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Bitcoin Crime Technology

A Manager of the Exmo Bitcoin Exchange Has Been Kidnapped In Ukraine (bbc.com) 82

CaptainDork shares a report from BBC: A manager of the Exmo Bitcoin exchange has been kidnapped in Ukraine. According to Russian and Ukrainian media reports Pavel Lerner, 40, was kidnapped while leaving his office in Kiev's Obolon district on December 26th. The reports said he was dragged into a black Mercedes-Benz by men wearing balaclavas. Police in Kiev confirmed to the BBC that a man had been kidnapped on the day in question, but would not confirm his identity. A spokeswoman said that the matter was currently under investigation, and that more information would be made public later on. Mr Lerner is a prominent Russian blockchain expert and the news of his kidnapping has stunned many in the international cryptocurrency community.
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A Manager of the Exmo Bitcoin Exchange Has Been Kidnapped In Ukraine

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  • obligatory XKCD (Score:1, Insightful)

    by Anonymous Coward

    https://xkcd.com/538/

  • by Gravis Zero ( 934156 ) on Friday December 29, 2017 @06:07AM (#55827153)

    this is not how ransomware works. ;)

    • by Anonymous Coward

      maybe, but given the funds he likely has access to this may be far more profitable than ransomware!

  • by Applehu Akbar ( 2968043 ) on Friday December 29, 2017 @06:07AM (#55827155)

    This traditional form of crime has fallen out of favor in modern societies because of the increasing difficulty of making an untraceable money drop. Ransoms in cryptocurrency eliminates this problem. Now we can expect to see kidnapping's comeback in the US and Europe.

    • by ffkom ( 3519199 ) on Friday December 29, 2017 @07:05AM (#55827305)
      Cryptocurrencies do not make "untraceable money drops" more easy - on the contrary, if you transfer such money from some legitimate account to that of a criminal, every future use of that money is recorded in detail in the "distributed ledger", ready to be used for investigation now or in 30 years.

      So unless your goal as a criminal is to some day die with $$$$ in some unused Bitcoin account, you have exactly the same problem of money laundering as with every other currency. Any non-criminal merchant, whether it is an sports car seller or a pizza delivery, will not have any reason to help you with hiding your association with some Bitcoin account number.

      So all police needs to do is to follow back the chain of transactions from the first such legitimate merchant back to the first legal entity who would not want to reveal the source of the money, and jail them, either for money laundering, or for the theft of the money.
      • by Applehu Akbar ( 2968043 ) on Friday December 29, 2017 @07:33AM (#55827377)

        Cryptocurrencies do not make "untraceable money drops" more easy - on the contrary, if you transfer such money from some legitimate account to that of a criminal, every future use of that money is recorded in detail in the "distributed ledger", ready to be used for investigation now or in 30 years. .

        If this were true, then why would there be a ransomware problem? Now that entire national healthcare systems are getting hit, intelligence agencies have a strong interest in tracing the path of ransomware payments so that the perpetrators can be quietly strangled with their own intestines as an example to their cohorts.

        No, apparently all you have to do is 'tumble' coins through a few exchanges and that blockchain of custody no longer functions as a tracer.

        • by TheRaven64 ( 641858 ) on Friday December 29, 2017 @07:56AM (#55827421) Journal

          If this were true, then why would there be a ransomware problem?

          Several reasons. The first is that you don't need anonymity for ransoms, you need the perception of anonymity. Ransom demands are possible when the criminal believes that they can receive the payment anonymously, there is less of a requirement that this belief be well founded.

          The second is that you actually don't really need anonymity for ransomware at all, you just need to be able to get the money past law enforcement boundaries. If, for example, I were in North Korea and released ransomware, then it wouldn't matter that everyone could see where the money went to, I'd still be safe from anyone arresting me.

          The third is that tracking the money is only part of the problem. If a law enforcement organisation determines that money sent to a bank account was illegal, then they can freeze the account and they can reverse the transaction. There is no way for a third party to freeze a bitcoin account, so you can watch everything that the criminal spends money on, but you can't stop them spending it (unless you can somehow persuade everyone not to accept money from that wallet).

          Finally, even without cryptocurrencies in the mix, money laundering is a thing. Bitcoin makes this relatively easy: I can send my bitcoins to an exchange, turn them into some other currency, and then take that money to another bank account and then back to an exchange and turn it into Bitcoin. Now there's no record in the public ledger that the money that I withdrew and put back on the block chain are the same. Money went into a pot and then came out again. You can avoid even that with mixer services, where you deposit an amount in bitcoin and withdraw the same amount (or a fraction less). All that the blockchain then knows is that 1,000 people each put 1 bitcoin in and 1,000 people each got 1 bitcoin out (in a different wallet, if they weren't idiots) and so there's no easy way of tying the individual money trails together. If you can get the records associated with the mixers, then you can recreate this, but there's no guarantee that they even keep useful records.

          • Your last paragraph precisely echoes my point, and explains why ransomware works. If you tumble coins through a few fast swaps of one currency for another, the blockchain no longer operates as a tracer and you can get away with whatever form of laundering you want.

          • Of course, science informs that high energy particles from the Sun sometimes alters parts of the blockchain, forming a mutation called a fork.

        • Because ransomware takes advantage of jurisdictional hurdles by operating from foreign countries. You can't kidnap someone who's in another country.

      • by cfalcon ( 779563 )

        The blockchain may be an immutable ledger, but it still appears easy enough to launder cryptocurrencies. Whether this laundering is fully effective, I have no idea- but clearly the bad guys believe it to be so, which is all you need for malicious behavior to manifest.

      • So unless your goal as a criminal is to some day die with $$$$ in some unused Bitcoin account, you have exactly the same problem of money laundering as with every other currency.

        Since when has the "problem" of money laundering been a valid deterrent? One would think this fact would have been rather obvious to anyone looking back over the last century of crime.

        Any non-criminal merchant, whether it is an sports car seller or a pizza delivery, will not have any reason to help you with hiding your association with some Bitcoin account number.

        Again, look at history. People who launder money get paid for taking that risk. They do it for the same greedy reasons anyone from petty criminals to big bankers (Wells Fargo) do unethical and illegal shit; because it's often worth it.

        So all police needs to do is to follow back the chain of transactions from the first such legitimate merchant back to the first legal entity who would not want to reveal the source of the money, and jail them, either for money laundering, or for the theft of the money.

        The ransomware problem is not shrinking because they've made some miracle breakthrough in

        • People who launder money get paid for taking that risk.

          Sometimes the payment is not getting shot.

    • President Trump, who knows more about taxes than any CPA, will sign an executive order mandating that ransom payment blocks embedded in the chain be coloured blue.

    • Kidnapping is OK as long as you don't post it on the Intertoobz.

      Then it becomes a sex crime.

  • With so many Bitcoin exchanges failing to exchange and making it extremely difficult, it comes at no surprise to me that something like this would happen.

  • a good way OUT OF the ukraine, so he shouldn't look a gift horse in the mouth.

    • by Ash-Fox ( 726320 )

      a good way OUT OF the ukraine, so he shouldn't look a gift horse in the mouth.

      You could just drive or take a flight out of Ukraine (a friend of mine returned from Ukraine yesterday)?

  • Nothing to see here.

  • by Anonymous Coward on Friday December 29, 2017 @06:45AM (#55827263)

    1) Set up a bitcoin selling site
    2) Collect enormous amounts of money
    3) Claim you have been hacked [google.com], kidnapped by gunmen/aliens/ZOG etc.

  • Instead of terminating his VPN access, Exmo should redirect his logon to a separate honeypot server whose wallet database only has a handful of keys that add up to a few dozen bitcoin. Lerner can lie and say "yep that's everything, we covered it up due to embezzlement" or say "they must've revoked access to the database except for this one old backdoor database they forgot about" and hopefully they'd let him off with that. And of course the other exchanges have been notified ahead of time to blacklist those

    • Might just have to settle for the guy being released and a few bitcoins being swiped.

      Or the kidnappers might settle for killing the guy because a few bitcoins isn't worth the risk that he could identify them.

  • go messing with the monopoly that the global central banking system has on the world's fiat currency and bad things are going to happen, look what happened to Lincoln for his green-backs, and JFK for executive order 1111, it was for trying to wrestle control of the monetary system away from the banking cartel that runs the world's currencies

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