Bitcoin Forum

Let`s us say that a exchange got hacked, Would there be anyway to ban those bitcoins? like blacklist the stolen coins so they cannot be used on the network? I know about going back in time with consensus of the network to a earlier block or forking and using that new chain, but could you just not ban the stolen coins?  I mean make a way to do that?

If you ask me all Mt.Gox coins should be perma banned. All 600,000+k of them
all 7000 Binance coins should be blacklisted

If the new address was known, exchanges could blacklist the address. But eventually, the culprit could find a way to offload the coins.

I am talking about the bitcoin network blacklist the coins, not the exchange.

https://cointelegraph.com/news/feds-claim-proceeds-from-seized-silk-road-fortune-at-only-334-per-bitcoin

Like why do the feds get to sell the coins? It makes no sense and now Mark Karpeles has 600k + coins.

Theoretically miners could refuse to mine a transaction that attempted to move stolen coins, but you'd need the majority to refuse and it's not as if they all work closely together. It also would be probably down to pools to do it as many miners won't check what they're actually processing.

Since they're only in it for the money you could include a ginormous fee to tempt them and I believe that's happened with hacks in the past.

Bitcoin's protocol doesn't know anything about stolen coins, transaction are valid when they are signed by corresponding private keys. It's impossible to mark coins as stolen automatically, so to do this we would need to change the protocol and introduce a trusted third party to do this, but wait a second, Bitcoin was created to remove all trusted third parties, which it successfully did, and now you want to introduce them back? That would turn Bitcoin into Paypal, except it would be shitty, because fees are higher and speed is slower.

There currently are bitcoins and wallet that are blacklisted by the government but you generally don't want that, once you block or partially block the usage of some coins they will start being traded at a discount, and you'd end up with individual bitcoins being worth different values than eachother.
One of the main reasons why currencies work is fungibility, you can't break one of the main properties of a currency Judy because someone's funds got stolen.

Miners can,but will take a huge chunk of percentage of miners to agree to blocking the mining of a current transaction block where the moving of stolen bitcoins in.But mostlikely miners would not agree to such terms because they will lose some profits if they will not continue on running mining each block.

you would first have to prove it that it was your coin in the first place. And that method has to be waterproof as well.  ::) ::)  otherwise what is stopping a random person from claiming your unstolen coins?

I think the network it self doesn't have such functionality. However, there are certain addressess that is banned by exchange platform most likely those that are from stolen funds.

Are we for censorship resistance, or not? Blacklisting is antithetical to what Bitcoin is. The entire proof-of-work mining incentive exists so that miners publish transactions regardless of any other consideration than rational profit motive. If users/miners can start meddling and deciding that some transactions are illegitimate, then clearly Bitcoin can't be trusted any more than the trusted intermediaries (like banks) it was intended to replace.

Exchanges and other centralized services are free to coordinate and blacklist coins among themselves, but implementing a blacklist at the protocol level would be impossible to do. Users wouldn't have it. Blacklisting nodes would eventually split from the Bitcoin network when the outputs are spent.

They wont really care at all on blocking those transactions yet they do know that they would make profits.Miners are the only ones can block these addresses
but it would still need some long agreement or arrangement from miners itself.

So in other words this can actually be but because everyone has their own problems so that it will be difficult to do. Miners also definitely don't want to waste their time on things that might be in vain

Many things can be achieved if enough people can agree to do it. The agreeing bit is the impossible part. The one thing everyone can agree on is making as much money as possible which is why stolen coins are very unlikely to ever be blocked at miner level.

I think it could not be retrieved nor blacklist those lost coins. In blockchain, tracing the lost or havked coins is impossible since there are many processes to be done. Maybe in the future we can have an advanced security on how to trace or stop those hackers.

I don't think it's possible, the culprit can create new address again and again and he can use a mixer, there is a lot of that here, and upload it to exchanges, there are a lot of possible ways for the culprit to get away, but it is a very huge amount, the idea of a fork is possible, but not highly recommended.

Well we would only blacklist hacked coins I guess, so hackers do not profit and miners do, for doing the right thing. I don`t know, it would be up to the network, I would vote fuck you to mt.gox coins lol, but it is to late now, if we had this feature it could of been good.

As for the later there could be fixes put in. I thought of something pretty good.

You can go in time before he used the mixer, but you need to compensate everyone else, a side chain can do this, that reconnects into the main, a chain inside a chain, kind of like how the avengers go back in time and don`t want to fuck up the time thing so they have to reconnect the fork to the future to the past and back to the future.  ;D

They couldn't blacklist the coins even an exchange couldn't do something about it but if you'll report and prove the occurrence of a certain hacking incident, some exchanges could ban an address. You must report an incident right away to an exchange's support for them to do a proper sanction.

Well it is defiantly has been made before or at least said that the addresses where the the stolen bitcoin was sent to were blacklisted when the Japanese exchange Zaif  got hacked and over 60 million worth of bitcoin were sent to multiple addresses, but something tells me that the damage was already done and probably were sent to multiple address other the ones used for the hack and they just said so just to calm the media down and in reality they could not do anything about it, but who knows if it is true or not, we can't prove it.

According to Bitcoin's design, "the right thing" for miners to do is to process transactions based on fee priority and nothing else. Blacklisting, rollbacks, etc. based on external financial incentive is an attack on the network.

I understand why people want to do this and I can agree with their sentiment, but it would completely erode trust in the protocol. Bitcoin would no longer be seen as irreversible and would instead be subject to some kind of morality code. I'm not sure investors and users would take kindly to that.

Theoretically some entity can give miners a signed transaction with a good reward, and ask them to mine it if some unauthorized withdrawal is made from their wallet while hacker's transaction is still in the mempool, but it still requires a large amount of miners (ideally - having all miners on board), and the reward should be bigger than what hackers will offer, otherwise miners will be tempted to include hacker's transaction. It also requires real-time coordination with miners, to tell them whether transaction is authorized or not, and any delay just increases the chance that malicious transaction will get confirmed.

instead of focusing on preventing the hacker from spending the funds he stole and wanting to add restrictive conditions to bitcoin and ruin it, you should focus on how you can prevent the hack from happening in first place, which is a much easier task!

not to mention that 90% of exchange hacks are either inside job or a shady story that the exchange feeds its customer just to scam them out of their money.

true, yah there is a lot of small easy things exchanges could do.

I know what you mean...and I shared that kind of feeling that I think we are inutile in the face of the hackers and scammers all roaming this industry as they continue to sow discord and evils victimizing many people along the way. There must be a solid way we can effectively deal with these people. Unfortunately, it seems that there is nothing we can do as of now. I think there are suggestions on this problem but until the whole industry can decide which should we be using, these people are scot-free to continue bringing menace. Now, let's hope that the time will come when we can find a way to deal with these people. For now, all we can do is to ask platforms to fortify their defenses. And for us, individually, to be always careful not to be a part of the statistics.

After the hacked accounts on Binance, MCaffe talked about the re-org of the whole bitcoin network. It is possible but all miners should go back to the previous block before hacked coins transferred to an address in order to split the chain which called re-org. It is dangerous and will lead to centralization. Long story short: Unlikely, but it is possible.

I would imagine the person would be able to find a way to offload the coins. There are cyber security firms like ciphertrace that can track these types of situations but blacklisting them seems kind of centralized no? Idk

First of all, the addresses where the coins were sent, needs to be tracked. Then, the exchange they were sent to, needs to be informed by the Cyber crime cell or anybody who is able to trace them down and the exchange can take the coins in (so not to let them trade them and withdraw anything in stable coins, fiat or dark coins), return it back to its original owner (from whom they stole the coins) after that owner proves to be the original one. That way, we can stop them. Another way is to expose them and their addresses publicly and ask everyone not to trade with such entities asking to sell a big lot of BTC to you for throw-away rates and even if they try to go based on market price, you should always ask for a Satoshi test and try to trace them if they actually sent from an address which is not related to the hack or they used any mixer.

I don't think that going back a few blocks would help but it would just mess up everything breaking the rules of the ongoing protocol and I never heard any such cases even got tried to be solved such way.

Still boggles my mind, 144,336 Bitcoins seized and the fed got all the money.
600,000 to mark gots(mt gox + mark karpeles) that are still usable
7000 from a hacker in binance

and like 50 other exchanges.

Exchange: Cryptsy
    Amount: $9,500,000 (13,000 BTC and 300,000 LTC)

    Exchange: Mintpal
    Amount: $3,200,000 (3,894 BTC)

    Exchange: Bitstamp
    Amount: $5,100,000 (19,000 BTC)

    Exchange: Bter
    Amount: $1,750,000 (7,000 BTC)

    Exchange: Bitfinex
    Amount: $72,000,000 (120,000 BTC)

    Exchange: Nicehash
    Amount: $60,000,000 (4,000 BTC)

    Exchange: Coincheck
    Amount: $534,800,000 (523,000,000 NEM)

    Exchange: BitGrail
    Amount: $195,000,000 (17,000,000 NANO)

    Exchange: CoinSecure[1]
    Amount: $3,300,000 (438 BTC)

    Exchange: Coinrail
    Amount: $40,000,000 (in various tokens)

    Exchange: Zaif
    Amount: $60,000,000 (5,966 BTC)

    Exchange: MapleChange
    Amount: $6,000,000 (913 BTC)

    Exchange: HitBTC
    Amount: Unknown (A daily volume over $200 million)

I am really curious what exchanges have a withdraw throttle from out of the ordinary amounts of withdraws or even exchanging alts in a short time span. I bet none and it is like the easiest fix.

If users withdraw = 1.5x or 1.25x normal volume stop all withdraws.
Will give them time to take a quick manual look at what is going on.

At least the hackers can`t steal massive amounts in seconds from many different accounts.

in fact coins from crime proceeds first before being used or circulated, crime coins will be washed using various methods so that they cannot be traced. if this is not done, this is very dangerous for them, and many exchanges will block their coins so they cannot be withdrawn.

There should to be a have the way to block the stolen coins.Unfortunately we don't see or have way to block stolen coins.If the codes of the coin show somewhere in blockchain. There should have a way.A software detect it and blocking it.I think we can use the gas system.Everyone pay for transaction.Gas system in scan what they deliver and reject to deliver.So that become useless.You can't get cash from what you have.What is meaning of stealing?

You can monitor the portfolio and consequently monitor the BTCs. I can only see this way of having the assurance that you will know which BTC is stolen or not. But if the robbery does not know the wallet, I can not imagine how to monitor

that is true if the hacker was actually withdrawing anything but they are not. they are "hacking" their system which means they have access to their wallets and the underlying system, for example have access to their wallets and private keys.
not to mention that most of these exchange "hack" cases weren't really a hack but an inside job or the exchanges scamming their users.

We can only trace the transaction but to block it  absolutely a hard job for anyone, not sure if someone could give a hard time doing it. Cause a lot of things happen like this but nobody give us report that they could block the transactions, this means that we can't do anything to bring back loss coins to our wallet or just even freeze it. This is one of the disadvantage in crypto, once lost,  it will lost forever.

hmm yah you right but I am sure there is hacks where they use a bunch of logins leaked and withdraw mass amounts of accounts at the same time though, fuck exchanges anyways lol, p2p or your like giving another man your banana to hold on to.

well that depends on the exchange security. simply not letting larger size withdrawals is like the first thing an exchange should do in their security implementations. but not all of them are actually secure, like the small exchanges with so little volume and users which weren't the ones i was talking about. but if we also include them, then it is possible if their system has such obvious holes in it.

The only thing they can do is to track the lost coins, but they cannot block it since it's not part of the feature of crypto currency which is decentralized. Maybe if they can identify the hacker, there is a chance the coins will be recovered when they can get the private key.

Identifying the hacker is just the best way to do when hack happens, big exchanges have the resources to pay people helping them identify but hackers are just smart, they were still able to take the hack coins, maybe mixers can also be use for this.

whats next..
someone 'buys a lambo' then 5 minutes later sends a special new tx declaring the coins that just moved are 'stolen'

hmm chargeback scamming 2.0

here is a secret.
1. dont give out private keys
2. exchanges should never have private keys on server
3. multisig funds, so if one key is found, its useless alone
4. dont hoard larg stash on one key
5. if your funds move and you didnt initiate it. confirms take 10min. so try CPFP to intercept the unconfirm
by creating a new parent child double tx and get it confirmed back to an address you prefer using more fee than the theif
6. in short, look after your funds because once they are out of your control. they are.. out of your control

other secrets
9 out of 10 'exchange hacks' are actually exchange ceo retirement plans

The efforts needed to get miners to act united on the hacked coins can be gargantuan and if it were possible maybe exchanges who were victims of hacking to the tune of millions in dollars might have done this. In other words, it seems impossible as there is no agreed protocol on this problem. We can never obliged miners to agree to do this.

The recent Binance attack was a case where compromised accounts used the withdrawal system and Binance mistakenly authorized the withdrawal. I believe they mentioned plans to institute more comprehensive internal checks like TimeBits is talking about. They say their wallets weren't compromised, and I can see my deposit addresses haven't changed.

This appears to be the new frontier for exchange hackers: Compromise accounts, patiently wait, then try to slip through the withdrawal system unnoticed. Another similar attack on Gatehub just happened (https://bitcointalk.org/index.php?topic=5151685.0), where dozens of user accounts were compromised through API keys. The attack netted a $10 million reward for the hackers.