WSJ: How the Feds Tracked Hacked Bitfinex Funds

pushups44

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Quote from: bbc.reporter on February 11, 2022, 10:41:58 PM

This makes it possible that the real hackers also hold the private keys for the wallet or the authorities do not really have the private keys for the wallet.

As soon as the government catches crypto thieves, they deposit the ill-gotten gains into their own wallet to manage the custody. According to the news reports, the majority of the stolen loot has been recovered. Obviously, after so much time has passed, it's not possible to seize all of it - still, a good percentage (maybe 75%+) is controlled by the government.

crwth

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I would've wanted to read the whole article, but the subscription is getting in the way. Anyway, I just read your post instead.

I'm not that surprised that people are using NFTs to cycle money or something like that, and it just makes people lose trust in something so innovative and make people own it. Don't get me wrong; I'm all in the idea of absolute ownership of digital goods; it's just that there's always going to be a "bad light" towards crypto, and it's always going to be like that.

bbc.reporter

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Quote from: franky1 on February 10, 2022, 04:51:20 PM

Quote from: pooya87 on February 10, 2022, 12:38:56 AM

Quote from: bbc.reporter on February 09, 2022, 10:16:24 PM

@franky1. Do you trust this official press release to be the real story? I reckon real hackers and moneylaunderers who have control to more than $3 billion in bitcoin might be more careful and smarter. The skeptical me is beginning to think that those people in social media who speculate that they are only scapegoats might be correct. Would it be shocking if the hackers was a group commisioned by a corrupt government intelligence agency?

Have the authorities recovered any funds or is it just tracking and arresting some people?

but the main lot the ~95k[Wallet 1CGA4] never went through an exchange not cashed out by the pair, nor seized in 2017-21.
but instead seized in 2022

Quote

Between January 31, 2022, and February 1, 2022, law enforcement obtained approval to execute a lawful seizure
supported by probable cause under exigent circumstances and used the private keys from
LICHTENSTEIN’s file to seize Wallet 1CGA4’s remaining balance of approximately 94,636
BTC, worth $3.629 billion

Are the authorities not supposed to transfer those coins to a more secure wallet? It might not only be the comedy couple who is holding the private key for the wallet hehehe. This clearly should be very head shaking for everyone. The official story is not very convincing.

Quote from: dunfida on February 10, 2022, 06:39:55 PM

Quote from: dothebeats on February 10, 2022, 03:00:46 PM

I am inclined to think that they are just part of the hacking group, perhaps scapegoats or those who collect initial info but not mainly the brains behind the actual hack. They are so fond of social media, and they have done things that could obviously put their identities in peril, and normally those who do some hacking do not engage in these kinds of activities.

The true hackers are still yet to be jailed, I believe. These two doesn't seem to be the masterminds of the heist from their most recent activities.

I do actually have the same thoughts that these couple arent the masterminds but rather just some cover ups on the said crime.It is really just impossible to think that hackers wouldnt really
be erasing their tracks that could possibly expose their identity which they are fully aware of that and its just dumb that they would be making out actions without considering that those
addresses were heavily monitored and im bit sure that they are fully aware of that but this situation a little bit giving questions on my mind.

This makes it possible that the real hackers also hold the private keys for the wallet or the authorities do not really have the private keys for the wallet.

pushups44

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Quote from: OgNasty on February 10, 2022, 05:06:17 PM

Quote from: pushups44 on February 09, 2022, 08:58:25 PM

"Mr. Lichtenstein and Ms. Morgan allegedly exchanged some of the bitcoin into other cryptocurrencies, according to the complaint, cashed some out via bitcoin ATMs and used the stolen funds to purchase nonfungible tokens, or NFTs. These digital collectibles have lately become another way crypto thieves launder digital money, the U.S. Treasury Department said last week in a report."

Does this mean that there won't be as many fresh NFT mints shooting up 100x before crashing miserably while some get rich and others are left holding the bag? The funny thing is, I bet they were actually making a fortune doing this. They probably went from thinking about how they'd launder their billions to wondering why everyone isn't rich since it's so easy to pump and dump.

Has anyone discovered their opensea profile yet (I'm sure they probably had hundreds). It would be very fascinating to see their transaction history and see if they really were making a fortune flipping NFTs while trying to launder their funds. Would surprise me at all...

This is one of Heather Morgan's ETH addresses: 0x014a113a454d1d20e954243E224f33745353C8ac

The above address is what the Ethereum name rzk.eth resolves to.

According to reports in the media, and from my own investigation, her Opensea profile leads to a 404 error (probably due to Opensea removing it). I believe she made her own NFTs here.

dunfida

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Quote from: dothebeats on February 10, 2022, 03:00:46 PM

I am inclined to think that they are just part of the hacking group, perhaps scapegoats or those who collect initial info but not mainly the brains behind the actual hack. They are so fond of social media, and they have done things that could obviously put their identities in peril, and normally those who do some hacking do not engage in these kinds of activities.

The true hackers are still yet to be jailed, I believe. These two doesn't seem to be the masterminds of the heist from their most recent activities.

I do actually have the same thoughts that these couple arent the masterminds but rather just some cover ups on the said crime.It is really just impossible to think that hackers wouldnt really
be erasing their tracks that could possibly expose their identity which they are fully aware of that and its just dumb that they would be making out actions without considering that those
addresses were heavily monitored and im bit sure that they are fully aware of that but this situation a little bit giving questions on my mind.

OgNasty

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Quote from: pushups44 on February 09, 2022, 08:58:25 PM

"Mr. Lichtenstein and Ms. Morgan allegedly exchanged some of the bitcoin into other cryptocurrencies, according to the complaint, cashed some out via bitcoin ATMs and used the stolen funds to purchase nonfungible tokens, or NFTs. These digital collectibles have lately become another way crypto thieves launder digital money, the U.S. Treasury Department said last week in a report."

Does this mean that there won't be as many fresh NFT mints shooting up 100x before crashing miserably while some get rich and others are left holding the bag? The funny thing is, I bet they were actually making a fortune doing this. They probably went from thinking about how they'd launder their billions to wondering why everyone isn't rich since it's so easy to pump and dump.

Has anyone discovered their opensea profile yet (I'm sure they probably had hundreds). It would be very fascinating to see their transaction history and see if they really were making a fortune flipping NFTs while trying to launder their funds. Would surprise me at all...

franky1

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Quote from: pooya87 on February 10, 2022, 12:38:56 AM

Quote from: bbc.reporter on February 09, 2022, 10:16:24 PM

@franky1. Do you trust this official press release to be the real story? I reckon real hackers and moneylaunderers who have control to more than $3 billion in bitcoin might be more careful and smarter. The skeptical me is beginning to think that those people in social media who speculate that they are only scapegoats might be correct. Would it be shocking if the hackers was a group commisioned by a corrupt government intelligence agency?

Have the authorities recovered any funds or is it just tracking and arresting some people?

the 119k coins where split up where ~95k remained untouched[Wallet 1CGA4]untill 2022..... and the other ~24k where the funds were split up and then looped through alphabay and several exchanges between 2017-2021
some of the 24k coins were spent, released, cashed out.. and some where frozen by exchanges and seized in some instances between 2017-21.
but the main lot the ~95k[Wallet 1CGA4] never went through an exchange not cashed out by the pair, nor seized in 2017-21.
but instead seized in 2022

Quote

Between January 31, 2022, and February 1, 2022, law enforcement obtained approval to execute a lawful seizure
supported by probable cause under exigent circumstances and used the private keys from
LICHTENSTEIN’s file to seize Wallet 1CGA4’s remaining balance of approximately 94,636
BTC, worth $3.629 billion

thus more then 100k coins(over 5 years) but less than 119k coins HAVE BEEN SEIZED from different places, over 5 years to the 4th of february.
and the pair have been arrested on the 8th of february(now on ankle monitoring house arrest)

dothebeats

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I am inclined to think that they are just part of the hacking group, perhaps scapegoats or those who collect initial info but not mainly the brains behind the actual hack. They are so fond of social media, and they have done things that could obviously put their identities in peril, and normally those who do some hacking do not engage in these kinds of activities.

The true hackers are still yet to be jailed, I believe. These two doesn't seem to be the masterminds of the heist from their most recent activities.

Anonylz

hero member

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What i find a bit surprising is how this couple was able to pull such a huge heist and cashing out becomes a problem! From the explanation above it seems they were lost on how to go about spending the money,
I thought every good hacker would have a correct cash-out plan, to me it seems, these two are not the real brain behind the heist.
The sad part is the media will capitalize on news like this to paint crypto bad the more, at least the authorities where able to apprehend them.

kryptqnick

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It's interesting to see how NFTs are now also a part of money laundering schemes (I've seen them being a result of stolen intellectual property before, but not used for money laundering), and the story of tracking the lost coins is also worth attention. It's great that they were caught and money was seized because it shows that Bitcoin doesn't prevent the work of law enforcement, and I also liked the part franky1 pointed out about a $500 giftcard to Walmart. I do trust that it was the case because being reckless is what usually get people caught (just recall how Ross Ulbricht was caught, using an email containing his name to tell people about Silk Road on the Internet).

hatshepsut93

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Quote from: Kakmakr on February 10, 2022, 12:40:56 AM

The thing is, the moment when Crypto currencies touch centralized Fiat services that adhere to KYC reguirements.... ALL pseudo-anonymity is gone. They used Crypto exchanges that has to report to law enforcement agencies and that is why their real identities were exposed.

They probably believed that their coins looked clean and they would be able to spend their fiat openly, because what's the point of stealing millions of dollars if you can't buy a house or a car with them? And let's ask ourselves, how many crypto criminals do get away with their crimes? All these hacks, scams, rug pulls, pump and dump schemes, ponzis and so on, and there's has been so little arrests made. So it's not like tracing all transactions of a person who submitted their KYC data is that easy.

cryptomaniac_xxx

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Quote from: pooya87 on February 10, 2022, 12:50:47 AM

Quote from: Kakmakr on February 10, 2022, 12:40:56 AM

It does not say if these coins were pushed through Mixer services, because that would have been interesting to see if they can still trace it, once it goes through Mixer services. (Also which Mixer service was used)

It would be interesting to know but I don't think they will ever reveal it if they had been able to trace any bitcoins that went through a mixer. Imagine if one of the centralized mixers was a honeypot, if they said anything about it that service dies right away because nobody would ever use it again.

Or they can just used any 2nd tier exchanges out there or maybe just fly by night without KYC or even i there is KYC, as reported they have used fake identifies. So they know what they are doing, but maybe they become too complacent and think that they are off the hook and that they are untraceable. Also interesting what tools the government did used to crack the blockchain and find the foot print.

Darker45

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The case has grown fuzzy after reasonable doubts are raised. I have actually been doubting the facts stated by the justice department ever since I read the news. I just couldn't believe how lax these two launderers seem when they are actually hiding billions of money. Not only are they keeping a huge amount of treasure, this treasure is stolen. They must have been very much aware that the authorities are waiting for just a single false move from them.

What I'm somehow convinced of is that they are not the hackers, although it is mind-boggling how the hacker has trusted them so much so that he/she sent all the funds to them to launder. Not to mention that the way they do things, they don't seem to be experienced and reliable.

What's sure at this point is that what really took place is not the one that is being narrated in the media.

witcher_sense

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Quote from: Kakmakr on February 10, 2022, 12:40:56 AM

It does not say if these coins were pushed through Mixer services, because that would have been interesting to see if they can still trace it, once it goes through Mixer services. (Also which Mixer service was used)

Interestingly, they used Alphabay darknet marketplace to launder some of the stolen coins, but federals have managed to seize and shut down this market and got access to all transaction logs that would later be used to identify our suspects. By default, Alphabay worked just like a mixer: it pooled all incoming bitcoin transactions together, mixed them in some way and paid clients from a different, unlinked to a previous transaction, address making it impossible to find a connection between incoming and outcoming transactions. Unless you had access to logs, which Alphabay recorded and kept for an unknown reason. The conclusion is no matter how a mixer is good at obfuscating transaction history, you are in trouble if they are covertly recording all that is happening during a mixing process.

pooya87

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Quote from: Kakmakr on February 10, 2022, 12:40:56 AM

It does not say if these coins were pushed through Mixer services, because that would have been interesting to see if they can still trace it, once it goes through Mixer services. (Also which Mixer service was used)

It would be interesting to know but I don't think they will ever reveal it if they had been able to trace any bitcoins that went through a mixer. Imagine if one of the centralized mixers was a honeypot, if they said anything about it that service dies right away because nobody would ever use it again.

Kakmakr

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The thing is, the moment when Crypto currencies touch centralized Fiat services that adhere to KYC reguirements.... ALL pseudo-anonymity is gone. They used Crypto exchanges that has to report to law enforcement agencies and that is why their real identities were exposed.

It does not say if these coins were pushed through Mixer services, because that would have been interesting to see if they can still trace it, once it goes through Mixer services. (Also which Mixer service was used)

I do not want to know this because I want to do something illegal, but if I make donations to Wikileaks or some other organization... I want to know that my pseudo-anonymity will be safe.

pooya87

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Quote from: bbc.reporter on February 09, 2022, 10:16:24 PM

@franky1. Do you trust this official press release to be the real story? I reckon real hackers and moneylaunderers who have control to more than $3 billion in bitcoin might be more careful and smarter. The skeptical me is beginning to think that those people in social media who speculate that they are only scapegoats might be correct. Would it be shocking if the hackers was a group commisioned by a corrupt government intelligence agency?

Have the authorities recovered any funds or is it just tracking and arresting some people? Because it can be a determining factor, for example if there is no funds recovered (the exchange and the victims have to be paid) that means there is a very high chance that the story is fake and as you said these people are scapegoats or maybe just the foolish launderers who don't know who the actual hackers are.

Keep in mind that historically speaking it is not unheard of to see hackers being caught this way. There has been many cases of them using Coinbase and were caught easily!!!

Ozero

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Yes, the story is a bit confusing, and, apparently, will continue. Therefore, to combat hackers and all sorts of scammers, KYC for cryptocurrency exchanges as user identification is necessary and very useful. In any case, this is a fairly successful operation by the US law enforcement agencies. After all, it’s not every day that about 95,000 stolen bitcoins worth $3.6 billion are seized. Will the bitcoins be returned to the victims? Again, if the victims used the exchange anonymously, it would be practically very difficult for them to prove that it was they who stole bitcoins from them. The regulation of cryptocurrencies by states has a certain positive role.

bbc.reporter

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@bittraffic. Agreed. There are many people who are also very skeptical of this. It really appears that the government wants everyone to accept that their official press release is really how the story transpired, however, can we trust the government? We know they have always lied to the people.

bittraffic

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Quote from: bbc.reporter on February 09, 2022, 10:16:24 PM

@franky1. Do you trust this official press release to be the real story? I reckon real hackers and moneylaunderers who have control to more than $3 billion in bitcoin might be more careful and smarter. The skeptical me is beginning to think that those people in social media who speculate that they are only scapegoats might be correct. Would it be shocking if the hackers was a group commisioned by a corrupt government intelligence agency?

Press releases are just some sort of making people think they got the culprits so everything is safe and sound. But it's far from the truth usually. These do doesn't look like a hacker. They are old enough to understand the consequences if they truly are the ones who got the skills to penetrate servers.

Having a TikTok account and posting thier faces on social media feel like they are celebrities doesn't look like a hacker will be fond of doing. The people who can hack exchanges are not scriptkiddies.

Topic: WSJ: How the Feds Tracked Hacked Bitfinex Funds (Read 291 times)