HitRed wrote:The Justice Department says it obtained the private key to the wallet the hackers used to store the currency. To recover the money, the federal government took legal action against an exchange or custodial wallet that has servers in Northern California.
Well, if you are handing out private keys how about helping those that forgot their password.
https://www.msn.com/en-us/money/other/a ... r-BB1cL47x This is due to the characteristics of cryptocurrencies, which, unlike traditional bank accounts or online wallets such as PayPal, do not have any institution or company that stores or can restore lost or forgotten passwords.
False
To Explain a bit... if you hold your BTC in an actual wallet, it is only accessible/recoverable through the pass phrase (a long string of words you need to enter in a specific order) there is no additional passwords. You lose the passphrase, you lose access forever to the BTC and no one can help you. That is what happened in the MSN link you posted. No Gov't can get it either, it's not stored on some server somewhere... access is just gone. Big BTC holders will do things like imprinting metal with their passphrase (so they can't lose it).
If you keep your BTC on an exchange like Coinbase, you relinquish your right to a hold your own passphrase for the wallet the coins are held in. Instead Coinbase controls the passphrase, and you can access coinbase through a simple password and trade from 'your' BTC wallet...as long as coinbase says it is ok. Crypto people hate CEX, because they are inherently NOT decentralized.
So back to the hackers... there are some weird things about this event. Once they sent him the BTC, anyone (and you better bet the USG was all hand on deck given the scale of this) can track where the BTC goes if it leaves the wallet they sent it to. So the tricky part is what the hacker does with the BTC in that wallet. How does he turn it into fiat or something less traceable? He could just hold it there, and no gov't can do anything about it but it's also not 'useful' to the hacker.
trying to turn BTC back into fiat usually happens on a centralized exchange like coinbase... as a company it's subject to US law. If the GOV'T says turn over the passphrase and has legal standing they must comply. Custodial wallet is the same, they (a company) hold your keys because you don't trust yourself to do it, they don't really offer any other value in the arrangement. Some very large above board BTC whales may use a custodial wallet for long term cold storage, but I don't think a hacker would ever have any reason to use a custodial wallet.
So i guess what I find fishy about this is that usually the hacker gets away with the BTC... because they aren't stupid enough to steal millions of $ and then send it to a wallet where they no longer control the pass key. to trust the keys to it with a Centralized Exchange (or Custodial Wallet), is like a real obvious no-no. If I put my conspiracy hat on, it almost seems like the BTC wasn't really important to them, it was about exposing USA weakness and kinda of points to 'foreign state actor' to me. Could be totally wrong, could be that USG had all man on deck, and maybe this hacker had been getting away with the same scheme on a smaller scale and then immediately moved it to a CEX and just moved things so fast authorities weren't prepared to stop it before it was gone... and this time the big brains got involved and were ready for his gameplan and were able to freeze things in time. Regardless, it's an interesting read and thanks for brining it up here!