Sure, You Can Steal Bitcoins

Share

Ter April 2012, the web webpagina Betcoin lost Trio,171 Bitcoins when someone hacked into three separate computers to zeehond the online gambling destination. With just a few mouse clicks, the thief made off with a fountain of digital currency that’s now worth close to $400,000.

But the money wasn’t exactly gone. After the heist, it sat for a year ter a Bitcoin wallet, visible to the entire world, yet managed only by the criminals. Then, this year, on March 15, the thief embarked to specie it out. He’d take petite chunks of Bitcoins, known spil ",peels,", and budge them from one wallet to the next. Eventually, about 375 Bitcoins (that’s $45,000 at today’s exchange rates) went to known Bitcoin exchanges such spil Mt. Gox where they could be converted into U.S. dollars.

Whoever pulled off the Betcoin heist hasn’t bot caught, but once stolen Bitcoins pass into an exchange or they’re used ter some other transaction, law enforcement has many ways of tracking down a culprit. You need to provide proof of identity to trade on Mt. Gox. Exchanges can also arm overheen information such spil IP addresses and bankgebouw account numbers to investigators.

The feds are still worried about such thefts, and about Bitcoin’s role ter money laundering and illicit commerce. Last year, a leaked FBI Intelligence Assessment warned that the private nature of the digital currency could make it hard for law enforcement to track criminals. You don’t need any ID to create a Bitcoin wallet, but the Bitcoin network is built ter a way that can make it awfully difficult for criminals to spend the digital currency once they steal it.

Bitcoin is a bit of a paradox. It can be used almost anonymously: any two people can lightly set up brand fresh Bitcoin wallets, meet ter a park, and exchange contant for Bitcoin. But at the same time, Bitcoin trades are public: all transactions are collective ter a publicly available verkeersopstopping called the Blockchain that’s posted to the Bitcoin peer-to-peer network.

That public ledger makes it pretty rough for big-time criminals to launder money through the network. At least that’s what researchers at the University of California and George Mason University found when they studied the Bitcoin network by developing sophisticated implements to track how money wasgoed moving around it.

The researchers argue that it’s often possible, when paired with current law enforcement contraptions, to learn a loterijlot of information about people who are moving Bitcoins. ",Laundering money – moving around illicitly obtained Bitcoin at scale – seems very difficult,", says Sarah Meiklejohn, the University of California, San Diego, graduate student who co-authored the investigate, which is set to be introduced at a technical conference te October.

The feds don’t seem to realize this just yet. They want fresh ways to track criminals who are using Bitcoins. And that’s why the Bitcoin Foundation went to Washington on Monday, to explain itself before more than 50 representatives from agencies such spil the Treasury Department, the Secret Service, and the Federal Kantoor of Investigation. The Foundation – the group that oversees development of the core Bitcoin software – wants to see if it can come to an understanding with government authorities.

While small-scale money laundering ",seems fairly possible,", admits Meiklejohn, the big fish – people who might want to stir a million dollars through the network – will have problems. There simply aren’t enough places to exchange large amounts of money ter an anonymous way.

",The money that’s moving around the system every day is just not enough to disguise large quantities of Bitcoin,", Meiklejohn notes.

Any criminal who wished to quickly unload a large number of Bitcoins would likely have to stir it through a Bitcoin exchange at some point – and those exchange companies are working hard to stick to federal anti-money laundering regulations.

Jerry Brito, senior research fellow at the Mercatus Center at George Mason University, believes the feds aren’t spil far from seizing this spil it may seem. He wasgoed at yesterday’s meeting ter Washington, held at the Treasury Department, and he thinks that the Bitcoin Foundation ",got a fair hearing, and people there were very interested and very tuned ter. They asked a lotsbestemming of good questions. I wouldn’t say it wasgoed hostile.",

Ter theory, a law enforcement agency could even recover the Betcoin money – at least spil it moved through legitimate exchanges.

But Betcoin’s proprietor, who goes by the online nickname ",Hippich,", isn’t optimistic. He says the thief who stole from him wasgoed sophisticated: they hacked three machines running three different operating systems. So he’s ",99.99 procent", certain that he’ll never see his Bitcoins again. Today, he has shuttered the webpagina, and is attempting to sell the domain to recoup some of the money he lost.

But if the Betcoin thief attempts to use online money laundering services, he may find himself the victim. Meiklejohn and hier fellow researchers attempted some of those services out – sites with names like Bitcoin Laundry and Bitmix – and they report some pretty rough practices. One service didn’t work. It simply returned the same Bitcoins, un-laundered.

Another service stole their money. Spil Meiklejohn observes, ",If someone comes to you and says, ‘I have a million dollars worth of Bitcoin. Can you mix it to mij?,’ I don’t know what your incentive is to do it rather than just steal it.",

Related movie: Genesis mining vs Hashing24


Leave a Reply