Bitcoin, Blockchain, Battlestar Galactica

If the risk for billions of theft is only 4 months, I might take that as a reasonable business risk. I could call my time a sabbatical and use it to think of new ways to steal.

 

So, all the addresses related to blockchains are very, very big numbers (for various reason), which represented in hexadecimal (as it usually is) would look something like this:

0xd9A1b0B1e1aE382DbDc898Ea68012FfcB2853a91

Now, that's kind of clunky, so most applications shorten it too look like this:

0xd9A1b0B1..cB2853a91

On to today's story. Someone had $71 million in "wrapped" Bitcoin in his Etherium wallet and wanted to transfer it to another wallet. As is normal practice, he first tried sending a few cents to make sure things worked alright. You only get one shot at a transfer, so doing a test transfer is prudent. A hacker noticed this test transfer, and sent zero wrapped Bitcoins to this rich person(1). But they did it with a specially created wallet address that had the first 8 and the last 9 hexadecimal digits exactly match(2) the wallet the rich person was trying to transfer to. So in $71 million guy's application it looked like he was just sent 0 coins from "0xd9A1b0B1..cB2853a91". While it is actually a different address, abbreviated it looked the same as his target wallet.

So when $71 million guy was set to do his big transfer, he cut and pasted this previous address in his history (because who wants to type all that), not realizing it wasn't from his test transaction, but the dummy transaction from the hacker. So the guy sent $71 million to the hackers wallet. And there's nothing he can do about it.

This is hilarious. I like to think someone moving money for drug cartels or human traffickers is about to get his balls cut off. But there is some question as to how much the hacker can get out of it. Most mixers have been shut down or crippled by the federales and the more unscrupulous the exchange the less likely it is it has cash money. If it's someone good (like the North Koreans) they will figure out something.

There is also a question if the $71 million in wrapped Bitcoins represents something real. Ideally, a bridge is going to take the original token (like Bitcoin), store it in their own wallet, and then create a new token in the new blockchain (say Etherium) to represent that original Bitcoin. The original Bitcoin would be frozen as long as the wrapper exists. But that means you have to trust that bridge to keep that original Bitcoin. For example, it is strongly speculated that Justin Sun's heavy use of wrapped tokens is smoke and mirrors and there's nothing backing them.

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(1) Yes, you can send nothing to someone. And you can send something to anyone. It is not possible to refuse something sent to you on a blockchain. Used to be common to send viruses in the form of NFTs to people. Don't know how modern wallet apps deal with those.

(2) There are things called vanity address generators. You can make a wallet that has, say, the first 6 digits spell out "BADA55" because wallet addresses are public and you want people to know you are a badass. The way it's done is to keep randomly generating wallet addresses until you get one that matches. The longer the pattern you want to set, the more computer time you need. This wasn't a cheap and simple hack. Someone skilled did this. That's why I mentioned North Korea.

 

I know this isn't blockchain relevant, but IMHO some people see this as the cost of doing business. Case in point, I know someone who owns a family business (2nd or generation). They are well off, even by NoVa standards. They also 100% live in the dark gray area of finances when it comes to their business. They have stated more than once that if the IRS comes calling, they can negotiate a penalty and be done with it.

They have no problem paying a fine if the benefits outweigh the risks. Sorry for the non sequitur

 

It's not a non sequitur.Blockchain is the latest tool in the crooked finance guys toolbox.

 

Ohio State’s recent graduation featured a controversy because the commencement speaker wrote a weird and awful commencement speech. He’s a tech bro and part of his speech was an exhortation to buy crypto. He later said he wrote the drafts on ayahuasca or whatever that stuff is called. The link below is an account of how he got selected. Basically, there was a committee that spent hours doing research and culling a large list down to 10. They presented the list to the school president. He ignored the list and picked this guy.

it turns out that the school president is on the board of directors of a bitcoin mining company.

https://www.rooster.info/p/ohio-states-drug-fueled-bitcoin-shame

 

It COULD have been worse!

Commencement ceremony rehearsals were equally challenging for Mr. Pan. The university asked Pan to remove what can only be described as “a shirtless dance number.”​

​

Oh, wait!

Pan declined.​

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To paraphrase Rick James, "ayahuasca's a hell of a drug!"

 

There's a pretty damning article about Binance in the Wall Street Journal. Here is an article from crypto news source Protos which deals with that subject.

Basically, Binance is a massive fraud. Two thirds of their volume in 2023 was from two customers, one of whom was Russian Andrei Grachev and his DFW Labs, the other being Justin Sun (former boss of Grachev). Binance's own internal investigation team flagged Grachev's trades as market manipulation. Binance then fired most of the investigation team and kept allowing Grachev to trade.

The article makes it clear nothing has changed at Binance even after the massive fine and government-funded vacation for CZ. There is no separating crime from crypto. It's an integral part of the business. It should all be burned down.

 

Hypothesis: the best analogue to the crypto frontier is when the Iron Curtain fell and there were no rules except to win by any means necessary.

 

The idea that I have "one chance to get it right" when moving tens of millions of dollars...yeah, no. I'm not interested, LOL.

 

The chances of a crypto-anything being a fraudulent activity is pretty high. A close work colleague's husband was hired as the GC for a major -- well known -- crypto org. One that most people by name would see as legit. He bailed after less than a year in the job, and they divested of all stock and other connections to the place. It was that fvcked up.

 

I have a special practice. I handle one client.

 

An analysis from Visa says that over 90% of stablecoin trading is wash trading or manufactured trades from the coin companies.

https://www.coindesk.com/policy/202...nsaction-volume-coming-from-real-users-report

 

According to the Fed's Survey of Household Economics and Decisionmaking, the number of people using crypto has dropped from 12 percent in 2021 to 7 percent in 2023.

 

Ryan Salame, one of the top executives at FTX who plead guilty when all the court cases started, was given 7 1/2 years in prison, which is more than the prosecutors asked for.

https://www.msn.com/en-us/news/crim...g-to-prison-too/ar-BB1ncTkx?ocid=BingNewsSerp

 

It's almost all "investing" - that is, buying to hold until the price goes up. Around 10% of US crypto use is to buy something (which almost certainly means drugs) and around 10% of US crypto use is to send money overseas.

 

Which is also drugs.Or guns.Or slavery.

 

I'm thinking mostly tax avoidance. But who knows really. Maybe a lot of people get pig butchered.

 

The Mt. Gox Bitcoins have been moved to new wallets. Looks like they may finally be distributed.

That's ~140,000 tokens, or around $9 and a half billion. If people sell a lot it's going to have an effect on prices. Exchanges are trying to get them to sell over-the-counter, but that means exchanges and market makes need to find that much cash, not just Tether (although that might be an intermediate step).

 

So, if they shut down TikTok, can they also do this?

Senators pressure Biden administration to crack down on fentanyl sales through cryptocurrency

Its only real use is for crime. Still confused about how it has been allowed. Do the banks want it so they can get this activity off their books?