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Bitcoin Crime The Almighty Buck

438 Bitcoins Worth Nearly $3.5 Million Stolen From Exchange In India, CSO Accused (indiatimes.com) 85

William Robinson shares a report from The Economic Times: Nearly 438 bitcoins, worth nearly $3.5 million, were stolen from a top exchange firm in India in what is being billed as the biggest cryptocurrency theft in the country so far. The exchange, which has over two hundred thousand users across the country, found that all the bitcoins that were stored offline had vanished. It was later found that the private keys -- the password that is kept by the company and is stored offline -- were leaked online, leading to the hack. The company tried to trace the hackers, but found that all the data logs of the affected wallets had been erased, leaving no trails about where the bitcoins were transferred. Coinsecure, a Delhi-based cryptocurrency exchange, is accusing its CSO, Amitabh Saxena, of siphoning off the money from the firm's wallet. The exchange is urging the government to seize Saxena's passport, fearing that he may leave the country.

438 Bitcoins Worth Nearly $3.5 Million Stolen From Exchange In India, CSO Accused

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  • The error was not giving half of them to the police.

  • by Anonymous Coward

    What an appropriate name!

  • Hahaha (Score:1, Troll)

    by Viol8 ( 599362 )

    Bitcoin - so much more secure than the banks! Hahaha! Stored in da cloud, blockchain, blah blah blah.

    Right.

    Bitcoin - the joke is on its users.

    • Re:Hahaha (Score:5, Insightful)

      by PolygamousRanchKid ( 1290638 ) on Friday April 13, 2018 @06:25AM (#56429875)

      Bitcoin - the joke is on its users.

      Unfortunately, when Bitcoin implodes, a lot of folks who are "too big to fail" will be affected.

      And so the bill will be placed on the taxpayers.

      The joke will be on our tab.

      • You are possibly sarcastic playing on the bail out. Well done. If you are not sarcastic : bitcoin even with "overinflated" value is 1/100 of the bailout value, and so far as I can tell no fiduciary institution was insane enough to buy any relevant amount.
      • Unfortunately, when Bitcoin implodes, a lot of folks who are "too big to fail" will be affected.

        And so the bill will be placed on the taxpayers.

        Doubt it. The 2007 crisis revolved around values in the the trillions concentrated on the financial sector of the USA. Bitcoin has a total market cap of $130bn spread across the globe.

        If the price was set to zero tomorrow, a few institutional investors may hurt, but it won't be a banks going bankrupt event.

    • by Anonymous Coward

      Bitcoin - so much more secure than the banks! Hahaha! Stored in da cloud, blockchain, blah blah blah.

      Right.

      Bitcoin - the joke is on its users.

      Uhm, what you fail to understand is that Bitcoin has nothing to do with with these incidents happening on exchanges. You handed them your money for safekeeping and to do trading on their platform; at this point they are technically no longer yours. If you don't know how it works, don't bother commenting.

      • Bitcoin - so much more secure than the banks! Hahaha! Stored in da cloud, blockchain, blah blah blah.

        Right.

        Bitcoin - the joke is on its users.

        Uhm, what you fail to understand is that Bitcoin has nothing to do with with these incidents happening on exchanges. You handed them your money for safekeeping and to do trading on their platform; at this point they are technically no longer yours. If you don't know how it works, don't bother commenting.

        It works like this: A key member of the exchange takes the property of exchange users, often Bitcoins, and then cries, "Omigosh! Hacksters!"

    • by sh00z ( 206503 )

      "all the data logs of the affected wallets had been erased, leaving no trails about where the bitcoins were transferred."

      I'm not up on cryptocurrencies, but isn't this exactly the kind of thing that blockchains are intended to prevent?

      • Nope. The same thing could happen to MasterCard or visa(see the target, home Depot, and a few other hacks)

        The exchange was hacked and they took the wallets and used the money in them.

        However MasterCard and visa run their own protection systems and revert charges back in the event of a stolen card number.

        Block chain has no undo button like that so your money is gone forever. Etheruem does do some roll backs, but still only in big cases and they are controversial every time.

        What this is simply don't realize

    • by Mouldy ( 1322581 )
      The issue here is people trusting someone else (the exchange) with their money (bitcoin). This isn't an inherent issue with bitcoin itself.

      Fiat banks, for example, are essentially people trusting someone else (the bank) with their money. That would be just as stupid as the bitcoin exchange situation except; banks have insurance and government-backed assurances that mean if they screw up, customers don't lose their money.

      The downside to the fiat model is; I have to use a bank because I cannot keep $3
      • by bws111 ( 1216812 )

        It's just a private key. The effort to keep 1 bitcoin safe is identical to the effort to keep 350m bitcoin safe

        Really? Surely you must protect that private key somehow, both from theft and from loss. How exactly do you do that in a manner that is the same effort for 1 bitcoin vs 350m bitcoin? If there is any 'physical' component to it, then the protection requirements of that physical component are no different (other than sheer space required) than the physical protection requirements for cash. And if there are 'mental' components (passwords, etc), how do you protect against forgetting them, either for yoursel

        • It's just a private key. The effort to keep 1 bitcoin safe is identical to the effort to keep 350m bitcoin safe

          Really? Surely you must protect that private key somehow, both from theft and from loss.

          Yeah, keep it in your head.
          The core wallet generates a string of words, which you learn by heart. Then, whenever you want to regain access to your funds, you install a new core wallet application and restore your wallet using those words.

          • by bws111 ( 1216812 )

            So a rap on the head, or a stroke, or (obviously) death, or any of number of things that cause memory problems and all your money is, in effect, gone? That may be acceptable for 1 bitcoin, but I doubt many people would consider it acceptable for 350 million (which was the claim).

            • In case of death you're guaranteed you'll lose all your money, just sayin'.
              Oh, next of kin? Write down the words on a piece of paper and store it in a safe box. Create 10, 20, 100 wallets, spread your coins to all of them, write many words on many pieces of paper and store those in multiple safe boxes. Then make a will and tell them in it how to recover said wealth.

              Bury the piece of paper in your backyard. Carve the words on a wall behind furniture in your basement. Create a poem with each verse containing

              • by bws111 ( 1216812 )

                You're missing the point. The claim was that you need a bank to store cash because it is impossible to safely store it otherwise. He said no such protection was needed with bitcoin, that it was just as easy to protect 1 bc as 350 million.

                If you just rely on your memory, you are subject to losing the money if you forget the words. But, if you write them down, etc, then the places they are written should receive just as much protection as an equivalent amount of cash. Is that true or not?

                • Not necessarily.
                  In case of money stored in a bank, the bank takes care of everything and you pay them to do so. Your money are insured up to a certain amount (definitely not 350M). That's the advantage. The disadvantage is that the wealth you have stored can be taken away from you (asset freezing, government turning cuckoo, etc).
                  In case of cryptocurrencies, you can secure them as strongly (or weakly) as you want. Nobody else is or can be made responsible for your "wealth" but you. That's the disadvantage, s

      • by jythie ( 914043 )
        You are overlooking the other major reason people use exchanges : trading. A lot of BTC users fancy themselves currency traders, so they want their coins on a service where they can trade them rapidly without hitting the main (slow) network. In a way, this actually is a bit of a flaw in BTC. It functions poorly for a major use case that people want to use it for, so all these exchanges have popped up to offer a solution for the limitations of it.
  • As I said in my previous comment...

  • Erased? (Score:5, Interesting)

    by SCVonSteroids ( 2816091 ) on Friday April 13, 2018 @06:28AM (#56429883)

    Isn't this why so many people trust Bitcoin "security" to begin with? So you can trace any and all transactions back to the inception of the bitcoins used themselves?
    Seems rather pointless if you can just delete any records. Sounds more like a scam every time I read something new about them.

    • by DrYak ( 748999 ) on Friday April 13, 2018 @08:12AM (#56430137) Homepage

      Isn't this why so many people trust Bitcoin "security" to begin with? So you can trace any and all transactions back to the inception of the bitcoins used themselves?

      Seems rather pointless if you can just delete any records. Sounds more like a scam every time I read something new about them.

      That is true on the blockchain itself, regarding exchange of BTC on the public bitcoin protocol.
      You can't "delete" anything, unless the majority of the nodes on the network all agree together to roll back the blockchain. (Which happens every now or then when a newcomer cryptocurrency has a massive blunder leading to abuses and theft. Some time the whole network of that currency agree to roll back to before the blunder and use the new patched software).

      But here, it's not the blockchain it self that got deletes.

      There are transaction going from various owner to the wallet of the exchange platform,
      there are other transaction going from the above mentioned exchange's wallet to other accounts.

      But whatever happens on the exchange platform itself happens "behing closed doors" as long as the crypto-currency protocol is concerned.
      An exchange platform might keep track of who exchanged which cryptocurrency with whom, so that at the end, when that user decide to withdraw their earnings, the platform knows how much to send from the platform's bitcoin wallet.
      But that entirely internal book keeping.
      And is completely left at how the platform feels appropriate.
      For all the cryptocurrency protocols cares, it could also be a gambling platform.
      Or some "artist's happenning" that completely burns and destroy bitcoins.

      Here, hacker managed to get hold of the exchange platform server and persuade it to pay them out a good chunk of the BTCs held on the platform's bitcoin wallet, no matter what the server log held.

    • Re:Erased? (Score:5, Informative)

      by GeekWithAKnife ( 2717871 ) on Friday April 13, 2018 @08:20AM (#56430169)

      You need to read more carefully...from the article: "The company tried to trace the hackers, but found that all the data logs of the affected wallets had been erased, leaving no trails about where the bitcoins were transferred."

      It's not the blockchain record that was erased.

      It's also important to understand that an exchange often has transactions on a data base & only once bitcoin is withdrawn does it register on the blockchain because all the trading happens off-chain.

      As an exchange sends bitcoin to many addresses constantly it will take a great deal of time to trace it and by then the thief may have cashed out.

      Of course if they managed to find the Mt. Gox hacker after so many years because it was all traced on the blockchain then stealing bitcoin and keeping it on-chain is not a very smart idea...

      In summary, as far as we know; bitcoin is the only tried & tested decentralized public financial blockchain that is a currency agnostic settlement layer application and it is secure.

      (Literally any other chain is so far deemed less secure, untested, private, not decentralized etc etc.)
  • by iTrawl ( 4142459 ) on Friday April 13, 2018 @07:43AM (#56430061)

    You're supposed to keep your bitcoin in your own wallet. If you're against banks but keep your crypto at an exchange for more than the time needed to, you know, exchange it, that goes pretty much against the whole selling point. Even more, you just trust them blindly, because they're not regulated or part of an insurance scheme either.

    • "If you don't run a fully validating node, you're a second class Bitcoin citizen. If you don't hold your own private keys, you're a third class Bitcoin citizen." - @TraceMayer I am guessing third class citizen means a fool. Source: https://twitter.com/lopp/statu... [twitter.com]
    • You're supposed to keep your bitcoin in your own wallet. If you're against banks but keep your crypto at an exchange for more than the time needed to, you know, exchange it, that goes pretty much against the whole selling point. Even more, you just trust them blindly, because they're not regulated or part of an insurance scheme either.

      I'm pretty sure the difficulty of securing millions of dollars in currency is one of the reasons banks were invented.

  • "but found that all the data logs of the affected wallets had been erased, leaving no trails about where the bitcoins were transferred."

    I thought the whole point of bitcoin was that every transfer ever is logged and public. You might not know who controls a wallet, but you know what every wallet is doing or owns.

  • You know what's ironic about this? The pushers of Bitcoin try to promote it as the next big thing where there's no government interference or main control body to control the currency but as soon as a large batch of coins are stolen, they're out begging for the government to do something because something went wrong.

  • They could have been faked.

    In fact, if you fake a fake currency, did anything happen, other than a chain of fiddling ones thumbs?

Overload -- core meltdown sequence initiated.

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