Originally published at: https://boingboing.net/2020/11/05/1-billion-bitcoin-mystery-solved.html
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It’s only a billion worth if you can convince someone to give you a billion dollars of actual money for it, and the financial institution willing to do that wouldn’t be a financial institution for long. If the hacker had nicked only the amount they could realistically exchange they might have avoided the attention of the feds.
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So when is the fed going to auction them off for pennies not he dollar?
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I wouldn’t be surprised if it turns out the hacker got himself a fat finders fee for handing over the password.
How much can the market swallow without crashng the value of the bitcoin if the Feds want to sell it all?
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I would. It seems likelier the feds threatened the hacker with charges under the DMCA, money laundering and related laws unless they cooperated.
As to what the feds will do with it, I have no idea how they handle sized cryptocurrency, but by now they probably have a policy.
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This is the US govt circa 2020 you’re talking about?
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I never said it was a good policy. But I doubt this is the first cryptocurrency they’ve seized. Also, despite the administration’s best efforts to fill the swamp with Trump cronies, there’s still a large workforce of career LE and civil service personnel.
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Obligatory XKCD:
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Forgive me for not understanding bitcoin. Is it true that everyone can just see this wallet and its value? And the transfer is visible as well, so the only mystery was who controlled it and who received it? If you’re the kind of person who steals a billion USD worth of bitcoin, why not also be the kind of person who spends at least some of it?
The Trump Organization will end up with it.
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…and then promptly lose the password
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*fourth
This assumes the Feds want monetary value. What if they want to crash the value of bitcoin?
A better question might be, is there a good way to short the value of bitcoin then crash the market on purpose?
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It wasn’t worth nearly a billion when he stole it - I think it was a couple hundred thousand at the time.
But as to why not, the first reason is that while the wallet itself is anonymous, in order to spend any of it you need to reveal your ownership to someone. Which, when you consider he stole it from a website that famously was used to do lots of illegal stuff, including hire hitmen*, it becomes reasonable he wouldn’t want to reveal who he really was to anyone for a while. Next, even if it eventually became “safe” to withdraw, a whole lot of countries started looking at cryptocurrencies for tax reasons at this point. So not only would Silk Road be after him, he’d also have to explain how he got all this cash to the IRS (or local equivalent) - including possibly owing back taxes on it. This may not have been as big a deal around the time he stole it, but as the price climbed to the $1bn range, it certainly would become problematic.
Odds are this hacker either came forward himself and made a deal with the feds, or they caught him doing something else and this was his ticket out of some jail time.
* Not confirmed, and it’s not believed that anyone ever actually bought on through there, but everyone at the time thought it was happening.
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Is it actually possible to exchange Bitcoin for money? I thought it was an alt-currency, basically used to “buy” things on the black market, or as a bartering currency for anyone willing to accept it. Or I guess finding someone willing to buy it from you, because they have the cash and they want the Bitcoin. But it’s not really “worth” money, right? I can’t take my Bitcoin to the bank and say, “Money please”, right?
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There are plenty of futures markets around the world, and an increasing number of places you can borrow actual bitcoin too, so shorting is easy. The hard part is crashing the market on purpose…
Apropos of which, it might be worth noting that the bitcoin price is up 7% today – and up 42% in the last month, reaching 3 year highs – so apparently The Market felt this was good news for Bitcoin.
When you buy cryptocurrency, you’re giving someone cash for their cryptocurrency.
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Yes, this is why you’ll hear the term “public ledger” used to describe bitcoin. Every single transaction is pseudonymous (not anonymous) and public for eternity. The “block chain” is a global transaction history. Every time an “address” receives a transfer, that is documented publicly in a transaction “block”. If you have a billion dollars in a wallet, the moment those coins were transferred to your address is recorded publicly in a block. If you, years later, transfer those coins to the fed, that transaction is recorded in a new block. Every “full node” receives and stores copies of these “blocks” as they are “mined” – roughly once every 10 minutes.
Note that a pseudonymous public ledger – updates to which are broadcast to the world every 10 minutes – isn’t actually the ideal mechanism by which to covertly sell illegal drugs
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For anyone wanting to learn more about Bitcoin, https://casebitcoin.com/bitcoin-is might be worth a look.
Bitcoin has quadrennial cycles built in - one started six months ago - and the market cap (and price) is projected to rather rapidly rise from the current $280bn to over $1trn. Bitcoin also has a reasonable chance of becoming a major agent of societal change over the next decade so it’s worth understanding how that could happen. (What we really need is a Kurzgesagt video on Bitcoin!)
