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Can anybody explain how this works?

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

Can anybody explain how this works?

As far as I read the feds got access to them while the coins were transferred via an online platform (AFAIK not an exchange). That underlines the meaning of “not your keys, not your coins” and shows that a cold wallet is the best way to keep your coins safe.

EDAQ, Germany

Peter wrote:

Can anybody explain how this works?

As slowfyer points out.

I think the person who had bought the ransomware software was storing his bitcoin in a hot wallet on a server he was renting somewhere in the US. The authorities then got a subpoena to take the server, then got the keys from that.

Also, entirely contrary to what most people believe, it is possible to track every single bitcoin (or part thereof) back to where it came from. Anyone can track the bitcoin paid in ransom forever, and when someone eventually exchanges it in a transaction where the individual can be identified (for example, exchanging bitcoin for cash or goods), anyone can know that he money just exchanged came from a ransom. Literally anyone, it is all recorded in the blockchain.

Of course clever criminals obfuscate the path of the coin using “layering” (splitting, routing it around etc.) and by the time they cash in it appears legit. There really is no fundamental difference between laundering money in bank accounts and laundering bitcoin, you have to place the ill-gotten gains in the system (“placement”), you have to shuffle it around to obfuscate the origin (“layering”) and then finally you can use it for something legitimate (“integration”).

Layering is both easier and harder in bitcoin – easier because there is no “know-your-customer” when moving bitcoin between wallets, and harder because of 100% the traceability. Integration used to be easier, but is increasingly harder because the authorities are imposing KYC on bitcoin exchanges.

Biggin Hill

Cobalt wrote:

Of course clever criminals obfuscate the path of the coin using “layering” (splitting, routing it around etc.) and by the time they cash in it appears legit

If you can see that at some point it’s been part of a ransom, then how can it ever appear legit, desptie how often you move it around?

Andreas IOM

alioth wrote:

If you can see that at some point it’s been part of a ransom, then how can it ever appear legit, desptie how often you move it around?

If 1 ransom bitcoin and 1 legit bitcoin are put in a wallet and then 1 bitcoin is withdrawn, is that the ransom money, the legit money or a mixture?

ESKC (Uppsala/Sundbro), Sweden

Airborne_Again wrote:

alioth wrote: If you can see that at some point it’s been part of a ransom, then how can it ever appear legit, desptie how often you move it around?

If 1 ransom bitcoin and 1 legit bitcoin are put in a wallet and then 1 bitcoin is withdrawn, is that the ransom money, the legit money or a mixture?

What if the same done with cash?

EGTR

arj1 wrote:

What if the same done with cash?

The same question, right?

ESKC (Uppsala/Sundbro), Sweden

Airborne_Again wrote:

arj1 wrote: What if the same done with cash?

The same question, right?

Tracking serial numbers?

EGTR

Airborne_Again wrote:

If 1 ransom bitcoin and 1 legit bitcoin are put in a wallet and then 1 bitcoin is withdrawn, is that the ransom money, the legit money or a mixture?

It depends which bitcoin was withdrawn.

Unlike money (e.g. one pound coin is functionally indistinguishable from another) all bitcoins and parts thereof are completely unique and have an entire transaction history behind them. If it has the ransom in its history anywhere, it’s detectably the product of ill-gotten gains.

Same as with stolen goods. If you buy two laptops, and one of them was stolen 2 owners ago unbeknownst to you, the stolen one is still stolen property if you sell it, and you are still liable for dealing in stolen goods. The one that wasn’t stolen is legitimate. Except with Bitcoin it’s more detectable: the bitcoin (or part thereof) has the fraud/ransom/theft in its transaction history.

Last Edited by alioth at 10 Jun 12:25
Andreas IOM
101 Posts
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