Topic: IOTA: Snake oil insecurity with a centralized kill switch to shut off your money (Read 2200 times)

Thank you for your support.

Thank you for your suggestion. I have gone to discord and the problem is investigated by the team. Now I need to have patience...

Sorry to hear that, hope you will get those back. I would recommend to go into their Discord, present your case there and talk to someone from IF. Afaik David will compensate affected users, but be prepared to be asked to deliver detailed proof and also various documents for KYC.

I am a victim of the hack of february 2020 I have lost 35Gi. Is there anything I can do ?

Thank you for your support. I will keep on posting here the main findings.

I hope you have success in your investigations and hope you post updates here as and when you able to.

Nice.
What I read about Dominik, it is really fantastic Congratulation!

Many thx Hund! I am curious what coming next.

Circumstantial evidence points to Dominik Schiener, co-founder of the IOTA Foundation, being the criminal hacker known as Cystomatic aka. Alhalama.

Several pieces of evidence show the connection between the hacker Cystomatic (aka. Alhalama) and Dominik Schiener:

• Cystomatic created a MySpace account with the name "Dominik Schiener".
• Cystomatic announced a social media marketing project similar to Fileyy.com, Dominik Schiener's first startup.
• Cystomatic announced plans to relocate his Affiliate Marketing business (Fileyy.com?) to Malta. As Dominik Schiener, Cystomatic is Italian, speaks German, is a precocious entrepreneur, is working on an Internet Marketing project and is fond of tax havens.
• Cystomatic requests quote to create the logo for Fileyy.com. The winning logo was the same used by Fileyy.com and by Dominik Schiener in his LinkedIn page.

The following evidence shows that Cystomatic changed his name to Alhalama and, therefore, Cystomatic and Alhalama are the same person.

• In the Hack Forums, Cystomatic says "Nice, tell me again how much of a marketer you are, and how long your crypter will stay FUD". Cystomatic later changes his username to "Alhalama". However, another user has already quoted Cystomatic's sentence and, as a result, the connection between both usernames is revealed.
  
• Alhalama contact details are the same as Cystomatic's.

Crimes committed by Cystomatic aka. Alhalama include hacking and defacing websites, installing keyloggers, selling administration logins, selling site databases, and buying, using and selling remote access trojans.

• Alhalama hacks 11 sites on 6 June 2011.
• Alhalama defaces 2 sites on 12 June 2011.
• Alhalama hacks 1 site on 13 June 2011.
• Alhalama sells site admin logins and databases on 18 June 2011.
• Alhalama celebrates his success using the Rapzo Keylogger on 21 June 2011.
• Alhalama sells a Blackshades VPN and Blackshades RAT. Blackshades infects the victim's computer when the victim visits a malicious webpage (drive-by download). The FBI run operations in 2012 and 2014 to combat the use of Blackshades, which led to the arrest of near 100 people in 19 countries.

After starting IOTA, Dominik Schiener described his hacking experience:

The IOTA community and investors have the right to know this information. I have posted it in r/Iota and r/IOTAmarkets but the posts have been removed.

Sources:

• https://twitter.com/Hund_cleanIOTA/status/1274982149024878593
• https://steemit.com/crypto/@thinkexclamation/co-founder-of-iota-suspected-to-be-a-criminal-hacker
• https://www.notion.so/cleaniota/9961caf41c32421081b49564e08d4c23
• https://en.wikipedia.org/wiki/Blackshades
• https://www.crisp-research.com/interview-mit-dominik-schiener-co-founder-von-iota-08-03-2017/
• https://youtu.be/EXjCqT-oK9M?t=55

Yes. There are several people who have contacted me and shared valuable information. Sometimes it doesn't lead to anything, other times they help a lot.

This is going to take time. There are many angles to explore.

I sent today some data i.e.
https://github.com/ifinta/iota-backups

How is the investigation going? Did many people send valuable information to you anonymously?

LOL. I'm not even involved with IOTA fondation. just invested in IOTA.

Just trying to fight misinformation. But go ahead, and try to frame me.

Sergey Ivancheglo has published the Memorandum of Understanding that the Board of Directors of the IOTA Foundation signed five days after the 2018 Board leak.

https://www.notion.so/cleaniota/IOTA-Foundation-0c96e7936c164dfe9e8ef1218fe0e13a#327e67a54a314fa9bea3619add62543d

The revelations included in this document, make the "MoU leak" as big as the 2018 "Board leak" and the 2020 "Breakup leak".

In the 2018 Board leak, Ralf Rottmann said: “Just thinking about all of the other stuff that will come to light, makes me extremely worried”.

He later addressed the concerns of the community about this sentence.

https://www.reddit.com/r/Iota/comments/95qi3b/just_thinking_about_all_of_the_other_stuff_that/e3vg700/

The MoU sheds light on why Ralf Rottmann was "extremely worried". He feared that, in his struggle to control the Board, David Sønstebø could reveal sensitive personal information about Dominik Schiener, co-founder of the IOTA Foundation.

/cleanIOTA-Board-of-Directors]http://[Suspicious link removed]/cleanIOTA-Board-of-Directors

The MoU refers to IOTA AS and Jinn Labs as two separate entities. This contradicts David Sønstebø's claim to disgruntled Jinn investors that "Jinn Labs is IOTA AS". The MoU was signed by David Sonstebo himself.

https://www.notion.so/cleaniota/823de8eb6bee4ba78026d429957018a0#b19c32f251494b3483504c8341c6031d

Dominik Schiener said in the 2018 Board leak: "good luck. IOTA AS will have some serious legal issues with the advisor tokens and the impending tax audit. I am done with this. I am done with being threatened."

https://pastebin.com/482HVvPu

To avoid potential tax issues, the MoU established that all the proceeds from the "Big Deal Fund" would be owned by "Schiener & Sønstebø GbR", an unregistered partnership, and used to fulfil the advisor token "verbal" agreements, without the intervention of IOTA AS or the IF.

The MoU confirms that the IOTA Foundation transferred 0.5% of the total supply of IOTA "unclaimed" Tokens to IOTA AS, a company owned by David Sønstebø.

The MoU refers in several occasions to Serguei Ivancheglo as a shareholder of IOTA AS. Together with Sergey Ivancheglo's employment contract with IOTA AS, this contradicts David Sønstebø's recent claims stating that David Sønstebø is the sole owner of IOTA AS.

https://www.notion.so/cleaniota/9d007a5d94a6400abe057c327e566b1c#45b186ba0e334161b91732979d05600b

https://www.notion.so/cleaniota/823de8eb6bee4ba78026d429957018a0#05e6300b145d4decb117c356f6378183

I submitted the news about the "MoU leak" to r/Iota and r/IOTAmarkets. Both submissions have been removed by the moderators.

https://www.reddit.com/user/Hund_cleanIOTA

IOTA investors and members of the IOTA Community have a right to know about the MoU leak.

David Sønstebø should resign from the IOTA Foundation as soon as possible, for the sake of decency and for the good of IOTA.

Hello,

My name is Hund.

I have decided to carry out an investigation into the management practices of the IOTA Foundation. I will be focusing on both potentially illegal and unethical behavior. The topics I am currently interested are the use of the IOTA Foundation resources for personal profit and the leadership practices of the members of the Board of Directors.

If you believe you have valuable information and wish to collaborate, please write to Hund at [email protected].

https://notion.so/cleaniota
https://notion.so/cleaniota/FAQ

David is a greedy and shady baboon, and CfB is a try-hard child that lacks the required expertise for cryptography related projects (although he just may be hurt from his friend succumbing to greediness). Got it. Thanks. I guess I will read it some time.

Hehe, hard to give It's a conversation from November 2019 until February 2020. It covers IOTA Foundation internal things like nepotism, political agendas, power abuse, monthly costs. You have hints about shady things with token reclaims, clean addresses, lots of money (IOTA tokens) changing hands. Discussions about the IOTA protocal in general and how companies/partners are more and more disappointed with non-results from IF. You can read how David wants/wanted to push his private companies; what role JINN plays in this whole construct. And last but not least two friends splitting up, where one (David) comes over as mature, while the other (CfB) acts like a child.

It's really an interesting read overall, because it gives an insight what happens behind the curtains of a crypto project. And I guess this does not only happen inside IOTA, but with lots of crypto projects - and in "real life" companies & politics.

Tl;dr version?

There are more and more voices wanting David Sønstebø to resign from IOTA Foundation. The driving force behind this is his ex-bff Sergey Ivancheglo aka Come-from-Beyond, who is butthurt about the IOTA protocol going in a different direction than he initially planned (mainly the binary vs trinary aspect).

Couple of weeks ago CfB already leaked a conversation between the two, which gives some interesting insight and additional information between the lines: What really happened before David Sonstebo and CFB parting ways (chat log)

In the Paracosm Discord a list popped up recently, which features an overview of "Potentially illegal or unethical behavior of the IOTA Foundation": https://www.notion.so/Potentially-illegal-or-unethical-behavior-of-the-IOTA-Foundation-83df131d43374a32be33ab15b38abdf8

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Additional information:

JINN is a ternary processor. JINN needs IOTA, that is why IOTA was built. JINN labs was founded by David, CfB and an unknown third guy. JINN is said to be dead now, investors lost their money. Announcement JINN

Paracosm is a VR/AR gaming company from CfB. He has a gaming background and the purpose of building IOTA was to make his VR/AR vision become reality.

IoTIFY is part of Ternary GmbH, which is a company from David, registered in Switzerland, where an Indian guy is CEO.

FYI: ... I asking the moderator of IOTA thread to act again to correct the project - to implement it as feasible wisely and not support "members", posts - scam others in the future ...


A "nice and respectful" environment on the twitter - around IOTA ...



And this "nice and respectful" environmnt is growing, and growing, and ... NICE. They are the "respectful" community???

Are you mean - ThatsABity doing a "witch hunts"? I think, it is the TRUTH, WELL. The "silly little loser" are the EU politicians, which supported IOTA? Sure also!!!

yay! on your witch hunts again, silly little loser?!

nice profession you have there 

If somebody wants to take a look, here's the profile link: https://bitcointalksearch.org/user/thatsabity-1006152. If it turns out to be the case (I need time to evaluate), I will tag and flag him too.

ThatsABity trying to protect IOTA community and IOTA fundation against some questions of me... I think, this person dangerous and supports scammers - since many years!!!

Some info from twitter... A very good caricature about some "truth" behind the scenes...
https://twitter.com/durerus/status/1250462823798489088



As I see, David Sonstebo already treated from project side as an official scammer...
YES, he has a firm - for JINN. But... About the "TROJEAN" horse: it has three legs... Sure. Since early 2016......
Please see the Circulating Supply of IOTA:



Some calculations:



Durerus, Luey Forje, ... maybe has 10% - 20% of the whole market cap: from the 2779 TERA IOTA i.e. 400 - 500 TERA IOTA (or more, maybe less???)
They are LEGAL RICH PEOPLE? With the support of i.e. Deutsche Bahn, EU, Tether USD, ... ? With a support - up to ~yesterday - of a official scammer PM, David

DT members please support this flag. It does not have enough support!

I think, the post was simple off-topic
He means the Trolls in a film of DreamWorks... Or?

Working for IOTA or compromised account? Pick your description.

nice! Troll Time again in the forgotten Bilge Belly of Crypto!

Never gets old! Gibber and gabber away, Trolls, always makes me smile!

I just checked - as IOTA was selected for the trade on Bitfinex the following alt's was also on the Bitfinex Market tradeable (ok - you have right):
Litecoin, ZCash, Monero, Dash, XRP, ETH/ETC (I hope it is a whole list already)

https://www.bitfinex.com/posts/206

But: every alt's - before IOTA - was a well established alt on the market already at the time its listing on Bitfinex - every was already in the top 100 on the coinmarketcap.com - I think, but
IOTA was the first alt, which had the possibility to start on the market through Bitfinex! It was parallel listed on the coinmarketcap.com...
((in this way was only IOTA the first, sorry because some uncertainty, but it is also a big difference to other alt's. It was a little strange listing from Bitfnex))

What I consider at the start, and later - is documented in an other thread:


The thread above contains also some information about the truth ROI of IOTA, and about the ROI showed on the coinmarketcap.com.
The ROI of IOTA on the coimarketcap.com is also a scam, I think..., I see...

And about your remark: "a conspiracy theory"
Yes. You have right here also: It is a truth conspiracy, I think...
... with very much support from side some governments...
... and the BIG RED BUTTON is a LEGAL TOOL ... just to consider ... What should I say more?

I'm pretty sure that ETH was listed WAY before IOTA... I still remember Potter's legendary message on some slack when the DAO desaster happened


.edit: here

I think this is a conspiracy theory at best. The market cap isn't defined by the actual money flowing into the projects. That's likely just a coincidence.

Some earlier opinion from me and others:

https://bitcointalksearch.org/topic/iota-on-the-market-a-testcoin-a-scam-and-only-a-fork-of-the-true-iota-net-5173154

Just to remark, IOTA supported by EU - please see the thread, and some document in it......
IOTA has connections to Bitfinex and Tether. IOTA was the first alt at Bitfinex (after Litecoin, but Litecoin was used threre since the start). What should I say???
Tether had some "lost dollars" in last year, the "lost dollars" was always approx. the same "dollars" in volume as the IOTA marketcap had (~billion dollar). It is "maybe" only a parallel and random event
They found someone to pay this bill ( an investor - of course ).

I am considering it. The very least a negative rating, so that others are informed that the user's claims and statements are untrue.

@Lauda based on your quote, I think a flag is a bit over the top. He seems like a dedicated user who still has hope that the project might fulfill its promises, one day. Haven't checked his previous posts, but based on the quote, I see no danger of fraud etc coming from this user.

Next rating and flag I propose:

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Need more time to think about it, investigate user and write a proper rating.

Flag: https://bitcointalk.org/index.php?action=trust;flag=1416.

Flag: https://bitcointalk.org/index.php?action=trust;flag=1417.

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OP please add.

The integration of Moonpay was already leaked in mid November 2019, when a spanish Trinity tester (accidentially ?) tweeted about it and deleted the tweet shortly after.



IOTA officially announced the integration of Moonpay on December 18th 2019 then.

The IF tracked the attack back starting at November 27th 2019:


This is his account. He officially only joined the IOTA team in early 2016, since he was still busy with some other ventures and he even missed the ICO and had to buy his stack OTC, what you can also track a bit by checking his posting history in bitcointalk.

A well respected german user, who followed IOTA right from the start, talked about that here and here.

the timeline of the IOTA hack smells a lot like an inside job IMO. (maybe not on the management level but below?) the hack started shortly after the "reload" feature of the Trinity Wallet was released.

rhetorical question: how fast can you plan and implement such an complex attack if you are not aware of such a "reload" feature upfront?

EDIT: is the user account of Dominik Schiener not known? he has a Bitcoin history (Switzerland based Crypto exchange which did broke) and I assume he was active here on bitcointalk.org too.

https://www.iota.org/the-foundation/team

I want to extend this with a flag on the user: mich (UUID = 9645). This account is stolen/hacked/bought and has been for a long time. I do not know who controls it. It shills pro-IOTA (among many other coins) posts despite countless red flags. He is also caught in merit abuse, merit trading et. al. Input? Evidence:

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A separate thread is more suited for this, but I do not feel the member is worth it. I am mostly concerned about the IOTA-related shilling, the other coins I do not care about in relation to this thread.

Anonymint called it out years ago at a design level, before that the true legend cryptohunter branded it a scam and predicted how it would go down Seems the training wheels were never removed.

No need to give the credit to yourselves lauda and nullius Laudas alt.

Well done though for noticing years later now that most of the damage is done.

For me to say, “I prefer Paypal to IOTA” is damning Paypal with faint praise—to make a point about IOTA.

My point is that Paypal does what it says on the tin, and does it much more efficiently than anything like IOTA.

This is not to promote Paypal:  To the contrary, it is a reductio ad absurdum.  If I wanted a centrally-controlled system that is poison to privacy, is cheerful about financial censorship, and can arbitrarily revoke transactions at any time, then I would rather use a system which frankly admits to being exactly that—and which does it using technologies that make sense (I am guessing an enterprise RDBMS), rather than pouring on buckets of snake oil crypto just to make the whole thing look fancier.  Or for a different metaphor:  IOTA is a Rube Goldberg contraption with the disadvantages of a centralized system, plus many additional complications.

Although I do NOT trust Paypal’s security, and past performance is no guarantee that they won’t later suffer an Experian-tier giant hack or other systemic failure, I will also note that in the past 20 years, they have not suffered the sorts of “oopsies” that IOTA seems to have almost on a regular schedule.  Two years ago, the big IOTA news was their broken homebrew hash—two months ago, they had that “corrupted ledger” downtime—now, this...  If Paypal had IOTA’s record for security and reliability, would they still be in business?

That Experian is still in business is not a counterargument here:  You have no way to opt out of Experian, and their customers are others who are paying them for your information.  If Paypal were to suffer extreme and/or chronic security breaches, then I would think—well, I would hope that lots and lots of people would close their accounts and run away!  And that is the point of this thread:  Avoid IOTA, due to a high risk of losing money.

I would not like a Chaumian/Digicash-style bank. Digicash does not require the issuing bank to confirm the identity of transaction participants, but there is nothing preventing a bank from collecting information about transaction participants as a condition of signing new certificates. There is also the risk that the bank will become insolvent, or will issue unbacked certificates, or will simply run away with customer deposits.

Lighting is very similar to Digicash, except without the risks related to having a central issuing authority. There do appear to be some problems with it in practice. 

I find the idea of a DAG and having transaction fees that are too small for the average user to measure (a small amount of POW per tx) interesting. The IOTA foundation appears to have a goal of eventually removing their central authority in favor of a decentralized authority who validates transactions, however I am unsure if this is possible in light of the fact that transactions are (virtually) free.

To be fair to IOTA, this is a single instance of reversing transactions in a case of alleged large scale theft, there is a 'slippery slope' argument, but this is not worse than what PayPal does every day. PayPal will routinely reverse transactions, block access to funds, and will blacklist individuals/entities who are doing things that PayPal does not like, even if not against any rules/regulations that PayPal has published.  There is no slippery slope argument with PayPal because they are already at the end/bottom of the slope.

tyKiwanuka, JollyGood, and Lauda:  Thank you.  OP was promptly updated with flag #1392 against iotatoken.

Ratimov:  Thank you for the translation.  I have linked to it in my thread metadata post.

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Laud Lauda: Credit where due!

Quote from: The Sceptical Chymist on February 19, 2020, 05:11:55 PM

I appreciate Nullius breaking everything down here (and for starting the thread in the first place), as I wouldn't have read anything about this scam otherwise.

Thanks, but Lauda deserves the credit for the initiative.  When the story broke about the IOTA network “pause”, she asked me for my opinion due to my technical expertise and the fact that I have discussed IOTA’s failings before, as quoted above.

I am not easily shocked.  I was shocked that IOTA has a centralized kill switch; I did not know that, until they used it!  How do ordinary investors stand a chance with them?

I thereupon decided that I needed to do more to warn people so that they don’t risk losing their money.  Whereas that is always Lauda’s goal.  It was easy, too easy for me to sit back in the Development & Technology forum two years ago and sneer at IOTA’s broken homebrew hash—then ignore IOTA, because I would never risk my money on it.  Lauda has a more practical focus on helping others here.

Thank you, Lauda.

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IOTA is the worst of all worlds

Quote from: PrimeNumber7 on February 20, 2020, 02:01:49 AM

I don't like the use of a centralized validator, and would not trust any coin that uses one.

I think there is a place for centralized technologies:  Chaumian banks.  It is a matter of trade-offs.  Digicash had excellent privacy and fungibility, but was centralized; Bitcoin is decentralized, but lacks Digicash’s privacy and fungibility on the blockchain layer.  (Lightning mostly solves this problem in a different way.)  Centralized solutions also have high performance and low overhead, generally.

Whereas IOTA has none of these advantages.  It promises to be a Bitcoin-style cryptocurrency, but better than Bitcoin—which it is not!

In the practical terms which matter to the average user, I think that IOTA is really a Paypal-style solution, but with much higher overhead and, I think, lower security than Paypal—and it is a financially unstable altcoin which makes an even worse investment than government-issued fiat currency.  Why would anybody want this?  It combines the worst of all worlds!

Indeed, if I had an exclusive choice between IOTA and Paypal, the answer is easy:  Paypal.  I say that as a Bitcoin maximalist who holds almost all his own money in Bitcoin.

Quote from: PrimeNumber7 on February 20, 2020, 02:01:49 AM

It appears they are rolling back the IOTA blockchain to reverse the transactions involving the stolen coin. Etherum did something very similar in it's early days when a hacker exploited a flaw and drained coin out of the DAO, although it has something resembling consensus before doing this.

I also had that thought about Ethereum.  The form that my thought took was, “This is even worse than Ethereum—much worse.”  The comparison is damning, whereas I myself have previously called Ethereum a...

Quote from: nullius on February 01, 2018, 08:39:01 PM

...Bolt A Turing Complete VM Onto A Blockchain Security Nightmare With Centrally Controlled Promise-Breaking Via “Irregular State Change” Exploding Clown Car Cryptokitties Toy Coin...

...among many similar words of endearment in various other posts.

Ethereum rewrote the history of its blockchain with a hardfork; but it had a blockchain, and even the top-down Vitalik Says So order took some time and effort to push through.  By comparison, IOTA can also rewrite their transaction history with much less effort—and IOTA just recently demonstrated that the people who run it can shut the whole thing off with the push of a button!  Much, much worse.

This might be a bit off-topic, but gives some insight about the whole incident. The IOTA Foundation has released a three-part series, where they explain (in part 1) how an attacker could successfully steal around 8.5TI (around USD 2,550,000).

This was the main issue:


Pretty careless and there is no way this should have happened.

See the whole story here: Trinity Attack Incident

Flag has been supported. A massive thank you to all contributors to this thread for bringing any information of substance about the IOTA team.

Thanks. Here is also the flag against that account:
https://bitcointalk.org/index.php?action=trust;flag=1392

Excellent post. Thank you for the links and background information.

By now CfB has nothing to do anymore with IOTA other than his company using the Tangle - or intending to do so, but he will probably fork it. David Sønstebø and CfB have been bff for a long time until the moment they had different opinions about the future of IOTA. You can read what David has to say about that here.


https://twitter.com/c___f___b/status/1224039770499796993

To my knowledge, this is the Bitcointalk account David is in control of: iotatoken

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During the split-up drama between David and CfB some weeks ago, CfB posted some private (and most likely sort of confidential) conversations on his Twitter account and Paracosm Discord.


Source: Paracosm Discord

Most of these leaks are already deleted, but they revealed some shady things waiting to happen as you can see in the screenshot above. There are still unclaimed IOTA from the ICO and David wants (wanted) to give them to JINN.

JINN is a private company in stealth mode, that was founded by David, CfB and some other unknown third guy. See more here.

 

They changed their mind later, apparently it was written by an AI.  

While people have the right to keep any ridiculous belief that they want to, the above is not based on science and is thus incorrect. I am not interested in unbacked opinions - this case was constructed very objectively, hence why I created a flag.

Last sentence: There's a very good reason for that - think about it using Occam's razor.

Which is a - pun intended - very laudable thing to do. For the noobs getting educated, this is a huge plus, considering large corporations like Volkswagen, Bosch, Microsoft etc. didn't get that opportunity.
While most of those announcements of cooperations with companies are surely exaggerated (many of such cooperations merely consist of a company having a "blockchain research unit" which checked out the IOTA repo to take a look at it… bit offtopic, but that Tweet about sums it up: https://twitter.com/CryptoCronkite/status/1227320690321297409), I can see how they scratched their heads when they saw in what terrible way CfB etc. interacted with researchers who took their valuable time for pointing out weaknesses a.k.a. helping to make the product better.

For me, this project was over when CfB told the researchers that they implemented the "colission feature"  in curl to protect IOTA from copycats, what the actual fuck.

Depends on what point of view you have (some would even say that Bitcoin is not a decentralized, Peer-to-Peer Electronic Cash System ^^): those who were following the project closely knew about the coordinator, and that it was a centralized element which was intended to kickstart the network and to be removed, later. The "later" got delayed again and again, making the description of IOTA a concept rather than an actual product, thus vaporware.

For somebody who only read the catchy phrases and didn't bother taking a very close look at what he throws his money at, it might well be described as a scam. To be fair, the IOTA team did not put much effort into explaining IOTA's weaknesses.

Thanks for the link. I did not know this.


Wow..

According to the IOTA documentation, the coordinator (aka kill switch) is to prevent certain types of attacks related to double spending. IOTA does not have any miners, and it does not cost any coin to send a transaction (only a trivial amount of POW effort), and there is the risk that someone could do something very similar to a selfish mining attack that does not cost anything to try. 

The way I read the documentation, I don't think the coordinator was intended to be used as a kill switch, or more specifically, this is not how it is presented.

I don't like the use of a centralized validator, and would not trust any coin that uses one. It appears they are rolling back the IOTA blockchain to reverse the transactions involving the stolen coin. Etherum did something very similar in it's early days when a hacker exploited a flaw and drained coin out of the DAO, although it has something resembling consensus before doing this.

Any crypto having a kill switch is rather far-fetched. Why did they have it in the first place? Any centralised project can have a lot of things their way or unconventional but when I read about the whole project going off-line for those two days or so it shows exactly why IOTA should and any other centralised crypto should be avoided unless they show exactly what cards they are holding.

Back in January 2018 this project had a market capital of over $14 billion but IOTA now has just $770 million market capital and it is dropping fast. Here is yet another of many mismanaged projects that had too much talk and not enough action and development therefore it fell from massive all time highs to a fraction of that.

It is a very different case that needs to be handled on its own. Evidently, Ripple does not claim to be a cryptocurrency such as Bitcoin AFAIK (they are something else entirely) - despite their frequent attacks and public lies by their CEO (public as in in interviews and similar). They will get their chance in the spotlight as soon as there is more time.

Lol, I probably wouldn't understand a thing that they were saying--but I definitely see where this shit took a nosedive (and why).

Before reading this thread I really didn't know anything about IOTA.  It was just a project whose name I saw from time to time on the forum, and I had no idea how centralized it was.  I appreciate Nullius breaking everything down here (and for starting the thread in the first place), as I wouldn't have read anything about this scam otherwise.

Wouldn't this sort of shenanigans be a problem with Ripple as well?  And I have to profess ignorance about how Ripple works, but I'm pretty sure it's just as centralized as IOTA is. 

This space (today) consists of probably >99% people who are unable to research these things sufficiently for themselves due to lack of technical knowledge et. al. They are easy targets for fraudsters and scammers, and I do not blame them. We are here to educate and protect as many as we can.  

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If you say you are developing X, and it does not get released within 3-5-10 ETA's, then it is very probably vaporware.
If you say that the thing that you have released today is X, and it is actually not even close to that, but Y, then that is fraudulent advertising i.e. scamming.

Keep this important distinction in mind.

I see correlation rather than causation. There just is no real connection between how / if a product works and its market share.

Fact is, though, that IOTA has always overpromised and underdelivered. It was (like most cryptocurrencies) hyped like there's no tomorrow. At the end of the day, people who lost money on it lost it because of their greed, not because IOTA is a "scam", or, as I prefer, vaporware.

For those who need a TL;DR:  There Ain’t No Such Thing As A Free Lunch!  (Link for Tor users, whom that website blocks—or see Wikipedia.)

That is just common sense, the general concept of which has been the stuff of proverbs for thousands of years.  Crypto newbies may not know Schneier’s warning signs of snake oil cryptography.  Whereas every reasonable person should know that “free” is the most expensive—especially when it comes to financial investments.


People need MIT wizards to lay that out for them? 

From iota.com blog

https://blog.iota.org/instant-feeless-flash-channels-88572d9a4385?gi=9eb5072573c4


Free and instant transaction.  Fully scalable.

But everything has a price. Looks like iota price is very expensive

This scalability drama is just ridiculous. An stupid idea which became a marketing z to make fools  by shitcoins and stay away from bitcoin because it is "old slow and expensive "

I have always been advocating against IOTA, but the situation is much more worse than I have previously believed! I wish that this was handled much sooner..

See also: https://twitter.com/matthew_d_green/status/967073310604488707


Matthew Green is a professor of cryptography at Johns Hopkins University. His blog can be found here: https://blog.cryptographyengineering.com/. That was part of a tweetstorm. As reported by IEEE Spectrum, a professional publication from the Institute of Electrical and Electronics Engineers:

https://spectrum.ieee.org/tech-talk/computing/networks/cryptographers-urge-users-and-researchers-to-abandon-iota-after-leaked-emails


Also very important read: https://www.media.mit.edu/posts/iota-response/

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I'm really sorry for everyone who lost money in this very sophisticated scam, and hope that we can prevent additional people from becoming victims of IOTA.

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My flag is here (negative rating also left):
https://bitcointalk.org/index.php?action=trust;flag=1388

Translations:

• Pyccкий by Ratimov

If this thread grows long, important forward references will be linked from this post.

It is high time—no, long past time to better warn people about the billion-dollar scam with a centralized kill switch.  Please support:

• Flag #1417 against mich (see below)
• Flag #1416 against domsch (ibid.)
• Flag #1392 against iotatoken (see below)
• Flag #1388 against Come-from-Beyond, who is “a.k.a. Come-from-Beyond... one of the founders of IOTA, and the core developer of the reference implementation” and is still associated with IOTA, albeit as an “unofficial advisor“ albeit with “no position in the organization”.^*
  
  (* As a practical matter, Mr “Come-From-Beyond“ is the only well-known IOTA representative on this forum, official or otherwise; and the below quotations of OP on the IOTA announce thread were unchanged during his 2018–19 position on the IOTA Foundation Board of Directors.  The scam accusation hereby is against IOTA itself; this thread is intended to support flags against any known major or quasi-official IOTA promotional accounts, regardless of technicalities.)

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From Coindesk, with my red boldface added:

Quote from: Come-from-Beyond on October 21, 2015, 01:06:02 PM

Iota’s blockchain solves the following problems of its blockchain cousin:

Centralization of control
As history shows, small miners form big groups to reduce variation of the reward. This leads to concentration of power (computational and political) in hands of few pool operators and gives them ability to apply wide spectrum of policies (filtering, postponing) on certain transactions. Although there are no known cases where pool operators abused their power, there have been several instances where the opportunity were present. This possibility in a monetary system powering a multibillion (in USD) industry is completely unacceptable.

“Obsolete” cryptography
Although large scale quantum computers do not exist yet, future oriented companies have already begun initiating the steps towards quantum-resistant cryptography. From a security point of view it makes perfect sense to assume that hardware capable of cracking classical cryptoalgorithms may appear in the very near future, so preparation is the only defense.

Let me get this straight:  IOTA avoids “centralization of control” by having a centralized kill switch which can turn off your money at any time—and they use that kill switch when theft occurs because their way to avoid “‘obsolete’ cryptography” is to sell you a bug-ridden heap of snake oil that has had its homebrew crypto broken in the past, and apparently is overall insecure and buggy (whether or not this latest theft was caused by a break of their crypto).

SCAM

Because I am a techie, let me put this in terms of something that looks like maths and stuff:

IOTA = your money → 🗑️

The current IOTA disaster shows that honest technical experts on this forum, including myself, were justified long ago in giving a roundhouse kick to IOTA’s snake oil security.

What do I mean by “snake oil”?  Everybody who knows anything about practical cryptography knows well these warning signs:

https://www.schneier.com/crypto-gram/archives/1999/0215.html#snakeoil

Quote from: nullius on February 25, 2018, 06:38:06 PM

Quote from: AGD on February 25, 2018, 02:32:14 AM

The recent (and a really good) example of bad code here: http://www.tangleblog.com/wp-content/uploads/2018/02/letters.pdf

Quote

Dom, David and the rest of the IOTA team,
We have found serious cryptographic weaknesses in the cryptographic hash function
curl used by IOTA, curl. These weaknesses threaten the security of signatures
and PoW in IOTA as PoW and Signatures rely on curl to be pseudo random and collision
resistant.
...

This is not “bad code”.  It is DIY crypto.  Worse, DIY crypto for a primitive—a DIY hash!  Worse still, DIY crypto by a corporate outfit which never showed any evidence of being inhabited by world-class cryptographers—despite their claim in a spin-job piece that “the IOTA Foundation has already subcontracted a team of 5 world-class cryptographers, as well as 3 independent ones to come up with a final design of Curl and then start the long peer-reviewed process, as was always the plan.”  N.b. that even world-class cryptographers need their primitive designs to undergo extensive peer review before fielding them with Other People’s Money—whether it’s the “final design”, or otherwise!

One of the people who broke IOTA had some damning words for it, in “Cryptographic vulnerabilities in IOTA”:

Quote from: Neha Narula (2017-09-07)

You might think that IOTA, a cryptocurrency worth over a billion dollars, and working with organizations like Microsoft, University College London, Innogy, and Bosch, BNY Mellon, Cisco, and Foxconn (through the Trusted IOT Alliance) would not have fairly obvious vulnerabilities, but unfortunately, that’s not the case. When we took a look at their system, we found a serious vulnerability and textbook insecure code.

“In 2017, leaving your crypto algorithm vulnerable to differential cryptanalysis is a rookie mistake. It says that no one of any calibre analyzed their system, and that the odds that their fix makes the system secure is low,” states Bruce Schneier, renowned security technologist, about IOTA when we shared our attack.

Anybody who buys into such ill-conceived crypto-junk as IOTA deserves to lose their money, on grounds of foolishness.

Merited by TMAN (10), achow101 (2), LoyceV (1)

Quote from: nullius on February 26, 2018, 12:49:52 AM

Bitcoin requires a new mindset.  [...]  If you get that, then you will pay careful attention to the quality of your code.  Also, you will much respect Core—because they get it, too.  And if you dare to make your own currency, you will not start by designing your own hash function as IOTA did!  That really wrecks any credibility they ever had.

Quote from: BenOnceAgain on February 25, 2018, 09:42:29 PM

I don't know precisely what happened with IOTA but I have read a little bit about it and I'm not sure why the currency continues to circulate given what I do know.  I guess too many people had invested into it by that point, which is more a political reason for continuing to exist rather than anything based on technical merit or the capability of the system.  I'm not sure why the IOTA people thought it was a good idea to throw in some untested cryptography, but that seems like a very amateur thing to do.

As for the latter bolded part:  I don’t see “amateur”.  I see PHB + NIH.

Come on.  We’re the big boys.  Microsoft is involved—you know, the company which does \ instead of / as a directory delimiter.  For our billion-dollar cryptocurrency, we will do innovation!  We don’t just use a commercial off-the-shelf hash which everybody else has.  We have our own hash!  The boss says so.

I hereby partly retract one statement that I made in the above quotes:

Quote from: nullius on February 25, 2018, 06:38:06 PM

Anybody who buys into such ill-conceived crypto-junk as IOTA deserves to lose their money, on grounds of foolishness.

The word “deserves” was rhetorical hyperbole.  Newbies and people who are not technical experts do not deserve to lose money on a billion-dollar scam, which they lack adequate knowledge properly to evaluate.  Wherefore my new action against IOTA:  People deserve to be warned, so that they do not unknowingly take the high risk of losing money that comes with investing in a “cryptocurrency” that uses snake oil crypto, has suffered thefts (due to apparently as-yet undisclosed insecurities), and has actually had its whole network shut down with a centralized kill switch.  IOTA is a broken-by-design financial time bomb!

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Disclosures:  I have no financial position which could be in any way directly affected by IOTA’s market price.  Indeed, I flatly ignore >99% of the altcoin market.  IOTA just keeps coming to my attention as a disaster by design.  In 2018, it was their broken homebrew hash; now, it is their kill switch...  I want to warn others so that people don’t take a high risk of losing money by buying into a billion-dollar scam with snazzy marketing, big corporate backers, and abysmally insecure technology.