Topic: I just got hacked - any help is welcome! (25,000 BTC stolen) - page 3. (Read 381810 times)

Banks are supposed to because they have the means and are integrated into the monetary system, but merchants can't realistically be expected to have the equipment to check on a bill's serial #. In the bitcoin world we don't have the equivalent of banks - except maybe the major exchanges which sort of act as quasi banks - but it by far easier and cheaper to keep track of bitcoins. But like I've said so many times it doesn't really matter that much because you cannot enforce your claim to stolen bitcoins due to the fact that it's damn near impossible to attach a real identity to a bitcoin address.

Honestly I would not expect that someone would hand them back 20 iterations from now. The best hope is that someone who gets them somehow almost freshly stolen (I can't think of a more technical term for this situation at the moment - maybe closer to the source is appropriate) notices that they're stolen and either a) refuses to do business with that person or b) receives the funds but in a sort of street justice  way does not send the money or whatever value was requested by the seller in exchange for the bitcoins, and then this person would proceed to hand over the bitcoins to some police authority or some organization or institution that can arbitrate the dispute.

This would be easier if there was a site that would keep track of reported stolen btc. Think of how many people had their wallet.dat files stolen by trojans and such. It would be great if we can make the life of these parasite "hackers" just that much harder by everyone refusing to accept stolen property.

Also I'm thinking some sort of free-market bitcoin court or legal structure would come in handy. If we want people to have trust in bitcoins I think there has to be some hope for the victim. As things stand if you somehow get robbed of your bitcoins you're pretty much fucked - pardon my french

Yeah, that's like $300K right now. Imagine knowing you had that for a year or more and that it could finally be a safe nest egg for you and your family, only to lose it because you were trying to be safe by backing it up to Dropbox, because that's a very popular way to back stuff up. Regardless of Allinvain's technical acumen and what he should or should not have known and done, it's a very crappy situation for him.

For Bitcoin to gain any kind of real acceptance, people have to learn from this Universal lesson. This needs to happen now, because it's shaking out the fears and the realities of a world-wide, decentralized digital currency. It's a hard lesson to learn, and Allinvain is going to be remembering this for the rest of his life. Why not help to soften those memories a bit for him?

It's a charity thing. You don't have to donate to charity... but it's a nice thought if you did.

This kind of bothers me.  What if someone is the recipient 20 iterations from now, are they supposed to send the coins back if they were purchased legitimately?
 
If someone stole $25k in cash, are merchants/banks/etc supposed to verify every serial number they come across?
 
I feel your pain, really I do.  I'm sure it was like a punch in the gut (or worse), but if buy coins from someone (*especially if the stolen coins are 10 or more iterations from the original*), I'll be God-damned if I'm going to give them away for free.  (unless I'm caught on a very good day, then I might sell back at a slight loss)

To add, a lot more depends on his situation and manner and time period of acquiring said asset. There is a lot more information needed to correctly file or even really comment on this than what is available publicly.  If you are in a similar boat or are wondering how to file if you have used real world assets to acquire bitcoins feel free to conact me via PM and I can set you up with a tax attorney thats into this kind of non traditional investments who is very discrete and would be much more capable of answering such things.

My bad, I missed the "deduct your basis".  I thought Joel was talking about deducting the full $500k value of the coins, not just the basis.

You can't.  I was only responding to the loss part. There is no 'gain' here though as he never cashed out on any 'earnings' or equity from the asset.  On his claim he would handle it the same way you would any other purchased or acquired asset.   There was no gain or loss when he commenced the trasnaction to acquire the capital asset as it was worth the very same at the moment he acquired it in comparison to bitcoins or other currecny that was used in the trasnaction.  I.e. He traded the intrensic value of one thing for the exact same intrensic value of another under the presumption that both were equal at the time. (if there is any way to show purchasing a capital asset at a loss at time of purchase and that being at all beneficial is well beyond the scope of my limited knowledge)

It can be much more involved if one would so chose it to be but it has been my limited experience that overcomplicated filings on such assets tend to raise red flags....


As stated before I would highly recommend at least consulting a qualified tax attorney before filing anything.

How could you possibly be allowed to file a loss on something you never filed a gain on?

This I can partially verify after running it by the wifey. She is a CPA/EA here in FL, mostly small to mid size clients.  Best you could probably do as Joel pointed out is to Schedule B the loss at its fair market value at time it was stolen. It will only go to lower your tax liability though but can be carried over to future filings atleast.  I would be very hesitant to file it as anything until you have run it by a qualified tax attorney though......

I don't see any reason you can't treat it as a loss and deduct your basis. Note that if this was a business loss, it's only deductible against business profits. I believe you can hold it over for future years when you have a profit. If this was a hobby loss, I believe you can only deduct it if you previously paid taxes on a hobby gain. I don't think you can hold over a hobby loss, but I'm not sure.

Basically, it's the same as if a physical object was stolen. Your loss is the lesser of its fair market value or your tax basis in it.

I confirm the donation sent by phungus, and I thank him from the bottom of my heart. Confirmation of him actually sending the donation:

1e61bfb878...   Block 135315 (2011-07-08 14:38:19)   0.5   Received: Address   
1Q9dXNraKmiDrPoSXevAGV4mniZaFSj3XH
1LrZdXTHbWYvPkzUfXCPK1bdWbZ2s7AggK
1AdP1P4SP7du9zkLGTEk9XVYAWpEHi6qdo
1LvzhjFT6zow41XTGr3f4QVnXPNMxB5q8R
1LLtyyPHqm8Jt1Hr5Tsq4JApTmvmgKgfEx

or

http://blockexplorer.com/t/29n6KoJmoo

Also I'd like to thank the other person who donated 0.01 btc. I forgot your name (I'm really sorry) but if you'd like to make yourself known here please do so. Thanks to all.

Hey everyone,

I just talked to Allinvain in #bitcoin and he had said that to date he had only received .01BTC to help recover his loss.

Seeing as how this is an important lesson for the community, I think folks should rightly chip in a little for him.

I've sent .5 BTC to Allinvain. I encourage others to do the same.

His BTC address is 16vD6WnnUfU1s6bbwShapoj9U5zwduBBbs

but he should probably post here to confirm that this really belongs to him before anyone sends anything to it. I promise it's the one he gave me on IRC though.


Just trying to look out for him since he said he wasn't sure he was comfortable asking for donations.

SO I'M ASKING FOR HIM.

He lost 25,000 BTC!

I see. OK, thanks for the info. That's probably what I'll do..dump my btc and move on..declare that as a capital gain and pay taxes like a good subservient of the government..

Heh..yeah it should be fun to try to figure out how much I paid in electricity to generate them...time to dig out the old power bills.

Unless you already claimed a gain from it, you can't claim a loss.  Or, I suppose you could claim a gain AND a loss, but you'd have to look at the tax liability implications of doing so - it may not just "net out" as you would think, it may cause your tax liability to go up.

You don't need to report capital gains until you sell an asset (pretty sure mark-to-market doesn't apply to bitcoins), so if it is stolen, you only report on the loss of what you initially purchased the asset for.  I suppose you could argue that the value you paid is the cost of electricity used to generate the coins, but I think that's the max you could take as a tax deductible for stolen goods.

Sorry Rob P., I should have made it clear I wasn't referring to you.  My apologies.  

I've never viciously attacked him.  Just saying, since I was quoted. 

What is your insurance situation? If your $500,000 gold/cash stash went missing ... you might be covered by householder's insurance!

... just saying, it ain't real until you make it so ... an then do you want an insurance lawyer crawling back up your blockchain making sure you haven't just sent them to yourself to avoid prying eyes, taxes or some such ...

Hmm, good question. I wish I could answer it. This is a legal grey area here. Should we treat BTC as a stock or some other asset that gets taxed only when converted into USD. Or is me mining 25K back then an income stream even though I never converted it into so called "real money" (ie money recognized by the government or belonging to the government).

The way I intended to treat it (had I still controlled that 25K BTC) is as a capital gain. If I sold some of those bitcoins I would've reported my profits as income. Granted where I live I would've been taxed like hell.

Any tax experts here? How should I treat this 25K BTC loss; tax write-off? Doubt that would fly with the tax man.

So what's the tax implications of mining 25,000 btc that go missing through nefarious means ... or otherwise i suppose, e.g. into the btc black hole?

Lol..it has inceptionary trolls (trolls within trolls within trolls).

Thankfully I just bought a few crates of this stuff (with BTC ) :



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