Friday, August 14, 2020

So Apparently the Government CAN Confiscate Cryptocurrency

 This is interesting.  It shouldn't be able to happen in theory.  Does anybody know HOW this happened?  not that I'm for terrorists, but I sure am fuck against the government being able to crack and confiscate crypto.


Anonymous said...

As a guess, I would say they likely had a custodial account at Coinbase or a similar corporation.

Joshua said...

My guess is they used a web wallet on a third party service instead of keeping all their encryption keys airgapped on personal devices.

Always keep your keys under personal control.

favill said...

Let's play a logic game. If the government couldn't confiscate your wealth unilaterally would they allow it to exist?

David Durden said...

If you have your crypto in a crypto broker like Coinbase or somesuch, and they're actively trading, then you don't really possess real crypto. It's just in a pool of crypto which the broker controls. Middlemen, effectively, own and control your crypto on your behalf.

In crypto language, the broker uses the private keys which unlock your cash. They use those keys on your behalf until you take possession of the crypto in your own digital wallet (Trezor or somesuch). Once you transfer the crypto to your wallet, you possess the private keys to the crypto and nobody on Earth can take it from you. The broker no longer has any control over your crypto -- your account with them is zero.

The only way people can get your crypto after that, is if they can get your keys. The wallet basically stores those private keys and handles transactions.

You can even print those keys out on paper and they are as good as gold. Some print them out in a way that it requires 2 of 3 pieces of paper to reassemble the keys and they store those 3 pieces separately -- in a vault or safe or safety deposit box.

The only way government can seize crypto, is if it's stored with a broker. Brokers are already under regulations so they'll hand over any keys the govt orders them to. Terrorists didn't understand that security hole in their cash.

To keep your crypto and keep it safe from govt, you should always be the possessor of the private keys. Your transactions should go through a digital wallet which only you can access. Nobody else can touch it thereafter.

There are some crypto advocates who insist that everyone should always possess their own keys because the brokers can fudge the numbers and artificially manipulate the market. You can use a broker for transactions, but whatever crypto balance is on that broker account at EOD, you need to send that to a digital wallet.

jay said...

We ask similar questions. You can read and view vids @ arguments FOR crypto all you want (and I have) but no one brings up stuff like this. Or when (not if....when....) the central banks begin issuing their own and simply outlaw use of anything else.

August said...

If you can match the cryptocurrency address to an I.P. address, then get warrants to search those computers- not to mention question the suspects- you can gain access. Then, I suppose they either transfer the currency to another account or somehow change them so the original users no longer have access.

Anonymous said...

Not a word in the piece about legality, just that warrants were issued. Given what we have seen in the past, if the federal government was involved, legality is doubtful.

daniel_ream said...

From what I can tell, they don't actually have it, they've just filed warrants to seize it.

Post Alley Crackpot said...

August: "If you can match the cryptocurrency address ..."

You're most of the way there.

One of the problems with the Tor network is that as many as 23% of Tor network exits are compromised in some way that aids attacks on Bitcoin.

Compromised Tor exit nodes running with internal HTTP request rewriting proxies act as automated man-in-the-middle (MITM) attackers for what is an opportunistic attack on Tor users trying to anonymise their Bitcoin access.

And so this has forced trading traffic back into direct access as well as into VPNs.

Printing out crypto tokens for storage is essentially a HODL investment strategy -- people who intend to trade crypto need the networks for trading access.

BTW, you can also HODL American dollars by storing them underneath your mattress. :-)