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.
Or one of the members of the criminal gang ran off with all the cryptocurrency and then made a public post claiming some form of law enforcement seized the crypto.
According to the blog post, they said their payment server had been seized. The payment server must hold or have send-access to a Bitcoin wallet if it can make payments. By seizing their payment server, they also siezed the Bitcoins.
Oh, somehow failed to see your post before writing mine. The perpetrator of the "all for myself" starting the state actor claim themselves makes even more sense! Why anger your partners when you can just point a finger elsewhere?
> debunks another favourite talking point of the crypto people that it secures your money from government access
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.
There are other possibilities - for example they can maintain a list of tainted coins, and declare them illegal to transact. This can then be enforced at the level of exchanges.
I don't see anywhere that the coins where stolen by the government. It could have been done by an insider from the group who had access to the wallet and 1. transferred to himself or 2. the damage and attention was to much for one of them and some ethics kicked in and ratted out the group to government. gave them his access. 3. the group got scared from the attention and stopped their operation and lying about the seizure, because at this point we don't even know if anything was seized at all, that info comes from the criminals which is hard to trust and wasn't confirmed by official reports yet.
This is the most puzzling part of the story. These guys were evidently pretty skilled. I can see their servers being seized but I am struggling to figure out how they lost their currency. Did the Kremlin put a gun to their head and say “unlock the wallet”? This seems especially fishy.
It takes less skill than you might imagine to buy ransomware on the black market and deploy it. You don’t need to write it yourself, you just need to handle the extortion side of things.
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.
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.
Also perhaps a fair reason for some part of taxation. Owning millions in .*coin, and the ability to freely wander around in a first world country while not getting hit with a wrench has a whole lot of value.
Indeed, something I've tried to communicate to wealthy friends and family is that a higher tax rate,used halfway effectively, means you don't have to live in a gated community, in fear. You can roll around in your Ferrari, live where you want, and be reasonably safe.
This is commonly referred to as Rubber-hose cryptanalysis:
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.
Julian Assange and a couple of others developed a file stem called Rubberhose to avoid this problem. All of the filesystem structures, data, and free space are indistinguishable from noise without the decryption key. The system always sets up some portion of the filesystem as unusable space that's initialized to noise. This space may contain another Rubberhose instance, which would also have some unusable space in it.
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.
While I tend to agree with your argument, there is a difference: crypto is safe if no one knows it exists, or rather no one can link ownership to owner.
I think you're missing the point entirely. The government can't seize your virtual coins, but the only point of money is to spend it on actual goods, which the government definitely can seize.
A. You can store redundant copies in various secret locations.
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.
The hiding crypto from government entails im large part avoiding taxes, yet it seems like the government does not do much to recover lost taxes on current schemes such as fiscal paradises and so on. I doubt the governemnt would go as far as locating a harddrive, seizing it just for tax purposes. Something else must raise their flags for them to go that route. Also this route is very hit and miss in my oppinion and on a case by case basis
> They would need your private key and your hard drive?
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.
Note that hardware wallet attacks tend to get published at least once per year, but so far most/all of them have relied on physical access. Not just sending some buffer overflow via the USB link, but actually opening up the device and messing with capacitors or something.
How can one trust the hardware keys though? The manufacturer/supplier could have installed a backdoor (very reasonable to do, as people paying for these keys are likely to have sth valuable).
In general, you store the keys of your coins, not the coins themselves. Everything is inside the blockchain and the blockchain makes possibile to be sure that you have what you should have, thanks to consensus.
Based on Snowden's stories you can assume that they went ahead as fbi/CIA national security threat which could mean fast access to isps and using zero days they do have.
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.
As someone else said, you do not store coins anywhere, they are derived from the public ledger (block chain).
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.
iF you store your coins on a storage device not connected to a computer, maybe. As long as the government does not have access to the computer/phone the storage gets connected to, at any one time.
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.
aes 256 is as strong as the decryption key . even as few as 7 words from a 2000-word dictionary should thwart any attackers. A slow KDF makes it all but impossible.
Actually this ignores the fact that bitcoin uses ASICs now, and every ASIC built for bitcoin hashing is probably already hashing.
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.
I mean it doesn’t require ASICS, it’s just inefficient not to, right? Shouldn’t it be theoretically possible to mount a 51% attack with conventional CPUs (or GPUs), just a lot more of them? I have no idea what kind of computing resources various major states have, but I wouldn’t completely write off the possibility that they have enough CPUs to throw at the problem.
That's the point that got me thinking about the likelihood of a very different real story that might be going on. What if some individual or subgroup just ran away with the hoard? Some subcontractors/mid-level data henchmen could have tried to press compensation by threatening to release victim keys, and then a combination of disbelief, unwillingness to accept having gotten fooled by a peer and dreams of spy story grandeur conjuring up a fantasy about state involvement that they eventually believe themselves. Or at least like better than the alternative.
I don't consider that the most likely scenario, but something in the willingness to declare defeat got me into "what if" mode.
As the old xkcd comic notes, no amount of mathematically-proven security protects your encrypted data if the private keys can be beaten out of you with a lead pipe (or, the cleaner version of that, "If you can be incentivized to hand them over given the alternative of jail time that lasts until you divulge your computer's password to the authorities").
I think it's both: people who have something to hide for the government can make it pretty hard (but not impossible) for the authorities to track them down. On the other hand average people who don't have "anything to hide" have no reason to bother implementing these counter-measures, making it fairly easy to track their transactions on the public blockchain.
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.
A talking point to the dangers of Bitcoin and cryptocurrency is that it can be hard to trace bad actors using the network to launder money. The comment I replied too was stating "debunks another favourite talking point of the crypto people that it secures your money from government access."
Both of those seem pretty hard to be true at the same time
> 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.
> 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.
Not hypocritic at all. From a legal perspective even illegal made money is money made and therefore subject of taxation. Tecnically you even have to describe the means by that you have come to it. Otherwise you are commiting tax evasion. For example if you sell 100k worth of access to documented child abuse, you have to pay taxes on those 100k. Thats why you have to launder money made from illegal activities
This doesn't really improve the optics. If anything it makes it worse: if very technical people who clearly want to escape government oversight can't, what hope would my 60yo "I think Windows and Word are the same thing" father have to use them correctly?
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.
