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Author Topic: Tracking down stolen Bitcoins  (Read 1506 times)
andrew1carlssin
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March 28, 2018, 04:24:31 AM
 #61

It's possible to track down stolen bitcoins by following the input/output trail, but they will only help if they end up depositing to a known address where you could potentially gather their KYC information. If they end up trading for something such as monero, then the trail will probably be irreversibly broken.

Since it back and forth post ...

can I add

Stolen Bitcoin Tracing - Computerphile
https://youtu.be/UlLN0QERWBs

Satoshi's book editor; SCIpher - https://pdos.csail.mit.edu/archive/scigen/scipher.html
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March 28, 2018, 04:54:18 PM
Merited by chennan (1)
 #62

It's interesting how quickly history disappears in cryptocurrency land Smiley

See, this was actually tried on a significant scale back in the old days. A popular margin trading site - Bitcoinica - was hacked, and as a result, MtGOX (the #1 exchange at the time) instituted a policy that they wouldn't accept deposits of the "tainted" coins stolen by the hacker - and would put a temporary AML freeze on any account that tried - under the theory that such a person might have been responsible (or know who's responsible) for the hack.

Example of a thread about this.

People quickly realized, within a few weeks, that this was not a tenable way forward, b/c overwhelmingly the people affected by the policy were randos who had nothing to do with the hack - they'd just been paid coins that, at some point in the past, had been spent by the hacker.

When the founder of Bitcoinica asked MtGOX to stop this policy, they did, and since then nobody has seriously tried it again.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
ETFbitcoin
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March 28, 2018, 05:22:02 PM
 #63

It is possible and service such as http://chainalysis.com/ already do this. Some government even use chainalysis services to track down stolen/tainted bitcoin and it's really effective when government force exchanges/services to cooperate with chainalysis to see if user attempt to deposit bitcoin to the exchange/services.
But it's not really effective if the user use bitcoin mixer or decentralized exchange to get away.

But i strongly disagree with the idea of blocking/deny stolen/tainted bitcoin on bitcoin network since it could lead to centralization (such controlled miner/nodes by government will vote to block TXO which doesn't cooperate with government).

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March 31, 2018, 12:50:40 PM
 #64

Right now is too many people are bad, or Somebody has motive to be doing like that to track someone if you are giving a chance to tracking you and lead to stolen you bitcoin in your wallet.The best thing is you cannot give your personal information about your wallet to someone or even a close friend and be sure that your password is very unique.you can get more wallet to divided your coin if ever someone hack your wallet small amount will lose.
bitbunnny
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April 04, 2018, 06:22:04 PM
 #65

It is possible and service such as http://chainalysis.com/ already do this. Some government even use chainalysis services to track down stolen/tainted bitcoin and it's really effective when government force exchanges/services to cooperate with chainalysis to see if user attempt to deposit bitcoin to the exchange/services.
But it's not really effective if the user use bitcoin mixer or decentralized exchange to get away.

But i strongly disagree with the idea of blocking/deny stolen/tainted bitcoin on bitcoin network since it could lead to centralization (such controlled miner/nodes by government will vote to block TXO which doesn't cooperate with government).

Exactly cases of stolen Bitcoins or those related to some illegal/shady activities are the good example how regulation can help and why exchanges need to obey some strict rules opposed by governments. It's for the benefit of users and not to harm Bitcoin. And we are against regulation we forget that everyone of us could became a victim of cryptocurrencies illegal activities too.
But I agree that blocking suspicious transactions is not the best idea, it could make more harm than good.

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chennan
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April 08, 2018, 02:15:53 PM
 #66

There are a lot of stories of stolen bitcoins from hacked websites or fooled people.

I was wondering, since all transactions are in blockchain, is it technically possible to make blacklist of wallets where stolen funds where transferred (by claims of victims) to track transfers of those funds and report when the owner can be identified (for example when some goods where bought and delivery address is known)?

Or perhaps just block those blacklisted wallets and don't support them on the network (bitcoin) level?

It is possible to follow the coins, but it is impossible to know if/when the owner has changed. You cannot know if a transfer is from one owners address to another address of his, or if the new address belongs to a new owner.

Even proving that the coins belonged to you could sometimes be difficult  Smiley

On the other hand. Now all? exchanges require identification for buying or selling large amounts of bitcoins. If the thief sells the stolen coins through an exchange then he can be identified.

Blacklisting coins from the blockchain is impossible. Who could do that? Bitcoin is a decentralized system after all...

I feel like this will become the eventual downfall of "open ledger" and non opaque blockchains like Bitcoin and the other countless clones of it.  Major exchange sites will begin to realize just how much liability this puts on them because they absolutely 100% have to report the criminals and have to keep track of these "tainted" coins, and if not then it will look bad on them and will be penalized in some sort of way.

If you have coins that successfully hides all of this meta info from the coins they are exchanging for customers, then that will therefore reduce that liability and also makes exchanges more willing to accept these type of coins. ... At least that's how I see it eventually playing out unless there is some weird law that passes where exchanges are forced to only accept open ledger coins.

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April 08, 2018, 02:38:52 PM
 #67

It's interesting how quickly history disappears in cryptocurrency land Smiley

See, this was actually tried on a significant scale back in the old days. A popular margin trading site - Bitcoinica - was hacked, and as a result, MtGOX (the #1 exchange at the time) instituted a policy that they wouldn't accept deposits of the "tainted" coins stolen by the hacker - and would put a temporary AML freeze on any account that tried - under the theory that such a person might have been responsible (or know who's responsible) for the hack.

Example of a thread about this.

People quickly realized, within a few weeks, that this was not a tenable way forward, b/c overwhelmingly the people affected by the policy were randos who had nothing to do with the hack - they'd just been paid coins that, at some point in the past, had been spent by the hacker.

When the founder of Bitcoinica asked MtGOX to stop this policy, they did, and since then nobody has seriously tried it again.

Perfect example of how that practice of exchanges having to play the "regulators" as well as providing a service is not really feasible.  If exchanges didn't have the ability to be able to check the "taint" on the coins then it wouldn't really matter.  It's still a good thing to have KYC in terms of knowing who is buying and selling coins for tax purposes, but being able to track coins from 5 wallets ago or so that came from a criminals wallet is bad for the global (crypto) economy and end up hurting people who are not doing anything wrong at all.

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April 09, 2018, 09:32:59 PM
 #68

I think this is were people will see the need for some sort of centralization or "policing" of transactions/records. Cryptocurrencies, Blockchain technology,etc are all excellent in an Utopian world where people are all honest and law abiding. But in reality it is not the case, a person or a group with ulterior intent would surely put time to come up with a fool proof plan to steal and eventually get the cryptos converted to fiat. They might even go to the extent of faking their identification if we think that exchanges provide some sort of security! That's why I believe some regulating body or bodies are needed for cryptocurrencies to get mass adopted.
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April 10, 2018, 04:23:46 PM
 #69

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April 11, 2018, 04:30:05 AM
 #70

well this is one of the weaknesses of the digital currency or can also be called bitcoin one of them, the lack of digital currencies like this easy to be stolen, and when lost who will be responsible, yes only the owner of the account and usually if the account has been hacked by others then our bitcoin will disappear as well and can not be restored
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This text is irrelevant


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April 11, 2018, 08:39:48 AM
 #71

well this is one of the weaknesses of the digital currency or can also be called bitcoin one of them, the lack of digital currencies like this easy to be stolen, and when lost who will be responsible, yes only the owner of the account and usually if the account has been hacked by others then our bitcoin will disappear as well and can not be restored

I would argue that this is not the weakness. This is how any trust-less flat structure should function. In such structure you can't really offload your responsibility to higher authority so you have to assume it as is and pay dearly for your fails because there is nobody to argue about them. It may seem harsh but that gives you an idea of how higher authority feels when making decisions.
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April 11, 2018, 08:50:50 PM
 #72

Sometimes its pretty hard to track them down while its even harder to prove that the coins are really yours. You then might needs witnesses
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April 12, 2018, 11:11:05 AM
 #73

Blocks doesnt permit tracking facility as far as i know they just provide the end-to-end motility
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April 14, 2018, 01:42:53 AM
 #74

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