital Currency Address - XMR 5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320;
Note the lack of the 0x prefix. Here's the transaction on the block explorer:
https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207...
You ask that like it seems implausible. To me, given what we know, it sounds light-handed for them.
https://www.nytimes.com/2016/03/30/world/europe/russia-chech...
So which of the following is most likely:
- the government has a tool that can break private key encryption and used it to confiscate a hacker groups funds
OR
- whoever controls the groups wallet transferred it out and is on the run
Someone got a little sloppy on their payment processing server (also seized) or with maintaining separate wallets and control of that server allowed sending of payments to an account specified by whoever was in control - likely since the server was for paying affiliates.
My read is that tax enforcement failure is intentional, lubricated by political donations and influence, vs incompetence.
See the high-net-worth enforcement group at the IRS that was quickly shut down for murky reasons.
There is something called the "gun test". The crypto on an encrypted hard drive is not more secure than the gold bars in a locked safe. Its security is a function of how the secret holder response to gun-on-their-head events. In this case, since the government is directly involved (and angry), a lot of criminals may pick personal safety over assets.
Frankly, I think a large portion of cryptocurrency proponents are overly confident in its "decentralization" and "safety". Cryptocurrency is only as safe as gold bars in a locked safe; and worse if you use a public exchange.
In cryptography, rubber-hose cryptanalysis is a euphemism for the extraction of cryptographic secrets (e.g. the password to an encrypted file) from a person by coercion or torture[1]—such as beating that person with a rubber hose, hence the name—in contrast to a mathematical or technical cryptanalytic attack.
If you're tortured to keep revealing keys to deeper and deeper volumes, eventually you're going to hit a point where there are no more volumes, but you can't prove it.
I think the original threat model was someone willing to torture you, but willing to accept plausible deniability once you'd revealed some moderately sensitive information.
In reality, if someone is willing to torture you a couple volumes deep, there's a good chance they're going to just keep torturing you forever. Rubberhose may still work in this model, since in theory the promise of avoiding torture loses most of its power. The downside is that once you format a partition with Rubberhose, you're resigning yourself to being tortured forever.
All the cryptographic, air gapped security hardware doesn’t matter if someone can beat the keys out of you.
That's usually the problem that people who pay a lot of taxes have with the taxes.
It's very hard to do this with gold.
B. To bury gold you must transport the valuable property in meat space to your hiding spot after acquiring it. With cryptocurrency, you hide the secrets before they have value and transfer the funds to them without new data actually traveling to the hiding spot, electronically or physically.
With state actors, you have to assume they have access/backdoors to most modern computing devices, and that device has to connect to the internet only twice - feds activate the backdoor and give it instructions, and have the device send the requested info back to the fed.
Minix being the most popular operating system, thanks to Intel-backdoor-on-a-chip, is only the tip of the iceberg.
If that's not enough and anyone of them is in the USA they do have access
Can your wallet be hard to crack? Yes but either use your zero day to get all data including a Password or book a little bit of supercomputer time for brute forcing.
They might have linguists available to help out with a dictionary attack.
As aluminum foil hat this might have sound in pre Snowden that's how it could have been played out.
What you store is your private key.
Your private key was generated together with your public key, and your public key is, well, public.
So the question is, can someone re-generate your private key?
In theory, yes, it is possible. In practice, it takes a very very long time.
But sometimes flaws are found in the generation process, like a weak pseudo-random number generated used, which significantly reduces the solution space, and then it becomes feasible.
Most people serious about cryptocurrencies do not trust computers/harddrives anymore since years. They use "hardware wallets", which are HSMs with a very small attack surface. It's not impossible that hacks happen but there's a gap so wide between "a Windows 10 computer running some Bitcoin software wallet" and "a Ledger Nano S" hardware wallet that it's basically two different worlds.
Think a Yubikey (with a tiny screen) to cryptographically sign your transaction.
$5 wrench attack still works but compromising your private key(s) by "logging every OS keystroke in the name of telemetry" or "using one of the tens JavaScript 0-day from today" doesn't.
The idea behind these cryptocurrencies hardware wallets is that ANY computer you connect them to is compromised (which is precisely why you're using an hardware wallet) and that, yet, that's not a problem.
I have to say: it's not a bad way to think about computer (in)security.
Credibly threatening repeated 51% attacks against Bitcoin is well within any G7 member’s budget.
Semiconductor production can't be scaled up instantly, so 51% attacks require seizure of assets.
Even if the USA purchased every single CPU, GPU, FPGA, and ASIC made in the next month, it's unlikely they will have more than 10% of the network or so.
To seize the majority of the hashpower, they'd have to seize Chinese miners, which require either US-China cooperation or a world war.
The latest and greatest Intel i7 can do maybe 30 mh/s.
You would need more than all cpus produced in history. I can believe G7 secretly having a third of total known CPU compute.
I can't believe G7 secretly having multiples of all known CPU compute.
I don't consider that the most likely scenario, but something in the willingness to declare defeat got me into "what if" mode.
"BTC is bad cause it can be used by drug dealers to launder money"
"BTC is not even secure from government access"
Surely someone will point out both can be true but the point is the anti-btc folks seem to be talking out both sides of the mouth
The most beautiful being: "The cryptocurrencies scam should all stop but, please, let us collect all the due taxes on the gains you made".
From that standpoint which one is it: are they legal or illegal? Because it's funny that they both want it to be illegal, yet they want people to pay taxes on the gains they made.
Hypocrites.
In this case even the pros messed it up, but this is a very high profile case with undoubtedly a massive amount of manpower thrown at it in various agencies. You don't mess with USA's oil.
And even then it's unclear if the money was actually confiscated.
Can you explain how you reach this conclusion? It doesn’t seem to follow.
Both of those seem pretty hard to be true at the same time
That’s what doesn’t seem to follow.
Cash, for example is hard to trace if the serial numbers haven’t already been recorded, and good for money laundering, for example, but it doesn’t secure your money from government access if the government puts resources into it.
It just demonstrates that they're incompetent.
Beyond all the technical discussion about the value of cryptocurrencies I never believed that the idea that everybody would carry their cryptocurrency wallet with them at all time was in any way realistic. People would get their wallet stolen, destroyed or lost all the time, locking them away from their savings. The vast majority of people will prefer having the peace of mind of entrusting their coins to a third party who'd handle the technical details and provide insurance against lost and theft. And just like that we've reinvented banks.