What Will Happen If the Mt. Gox Stolen Funds Start to Move

[Upgrade00]

since it is practically impossible to verify the identity of miners who process a transaction.

The founders of the top mining companies are actually known and which miner confirms a particular block is public information.

[betswift]

The decentralized nature of Bitcoin means there isn't a central authority to block or reject transactions based on their history. It would be a significant event, but on my mind the funds could indeed move if someone attempts to do so.

Is it really? Today the No1 mining pool controls 30% hashing power. If you combine the No1. and No2. They two together control over 50%. Both of them are KYCed.  You think it is really decentralized?

well, you’ve touched on a complex and nuanced topic within the Bitcoin ecosystem. The concentration of mining power in a few large pools has indeed raised concerns about the decentralized nature of Bitcoin.

However, while a few entities having substantial control over the hashing power seems to conflict with Bitcoin’s decentralized ideal, the network’s underlying protocol still does not grant them the authority to block or reject transactions based on their history. Their role is to confirm transactions by solving complex mathematical puzzles. Theoretically, they could choose not to include certain transactions in the blocks they mine, but this action would be visible and could lead to a loss of trust and possibly miners moving to other pools, thereby redistributing the hashing power.

Moreover, the Bitcoin community is aware of these centralization concerns, and there are ongoing discussions and efforts to encourage more decentralization, such as the development of more efficient mining hardware accessible to a broader audience and protocols that could reduce the influence of large mining pools.

So, in practice, I think, while the concentration of hashing power presents a challenge to Bitcoin’s decentralization, the network’s design and community efforts aim to mitigate these risks and maintain its foundational principle of being a decentralized digital currency.

[Faisal2202]

So, eventually, no one will want to mine that. It will sink to the very bottom of the mempool.
This is my thought. Feel free to feel differently.

Hmm, so if stolen funds (not mainly of Mt Gox as I don't think they are stolen they have been recovered or aren't they!) are moved then the other wallet address that received it will also get tagged by different entities. So you could easily find it. Now you wish when such funds are moved they will not be processed by the miners and validators. I say validators and miners don't have the ability to know that these funds are white money or black money. As thief could even use methods to obfuscate the tx.

What will happen in this case is, when a tx is moved to another address, the other address will also get tagged and smart people will add those addresses to the blacklist so they won't receive any kind of funds from them. Many CEXs have this feature to ensure the clean flow of BTC or flow of clean BTC, they even have not allowed any kind of deposits from obfuscating platforms. They use there own funds clean ones. They have balcklisted the tagged address so they won't receive funds from them.

[AmoreJaz]

Stolen coins has nothing do with miners who include the transactions to the block, they're own the address and they didn't have any access to the address. The transactions will be included to the block and confirmed ASAP especially they willing to pay high fees.

That address own around 80K Bitcoin or worth of $5.6 Biliion, it's 1/6 of Bitcoin 24 hours volume, so it could affect 16% of Bitcoin price.

But do you really think those who will move that amount will sell in the trading market all at once? Definitely, they will find a way how to discard it quietly and if possible in the black market. So hard to trace if they go in this route.

To CEX or any address, as long as it is coming from this address will be rejected. This is what i think regardless it's CEX or not.

Miners have nothing to do with the transaction whether the transaction came from stolen funds or not. Maybe mining pools can but by default pools and most nodes usually accept any kinds of transaction except those with low fees. However, like others said no CEX will accept this kind of transaction if they found it was from that address then the owner of the account will be under investigation.

Miners may not mind where it is coming from but yes, CEXs may consider the source of it. Especially if they already have addresses on their blacklist/watchlist. So it is easy for them to reject or detect the incoming transaction. Of course, they are also worried about their reputation, particularly those top exchanges which do not want to tie up their business with fraudulent transaction.

[Jason Brendon]

The Bitcoin network is designed to be censorship-resistant but with the increasing centralization of the mining pool, chances are the tx will be filtered out and not added to a block. This is based on a comment by F2pool's co-founder, Chun Wang on X, though the tweet is no more available.

"Why do you feel surprised when I refuse to confirm transactions for those criminals, dictators and terrorists? I have every right not to confirm any transactions from Vladimir Putin and Xi Jinping, don’t I?"

There you go. That's the concern I am sharing. Obviously, other people discussing in this thread don't understand my point.

since it is practically impossible to verify the identity of miners who process a transaction.

Impossible to verify the identity of miners? I don't think you understand this at all. Just so you know, all miners (most of them) are KYCed except for very few mining pools like OCEAN MINING.

also, I find this very concerning. According to a Twitter account @mononautical
https://twitter.com/mononautical/status/1777686545715089605
https://mempool.space/tx/b1dc9e09a97d0ac8ed57179c276dff19d484c1f74b96cd9af547107af4f18086

[yhiaali3]

It is likely that some miners will mine this transaction for stolen funds, for many reasons, but the first of them is profits, of course. If the thieves lure some mining pools with salivating high fees, they will most likely confirm the transaction.

Others may accept because they believe that Bitcoin should remain centralized and authorities should not be allowed to decide which transactions should be confirmed and which should be rejected. This would make the entire network subject to government control.

Ultimately, the issue remains an ethical issue, and no one can force or prevent miners from mining the transaction.

[Darker45]

It would probably cause a good deal of panic and the price might fall to a certain degree. That's worth billions, after all. But, should the person in control of the wallet decide to liquidate the coins, I don't think it will be sent in a single transaction and in a centralized platform. It will most probably be liquidated in smaller amounts, in tranches.

I can't see any reason why miners would reject it. If one miner doesn't want to include it, then another might be interested. It's not as if miners decide as one body and that the voice of the majority would mean the voice of all as far as including or rejecting a transaction is concerned. And I don't think miners would be inclined to censor transactions.

[adaseb]

Nothing will happen if the funds move. Where are they going to send it? Binance? Coinbase? And it’ll obviously get flagged right away and funds frozen and I guess in 10 years they would be sent back to the mt gox victims.

This is why for many of the hacks, the money just stays there and almost never moves. Which leads me to think that these people did it most likely for the rush and not for the money. Why steal all these bitcoins when you will never be able to spend it?

You can consider it burnt pretty much.

[Jason Brendon]

Nothing will happen if the funds move. Where are they going to send it? Binance? Coinbase? And it’ll obviously get flagged right away and funds frozen and I guess in 10 years they would be sent back to the mt gox victims.

I can't agree. why are so many people out there just like you who would think the funds are going to be sent to CEX? My point is that no matter where they got sent to, the transaction won't likely be included because of the centralization of the mining today.

[kotajikikox]

Will it never get confirmed? (no miners dare to include it in the block)
Will it be rejected to be mined? (miners find it is a legal issue so they say no, this is not going into my block)

Miners are not the authorities and should not have direct control of whether bitcoin should be transacted or not.
I still think it would be confirmed if not by one miner then surely another one.
Not everyone is aware of the exact addresses where the stolen funds are from and besides if they were to stop transactions then that would be imitating centralized banks which we all know isn’t what bitcoin wants to be

[Jason Brendon]

I still think it would be confirmed if not by one miner then surely another one.
Not everyone is aware of the exact addresses where the stolen funds are from and besides if they were to stop transactions then that would be imitating centralized banks which we all know isn’t what bitcoin wants to be

ok. can't argue with that. But eventually the guy who put it in will undergo huge trouble and investigation or will be having legal problems. That's so damn sure. You can't get a way with it by being innocent.

[pooya87]

The mining pools, they way they work and have grown has always been a concern since it affects the decentralization of Bitcoin and its mining but we are far from being centralized just because some pools have a high percentage of the hashrate.
This is clear from the fact that when a malicious pool censors a transaction (like the case with malicious AFAC sanctioned ones) the rest of the network includes it in their blocks instead and they are still mined.

What will happen if these particular coins move?
Nothing really. If a malicious pool censors the transaction, other miners will include it in their block. There is a good chance that after this malicious act (which is an attack on Bitcoin) the hashrate of that pool significantly drops as miners connect to another non-malicious pool.
The market could be affected to as the weak hands panic sell and for a day or two we may get a golden opportunity to buy bitcoin at a discount.

[Kakmakr]

Bitcoin is and should be censorship resistant. If a miner refuses to mine these blocks, hopefully some other will. That’s how it should be. Otherwise you can say goodbye to bitcoin. If the bitcoin miners will censor certain transactions because the law enforcement demands it, how can we say that bitcoin is still censorship resistant? How is this any different than the legacy banking where they can freeze any asset of anyone they want?

Maybe we’ll have to completely abandon bitcoin and move to the completely anonymous coins like monero which no centralized exchange will be selling. (D’uh)

This would take us back to the early 2010’s. Zero adoption days.

I think it is a collective decision by people to do the right thing, so sometimes you do something that is to the benefit to the community as a whole. Each incident has merit and should be handled seperately and not just be labelled as being anti-censorship as a standard.

Image someone being paid in Bitcoin to murder children on Live stream and some sick people that paid to watch it. Do you still think it is wrong not to make the choice... not to mine those blocks?

You cannot just take away people's choice by forcing them to mine blocks that they do not want to mine.  

[mindrust]

Bitcoin is and should be censorship resistant. If a miner refuses to mine these blocks, hopefully some other will. That’s how it should be. Otherwise you can say goodbye to bitcoin. If the bitcoin miners will censor certain transactions because the law enforcement demands it, how can we say that bitcoin is still censorship resistant? How is this any different than the legacy banking where they can freeze any asset of anyone they want?

Maybe we’ll have to completely abandon bitcoin and move to the completely anonymous coins like monero which no centralized exchange will be selling. (D’uh)

This would take us back to the early 2010’s. Zero adoption days.

I think it is a collective decision by people to do the right thing, so sometimes you do something that is to the benefit to the community as a whole. Each incident has merit and should be handled seperately and not just be labelled as being anti-censorship as a standard.

Image someone being paid in Bitcoin to murder children on Live stream and some sick people that paid to watch it. Do you still think it is wrong not to make the choice... not to mine those blocks?

You cannot just take away people's choice by forcing them to mine blocks that they do not want to mine.  

It is not and should not be the miners’ problem. Their only job is mining blocks and they shouldn’t decide the blocks they want to or not to mine based on their morals or even laws.

If somebody’s doing a livestream like that, the police should find that guy and jail him. They shouldn’t be messing with the network via miners.

Again, if btc miners (by “miners” I mean the majority of them) are going to censor any transaction because the law says so, then btc will no be different than the current banking.

Today they censor Putin’s transactions, tomorrow they will ban the Canadian truck drivers, then later they will ban your transactions because you didn’t get the vaccine they want. See where I am getting at?

Obviously some miners will always go against the law since they can’t control every miner out there but the question is, is their hashrate going to be enough to mine any blocks? That’s a big if.

The btc network is either censorship proof or not. There isn’t any middle ground between.

[Jason Brendon]

Obviously some miners will always go against the law since they can’t control every miner out there but the question is, is their hashrate going to be enough to mine any blocks? That’s a big if.

If you add up the No1. and No2 mining pools together, it is already more than 51% of the hashing power. To be safe, let's include the No3. Three of them contribute 66% of the total hasing power. If they got warned to not touch that tainted transactions, then very little chance will it get into the next block..

[bluebit25]

I just want to simplify the matter if that really happens then we will likely have the opportunity to buy bitcoin at a good price again, but let's wait and see what might happen. Why do I say that because this issue has been going on for many years and seems to be a way for some parties to navigate, for those who have not experienced it, they may be afraid of a big dumping with bitcoin, but these things can only scare people who do not really understand bitcoin and only come to the market in movements that are easily influenced by news or the crowd. In general, each of us will go through emotional levels during the process of accompanying bitcoin, and when we realize one thing we need more bitcoin, not fear of the things surrounding it.

[m2017]

What Will Happen If the Mt. Gox Stolen Funds Start to Move?
~snip~

Do you think whoever is behind the hack is so stupid that he would send that BTC directly to CEX? The one behind it can make a thousand transactions between his own wallets and then send the "mixed coins" to a mixer, and then he can do whatever he wants with them.

We don't know who is behind the Mt. Gox and can't know his/their level of competence. Suddenly, you overestimate their capabilities and ability to cover their tracks.

Even great crimes involve ordinary people who are prone to making ordinary mistakes.

Will it never get confirmed? (no miners dare to include it in the block)
Will it be rejected to be mined? (miners find it is a legal issue so they say no, this is not going into my block)

A counter question: will this become a problem for miners if the sender sets a very profitable fee/commission? Still, mining is a kind of business, because miners do it for profit.

[SickDayIn]

I highly doubt that miners will refuse to mine these blocks. Even if all of the pools somehow wouldn't mind the transaction, which realistically isn't going to happen, there is still a heap of independent Bitcoin miners that would process the transaction and it would get confirmed. If it moves, some alarm bells will be going off in some government crypto investigations teams and they'll begin the process of trying to determine where it is being moved and why. Then only reason it would be moved is if someone wants to cashout and this would be via a non KYC OTC exchange most likely.

[Vincom]

Stolen coins has nothing do with miners who include the transactions to the block, they're own the address and they didn't have any access to the address. The transactions will be included to the block and confirmed ASAP especially they willing to pay high fees.

That address own around 80K Bitcoin or worth of $5.6 Biliion, it's 1/6 of Bitcoin 24 hours volume, so it could affect 16% of Bitcoin price.

I don't think we can simply calculate BTC volatility like that. BTC trading volume does not only come from real trading demand, it can come from trading bots and is just a reference number. A buying force of about 10B USD from spot BTC ETFs has been able to make BTC price increase 70% from 40K USD to 70K USD, similarly, a selling force of over 5B USD at this time can make BTC price decrease more than 30% or 50%, regardless of the liquidity of about 30B-40B USD per day.

I myself am not too worried about the 5B USD worth of BTC from Mt. Gox, I am worried about the time when it can be sold. In bad times, this selling pressure can trigger a sell-off wave from other investors and quickly bring the market into a crypto winter.

Fortunately, over the years, we have talked about this a lot, but the victims of Mt. Gox have not yet received their BTC. Even when they receive BTC, they may continue to hold it instead of selling off all of it to make a profit after years of being forced to hold BTC through Mt. Gox. So, for now, we can rest assured and focus on the uptrend!