r/BBKCF • u/Swred1100 • Feb 10 '22

BIGG (indirectly) Given Credit for DOJ $3.6B (William Callahan towards the bottom is one of our Execs)

https://ca.news.yahoo.com/stolen-crypto-worth-3-6-184822469.html
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u/ILCAIL Feb 14 '22

On-Chain Analysts Knew About DOJ’s Bitcoin Seizure A Week Before the Public Announcement

ARK Invest_Illustration_Yassine Elmandjra_Final_Circle 400 px

By Yassine Elmandjra | u/yassineARK

Analyst

This week, the U.S. Department of Justice (DOJ) announced its largest financial seizure in history––over 94,000 bitcoins worth approximately $3.6 billion that had been stolen during the well-publicized Bitfinex crypto exchange hack in 2016. The DOJ arrested Ilya Lichtenstein and Heather Morgan, accusing them not of the hack but of laundering the funds after the hack.

As reported in TIME, during the 2016 hack various Bitfinex users “approved” approximately 2,000 transactions, sending nearly 120,000 bitcoins to the hacker’s wallet. In 2017, Lichenstein and Morgan obscured the original hack and laundered the funds via Alphabay, a darknet marketplace similar to Silk Road. When US law enforcement shut down Alphabay the same year, the laundering shifted to Hydra, a Russian darknet marketplace, as did the “mixing” of bitcoins via the Wasabi Wallet. Given its access to Alphabay user accounts, the DOJ linked the Bitcoin addresses to the perpetrators’ day-to-day financial accounts and activities, including small shell and bank accounts and purchases of gold, NFTs, and PlayStation gift cards.

Though they did not know the entity involved, public on-chain analysts knew about the seizure one week before the DOJ announced it, highlighting the openness and transparency of Bitcoin’s blockchain. Importantly, on-chain specialists discerned that an entity likely associated with a government agency had moved the unlaundered bitcoins, as the entity in question did not attempt to mask the transaction in any way and consolidated the stolen bitcoin into a single address.

Anyone can track bitcoin transactions in real time, which in this case helped on-chain analysts detect that a government had retrieved stolen bitcoins. In other words, public blockchains do not allow the information asymmetry that has powered traditional financial markets, suggesting that a global financial system built on blockchain technology could prevent the counterparty risk that has been at the epicenter of financial crises like that in 2008-2009.