Topic: Recovery actions for stolen Bitcoin (Read 10608 times)

If someone found your Bitcoin private key, that person probably used that key to sign a transaction to one of his Bitcoin addresses (accounts). There is no way for you to actually recover them. You could however track the transaction to eventually see where your bitcoins are being transferred.
Now if your Bitcoins are stored at a company such as an exchange or a cold storage company, you might have some kind of insurance that the company provides as they're responsible of keeping your bitcoins safe.

i think it is a hard problem to be solved
i know someone who lost his btc,  he tried many ways but he had nothing.

You are absolutely right mate.

Wish those strict laws are in place all over the world,so these theives can get a life and stop stealing others hard earned money.

The problem is that you can't just "pull" the BTC out of a wallet that it was sent to post-theft.

Complete greed and laziness to do hardwork has made the Hackers to evolve and steal from innocent and hard earned people.

Aboslutely there is nothing to do vth sympathy over here.But,there was a user on the top assuming I have posted this on the Forum
 assuming Iam here for sympathy to gain attention or begging etc this is a blackchain technology and the transaction is ireversibly which Iam now clearly aware of and apparently got here to see if there is any legal opinions to move forward or any inputs provided in regards to retrieval.

Money is insured by FDIC in banks but why not BTC,ofcourse it says we are our own bank but simultaneously a common man cant have huge security services solely !

Ofcourse my loss is a loss but the pain can be only felt by me and no fun.

A very old thread probably bumped by a few newbies. Posting this to enquire whether this paper has got a legal status in any country? We have progressed 4 years into bitcoin technology and these kinds of errors and frauds have become quite regular. Still I don't know any single country which has implemented such a law.

I totally agreed and vote for this.
Such a pain to loose your money and more painful thing is not able to recover it.

Never happened to me yet but do you guys think that someone can hack my blockchain ?

Two times BTC from my Block Chain account has been transferred even with out authorization
and it was  security set up too.

Payee id of BTC is also available.
How I can recover my BTC stolen in this way

Depends.  If they have other assets, it may still not be possible to recover the Bitcoin itself, but legal judgments are almost always going to be denominated in USD.  The problem is your typical scammer is often a judgment-proof degenerate with no assets whatsoever, at least none you can actually seize.  There is also the additional problem that Bitcoin generally appreciates in value, but proving this may be beyond the ken of the average juror, that is, it will require expert witnesses to prove.  So the amount of BTC in controversy as well as the solvency of the debtor/thief will determine whether it is worth bothering.

And if the idea suggested itself, a court will generally not look with approval upon an attempt to sit on your rights while waiting for the price of BTC to go up and only suing then.  That defense will immediately suggest itself if the amount in controversy is sufficient to encourage the defendant to seek competent counsel, i.e. that you waited until the price went up to the point to make it worth it to sue, so you should only be entitled, as a matter of equity and/or just basic fairness, to the value at the time of the breach of contract and/or tort.

Yes. I agree. It is next to impossible. Even if you track its movement, you can't do much if the thief uses a mixer.

Recovery of stolen Bitcoin:

Step 1: Pick up bible.

Step 2: ?

Hmm.... I have checked your website. Bitcoin is not mentioned anywhere. But still, it is great that you are accepting Bitcoins.

I accept bitcoin for legal services. I haven't had any clients pay that way but I would accept it (and have it on my business card).

A vigilante posse based in Saudi Arabia is probably about the last thing bitcoin needs.
Sounds more like a litecoin thing.  

Wrong? Oh, where to begin...

I can only speak for myself.  Considering all elected officials take a similar oath, and their conduct doesn't always look to me like it's upholding the Constitution, I have to conclude some people take oaths in vain.  As for me, though, if I say "I swear" something, I take it seriously.

As for lawyers who take cryptocoin, I believe MSantori, on this site, might.  There's nothing illegal whatsoever about taking payment in any form, so long as it isn't contraband of some kind.  I've known lawyers to take payment in goods, services, dairy products, construction work, pretty much any form of barter.

(I can also think of a couple lawyers who took payment in less acceptable forms, such as drugs or illegal services such as procuring the absence of witnesses in other cases.)

some people dot spend all day checking their paypal account to see if its been hacked
maybe they dont even use the email  address anymore they openeed it with  so it could easily
take a month or two for transactions to be noticed on a credit card statement

plenty of sites on tor are selling paypal accounts ,some with several thousand $ in them
you cant blame a non technical old  person for being hacked by some whizz kid on the other side
of the world

Localbitcoins user name is "spacecowboy", who is now alleged (by charges reversed) to have hacked the paypal account of [name removed], a doctor in the UK?

 ...The localbitcoins user 'spacecowboy' has been online on localbtc but the admins are 100% non responsive to tickets, so I doubt they froze the wallet, me and three other users got stiffed so it's like he was setting up the account for 2 months, only to duck out at the end?

localbitcoins.com is a real den of thieves if its this bad.

I mean, it is as if a paypal account is a weapon, if you have a stupid password, you should be liable when your account gets f-in hacked.  Losing your paypal account, and not notifying paypal right away??  How does a person get away with being so careless??  But there really is no rally point for which to unite against fucking thieves.

Are you telling me all lawyers make this oath above all oaths?

Followup question:  Do you know any lawyers that accept cryptocoin?

Well, then you have an actual dispute about a material fact, so you can't, for example, successfully file a motion for summary judgment and avoid trial.

Police have arrested bitcoin hackers, whether they can recover the stolen bitcoin will depend on a lot of factors, like whether they can recover the wallets with the stolen bitcoin and unencrypt them.

http://www.coindesk.com/fbi-proves-seizing-bitcoins-isnt-owning/

Regardless, bitcoin hackers/scammers are getting arrested or taken to court:

http://www.coindesk.com/german-police-detain-bitcoin-hackers/

http://www.coindesk.com/bitcoin-scam-china-authorities/

http://www.coindesk.com/company-pay-1m-secretly-using-customer-computers-bitcoin-mining/

http://www.coindesk.com/bitcoin-incubator-coinlab-2-4m-in-bitcoins/

Also, people can track stolen bitcoins and report the details to the authorities:

http://www.coindesk.com/sheep-marketplace-track-stolen-bitcoins/

Yes when it's uncontested it's easy but what happens when more then one person shows up with the private key.

Preponderance is basically a 51% deal.  If it's more likely than not that you own the private key, you prevail on that standard.  So if you can actually produce the key, that would prove that you actually own it to any reasonable person, especially if you also, as you would, swear under oath that you are the rightful owner of that key.

Civil court cases quite often turn into "swearing contests" just like this, with one person saying one thing and the other side saying another, and the fact-finder deciding which of them is telling the truth.

But actually possessing the private key is a lot stronger than just saying you are the rightful owner of it.  There's no "beyond any reasonable doubt" in a civil case, which a recovery action would usually be.  The burden is preponderance of evidence, and actually producing the private key while the other side is incapable of doing so (since it doesn't own it) would shift the burden to the other side to prove you were not the rightful owner.

It's not just difficult it's likely impossible.  Please describe a scenario in which such proof is even civil court sufficient which is "by the preponderance of evidence".  You can probably forget the criminal aspect of "beyond any reasonable doubt" but if you are up to it you can describe that as well.

As I mentioned in my blog which started this discussion, proving original ownership of the privacy key will be difficult and certainly will be subject to a finding of fact in any litigation.

Absolute BS. How can anyone claim this? Was this guy sleeping for 2 months? Can you give me the details of his Localbitcoins.com account?

Utter bullshit.


Almost all states have an oath in a similar form.

QUESTION FOR THE GROUP

If a paypal account, is used with 100% feedback on localbitcoins.com, then suddenly the paypal account owner claims "hacked" and reverses paypal monies for local BTC, what negligence is their on the part of the silly paypal account person who allows their account to be puppeted for two months??

The whole concept of identity, is the first thing that has been demolished.

...and that is what you supposed smart people who know law, need to figure out.  How do we have recourse against theft, yet protect our Constitutional rights to privacy.  Lawyers, do not swear an oath to the Constitution, so they are sideline players,from my perspective.

I think its hilarious when BTC is treated like toxic invisible waste by lawyers, haha, how long until lawyers accept BTC, and most important question will be: How will lawyers be taxed when they do accept BTC for payment?

Taxation is at the root of lawyering, paypal, and all money.  I guess we can start there.  BUT ALSO, the "tech stupid", who allow their paypal account to be zombified and puppeted for months, should also be made to suffer, for their ID is then wielded with ill intent, and they claim no connection to the man-in-the-middle.  Like, if my paypal account was hacked, I'd be on the phone to paypal that day, so how do these zombie accounts get so much time to steal,before they are identified??

Ask a jury.

What does sympathy have to do with legality?  The term legal possession implies a third party such as a government authorizing your right to it.  Bitcoin has no such thing therefore you can not possess bitcoin in a way that works with any current laws.  You can try to make it fit but it would be akin to trying to explain to a Native American the western concepts of land ownership.  You can only explain it with violence and force which then begets more violence and force in retaliation.

Actually deliberately posting it here would be an implicit invitation to add it to a wallet just to see what's in it.  For example, the "correct horse battery staple" brainwallet passphrase used as an example.  (Don't actually add it to a wallet because it is so constantly flooded with transactions that it can easily crash your client.)

Posting a private key with funds in it is basically yelling "Hey here's some money, and I'm leaving it here while I go away!"  That may make the inevitable thief still guilty of something, but good luck getting any sympathy from a jury.

If, however, someone obtained the private key illegally, such as with a keylogger or by finding the Post-It note where you left it under your desk, even if that is almost equally stupid, obviously they don't possess the BTC.  I assume OP meant by "possession" what is often meant legally by the term, that is, legitimate possession.  (Even a thief, though, is actually in "possession" of a stolen item and a drug dealer "possesses" illegal drugs even though the law recognizes no ownership right in such items.)

@ OP
Here was an interesting thought experiment are Bitcoin's virtual property? I think it is worth reading.

Many opinions expressed helped shape my understanding.

This method is negated by any wallet stealer since both the thief and victim would have the private key. Given that info, how do you prove that you were ever the lawful owner of the BTC at that time? Only thing I can think of is maybe a receipt of some kind (exchange logs?) and that doesn't take into account the fact that the BTC could have been traded willingly off network by sending the private key to the buyer (or thief [I can know as a 3rd party{you can't either}]).

Really?  So if I post my private key here then everyone that sees it on this forum owns the btc in that address?  What about any btc that used to be there?  Do they somehow become past owners of that as well?

Then we can set up this service in some country where theft is illegal and thieves can be caught using whatever means. May be Saudi Arabia?

Hacking in to someone's computer is punishable everywhere. Correct me if I am wrong. 

It is certainly subject to debate. My argument would be that possession of the privacy key constitutes the ownership and right to access the value denoted in the blockchain ledger. That is the basic premise of Bitcoin, correct?

The thief is probably in a different country to you. Just because their laws may not necessarily stop them hacking into your computer (or maybe their law enforcement is too lazy to do something about it), doesn't mean the same applies in your country.

Some throwaway thoughts on the replevin issue.  I'm not sure that's the appropriate remedy, particularly because of the inequity to innocent good faith purchasers.  Imagine this:  thief scams 10 BTC a couple years ago when it was worth much less.  Buys a number of trivial items for 1 BTC each.  Now, someone actually sleuths out who the thief is and where the money went.  It was to these ten merchants for a variety of $5 items.  The 1 BTC is worth $1,000 now.  To return that BTC (and the merchant probably could not return the actual BTC because that particular BTC is probably long-spent), the merchant would have to take a $995 bath.  Additionally, replevin requires the return of a specific item.  The merchant probably doesn't have this specific item any more.  Replevin can't require you to "return" an item you don't have, or substitute an item that just happens to be like it.

Additionally, the whole idea of boycotting particular BTC (basically destroying its value forever) would be considered breaking the protocol.  If there is something courts should not be encouraged to do, it is that.  Additionally, just as a matter of practicality, there are current technical proposals (specifically BIP 0032) that would render this kind of sleuthing much more difficult.  One pool (Eligius run by Luke-Jr) has recently started discouraging and de-prioritizing the kind of address reuse that would make going after merchants practical.  

Now, I agree that obviously, the thief is responsible to return the BTC, but I can't see a judgment ordering return in the form of a cryptocurrency.  How would the court administer such a thing and decide between conflicting claims when scammer claims he shipped and judgment creditor claims he didn't?  Expert testimony about BTC?  Costs money.  Lots of it.  Probably more than it's worth.

I think the plaintiff would be entitled to a money judgment in the form of the original money value of the BTC, plus something in the form of incidental and consequential damages (in a contract action), punitive damages if the conduct was particularly to be discouraged (and some other tort was involved), and otherwise.  Oh, and legal fees.  Because until you're getting into the million dollar territory, prosecuting the first few cases like this is going to be an uphill slog and require explaining highly technical subjects to 70 year old judges.

An action in the nature of trover also makes some sense, i.e. a verdict for the value of the lost commodity.  While arguably, BTC is identifiable rather than purely fungible, you could say that about actual cash, too.  It has serial numbers.  There's even a searchable database, as an example, of the serial numbers in the D.B. Cooper heist.  Money may be generally fungible, but in some cases, it can be identified as being particular stolen money.

While I understand why plaintiffs would desire to be able to go after merchants (since thieves are often judgment proof losers), especially for the current value of BTC they lost in scams which has since vastly appreciated in value, it would be grossly inequitable to the merchants, actual enforcement would be so disastrous to merchants that unless miners changed the protocol to make such a regime unenforceable (BIP 0032 would be a nice start), they would flee the market, and it would basically amount to a windfall for the plaintiffs.

If stealing the coins are not illegal, then getting them back is also not illegal. This hacking / stealing issue is scaring a way a lot of noobs from Bitcoin. In fact, I'd say that if not for the thieves, the market cap of BTC could have easily crossed 30 billion USD by now.

How could  any private service force anyone to  give the stolen coins back? They could perhaps find the thief like a private detective. But using force would be illegal.

No no... I am not talking about modifying the blockchain. I am just talking about a service which can track thieves and get the coins back from them by force.

For example, look at the recent Sheep Marketplace scam. Some users are tracking down the thief, in order to recover the coins from them. Why can't we create a similar service, which will trace hackers and thieves, to force them to bring back the coins which they have stolen.

Since you are a lawyer why don't you define legal possession and how that concept can be applied to bitcoin for starters.

I don't think that's technically possible unless some central power retains a "master key" that can arbitrarily modify the blockchain.  And if some central power does, it's very hard to trust that they won't abuse it. No such key exists for Bitcoin, so unless you change the protocol to use the NIST curves or something, where a backdoor already exists, nobody can do that. And if you proposed such a change, you'd make most owners of Bitcoin really angry.

Further, opinions vary on what constitutes "abuse."  You can't really have someone enforcing US law on the blockchain when the coins are circulating worldwide. 

We need a (paid) service to recover coins which are stolen through hacking / phishing. Just like the bankers who use the help of recovery agents to get back the amount paid out as loans.

I like this.

Effectively the blockchain is a tool that can be used to identify where the unauthorized action took place and possibly link it to an offender.  But the Bitcoins are neutral.

Bitcoins can not really be stolen.

Private keys can be stolen via unauthorized access to someone's computer (malware).

Contracts can be broken, such as the implicit agreement between an exchange and the customers who deposit funds there.

That's all outside Bitcoin though. Bitcoin is just a timestamping and script processing engine.

Bitcoin has no concept of the validity of a transaction beyond the question of whether all the scripts evaluate correctly.

Legal theories are of limited use here, since they are geographically-limited and Bitcoin is global.

The only effective use of resources in this matter is prevention, not recourse.

Given the continued publicity around stolen Bitcoin, I thought it might be worth examining the possibility of recovery from future possessors. I'd actually like to get into a full law review article on this topic. If any lawyers would like to co-author this paper with me, please get it touch. I've written a preliminary blog post on it at http://rjcesq.com/?p=15