[HN Gopher] FBI Looking for Hashflare Victims
       ___________________________________________________________________
        
       FBI Looking for Hashflare Victims
        
       Author : telis
       Score  : 119 points
       Date   : 2023-01-06 11:02 UTC (11 hours ago)
        
 (HTM) web link (www.fbi.gov)
 (TXT) w3m dump (www.fbi.gov)
        
       | londons_explore wrote:
       | > The government alleges that the HashFlare cloud mining service
       | did not have access to the volume of mining power that was needed
       | to service the amount of mining contracts it sold to the public.
       | The government further alleges that, to enable HashFlare to
       | create the illusion that it was mining bitcoin, Potapenko
       | purchased bitcoin from a third party and distributed it to
       | victims who were requesting withdrawals from their HashFlare
       | account.
       | 
       | This seems kinda reasonable as long as it was disclosed... Buying
       | and setting up mining hardware takes a while. Buying bitcoins on
       | the open market from someone else who has mining hardware is
       | functionally identical.
       | 
       | It's a bit like going to a farmer and giving him money to grow a
       | field of corn for you, only to find out he actually gave your
       | money to some other farmer who grew the corn and gave it to you.
        
         | fnordpiglet wrote:
         | That's also how a Ponzi scheme works
        
         | sofixa wrote:
         | I think you're missing an important component:
         | 
         | > who were requesting withdrawals from their HashFlare account
         | 
         | So it was more like a ton of people pay a farmer to grow a
         | field of corn, and when they ask for corn in return, the farmer
         | buys corn somewhere else and presents it as from his field.
         | Meanwhile the farmer hasn't planted what they should have, and
         | hopes not too many people ask for their cork or they'll crash.
        
           | londons_explore wrote:
           | So the real issue is 'Hashflare did not have sufficient
           | assets to cover balances in all customer accounts'.
           | 
           | Akin to 'farmer neither has corn growing nor money to buy
           | corn to fulfil promises to customers'
           | 
           |  _That_ would be the crime...
        
             | itake wrote:
             | My understanding is this farmer was paid to grow food, not
             | buy it from another farmer.
             | 
             | The expectation was this farmer would grow new calories
             | (increasing the supply of food for the region).
             | 
             | You may argue there is a fixed number of crypto released
             | and thus not fair, but allocating that money towards the
             | open market instead of toward hardware and energy company
             | has an impact on the crypto's value.
        
       | paulpauper wrote:
       | When are we going to start seeing arrests of fraudulent
       | promotions, rug pulls, and shitcoin promotions by celebrities
        
         | astrange wrote:
         | Today.
         | 
         | https://www.justice.gov/usao-edny/pr/non-fungible-token-nft-...
        
       | xcdzvyn wrote:
       | I'm not sure what people expected investing in a coin called
       | "Polybius"[0].
       | 
       | [0] https://en.wikipedia.org/wiki/Polybius_(urban_legend)
        
         | mhitza wrote:
         | POLYBIUS - The Video Game That Doesn't Exist
         | https://www.youtube.com/watch?v=_7X6Yeydgyg
        
         | H8crilA wrote:
         | I'm not sure what people expect of crypto in general yet this
         | thing as a whole has some insane marketcap.
        
           | sn_master wrote:
           | Buying drugs online is a big market and won't go anywhere.
           | That, and transferring money to all kinds of people and
           | regions where traditional banking tools aren't properly
           | functional.
        
       | uconnectlol wrote:
       | Why am I meant to care about this? Stop protecting the right to
       | be so dumb to fall for this stuff. I'm not saying you should be
       | punished for being uninformed. I'm saying the middle ground is to
       | do nothing, no need for FBI here. Shave off some unneeded police
       | resources. Cloud crap consumers are harmful to society, they
       | don't need protection, they created stuff like every door having
       | a camera connected to Amazon.
        
       | jsmith99 wrote:
       | They also specifically ask for people who made withdrawals.
       | 
       | In a fraud like this, those who lost money often recover from the
       | people who got out in time. Eg almost 90% of the losses from
       | Bernie Madoff were recovered by suing those who innocently
       | withdrew their 'gains' before the ponzi scheme was discovered.
        
         | dboreham wrote:
         | Not all the Madoff withdrawals were innocent.
        
           | Scoundreller wrote:
           | A lot of his clients were "feeder funds", and the trustee
           | settled with a lot of them that they should have known
           | better.
           | 
           | That's where a lot of the clawbacks/recalls were from.
        
             | badocr wrote:
             | Jeffry Picower estate settled for a US$7.2 billion sum
             | circa 2010 according to Wikipedia. This Picower character
             | seems to have had a shady fortune history, he also was
             | found dead at his swimming pool around 2009.
        
         | jandrese wrote:
         | Although this is the crypto realm which makes clawbacks harder.
         | Usually when one of these exchange scams collapses you'll get a
         | news story about how "unknown hackers stole everything" right
         | afterward.
        
         | Waterluvian wrote:
         | I guess they can't just ask people to hand over all "proceeds
         | from a crime" and expect much response.
        
         | jcpham2 wrote:
         | Trendon Shavers operated the first Bitcoin based Ponzi scheme
         | out of Texas and it folded in 2014. When he defaulted he tried
         | to claim Bitcoin wasn't money, he wiped or lost all his records
         | and access to the AWS hosting the scam, he perjured himself and
         | claimed to have fully repaid "jcpham" under deposition.
         | 
         | Liars gonna lie. My deposit and withdrawal addresses and the
         | blockchain kinda shows no, I wasn't made whole
         | 
         | It takes awhile to come to grips with this and actually see
         | yourself as victimized- I mean, a really long time. The overall
         | personal lesson is don't give strangers money, especially if
         | it's too good to be true.
         | 
         | Feeling depressed thoughts and guilt over the greed of seeking
         | interest takes awhile to move beyond.
        
         | avsteele wrote:
         | That's fascinating.
         | 
         | It would seem to set up a situation where your incentive, if
         | you suspect a Ponzi scheme, is to quietly withdraw your money
         | early then keep your mouth shut. Unfortunate if true.
        
           | themitigating wrote:
           | Or move to another country without extradition, something I'm
           | surprised more people don't do.
        
             | pjc50 wrote:
             | There are a lot fewer of those than you expect. And of
             | course if you need to do that, you can never come back to
             | see your family even for a visit.
        
               | fortuna86 wrote:
               | statute of limitations?
        
               | hermitdev wrote:
               | I'm not a lawyer, but I think statute of limitations only
               | protects you against charges being filed for a crime
               | performed X years ago. It doesn't protect you if you run
               | from charges for X years.
        
           | vkou wrote:
           | No, it doesn't, because all Ponzi schemes will always
           | unravel. Keeping quiet isn't going to help you.
           | 
           | What this does is it creates an incentive to not invest in a
           | ponzi, period. Without this rule, it makes sense for me to
           | invest into something that I think is a Ponzi, as long as I
           | believe that I'll be able to cash out before it collapses.
        
           | itsoktocry wrote:
           | > _It would seem to set up a situation where your incentive,
           | if you suspect a Ponzi scheme, is to quietly withdraw your
           | money early then keep your mouth shut._
           | 
           | How so? Law enforcement can claw it back, and the earlier you
           | withdraw, the less your gains.
        
             | Scoundreller wrote:
             | The limits depends on the jurisdiction.
             | 
             | And harder to claw back funds after you're already dead and
             | the estate has been settled. Or you've already spent it
             | all.
        
               | saghm wrote:
               | I feel like I'm missing something here. Are you saying
               | the optimal strategy is to withdraw early, keep your
               | mouth shut, and then...die? Are these schemes usually
               | long-lasting enough that a non-trivial number of people
               | who invest early would be expected to die by the time
               | they're discovered?
        
               | drunkonvinyl wrote:
               | As long as you don't claw back after you die.
        
               | maerF0x0 wrote:
               | > Or you've already spent it all.
               | 
               | This is only true if you never have income in the future.
               | They can garnish and/or reach in and take other assets
        
           | jerf wrote:
           | This is an important aspect of the financial world to
           | understand, because a lot of things work this way. It doesn't
           | have to be a "Ponzi scheme", this happens anywhere where a
           | lot of people pool money together, nominally have an
           | agreement that they can withdraw whenever they like, and that
           | money is used for something illiquid, regardless of the
           | reason for the illiquitity, resulting in a situation where if
           | too many people withdraw at once, the fund can't cover it.
           | 
           | Ponzi schemes are an extreme example, because the fund is
           | illiquid because it lied about its investments and simply
           | _stole_ the funds, meaning there 's absolutely no way to
           | cover.
           | 
           | But there's a lot of ways this can occur. This basically
           | describes a "bank run"; you nominally have an agreement you
           | can withdraw your cash at any time, but if everybody does it
           | at once there's a problem because the bank is using it to do
           | things like fund mortgages, which can not simply be called
           | back in instantly if needed. Even if the bank has the right
           | to do that, and for various things it sometimes does (taking
           | "financial instrument" generally and not just "US mortgage"),
           | it would still be squeezing blood from a stone; they can
           | demand it but it doesn't mean they'll _get_ it.
           | 
           | In recent news, Blackrock suspended withdrawing from a UK
           | real estate fund, because investors have been withdrawing at
           | a rate that would require them to liquidate their holdings at
           | fire sale rates, further depressing the fund's value:
           | https://uk.finance.yahoo.com/news/blackrock-halts-
           | withdrawal... Same sort of thing. No "Ponzi" scheme here;
           | there's some legitimate financial stress, but that stress
           | would only be exacerbated by letting everyone withdraw.
           | (Whether you agree that it is justified to halt withdrawals
           | in this case or not, I'm just using it as an example of the
           | generality of this structure.)
           | 
           | I can't pull it up quickly in a news article because I'm not
           | coming up with the right search terms to pull it out of the
           | noise of constant financial news, but when Janet Yellen was
           | Treasury Secretary, she had floated a trial balloon about
           | trying to fix this incentive problem with bank runs against
           | real banks with the same sort of clawback scheme, the idea
           | being to disincentivize a bank run in the first place by
           | making it so you don't get the pattern where the first few
           | people get all their stuff and everybody else loses
           | everything, which is a huge contributor to the run occurring
           | in the first place. The game theory on this one gets a bit
           | complicated if you think about it. e.g., OK, if everybody
           | _else_ is going to sit tight because this scheme incentivizes
           | them to stay in the bank, then it 's safe for _me_ to
           | withdraw everything because the bank run was prevented in the
           | first place. If they then hold things together  "long
           | enough", then I can say I did it for my own reasons, not the
           | bank run that was delayed for six months while everyone else
           | sat tight, before an ultimate collapse. But if everybody
           | thinks _that_ way... etc. Not clear to me whether this can
           | actually prevent bank runs, which I mean straight, not as a
           | weak sarcastic  "no this obviously wouldn't work". Not clear.
           | Complicated analysis.
           | 
           | This structure is not intrinsically morally wrong or
           | anything. It's a basic tool, and you need some kind of
           | structure to bridge between high liquidity and low liquidity
           | like that, and such a thing will intrinsically have some
           | "impedance mismatch" to it, to use a favorite technical
           | metaphor. But it does have a certain amount of risk intrinsic
           | to it that can be a bit difficult to characterize; the
           | problem is that a given instance of it failing is likely to
           | be highly correlated with a lot of other instances of it
           | failing at the same time. Naive analysis of the risk is
           | utterly inadequate, and being sophisticated and correct about
           | it is easier said than done.
        
             | mindslight wrote:
             | I get the general concept, but trying to apply it to bank
             | deposits is terrible. The whole point of banking
             | regulations and FDIC insurance are to make it so banks are
             | an abstraction where the customers don't have to care what
             | a bank is invested in (for better and for worse). The
             | straightforward way to reduce the risk of bank runs is to
             | increase the reserve requirements which I believe is the
             | exact opposite of what the Fed has been doing.
        
               | jerf wrote:
               | The FDIC has already come perilously close to running out
               | of money once. It can happen again.
               | 
               | I believe risk can be moved around, but it can't be
               | eliminated. This is probably fairly mainstream Wall
               | Street analysis, too. I also believe that all attempts to
               | move around risk must also _increase_ it on the net,
               | e.g., if you do the extremely popular financial move of
               | taking a modest chance of modest loss and stuffing all
               | the risk into a small chance of total loss and then
               | hoping that just never happens, that the total risk has
               | increased. This is probably less mathematically provable,
               | and depends on a lot of assumptions about how one
               | compares various classes of risks. (I base my thinking on
               | a variant of what you might call the  "more or less
               | efficient market hypothesis"; if there was a way to net
               | reduce risk overall, it would probably already have been
               | taken.)
               | 
               | The bank abstraction you refer to is in my opinion in
               | that class of "extremely popular financial moves". Yes,
               | it removes the modest risk of partial loss, but it moves
               | the risk entirely into a small chance of total loss when
               | the entire system comes down instead. I worry about the
               | net effect of millions of little financial transaction
               | that all perform that particular risk management move. It
               | ends up creating a lot of easily-hidden correlations in
               | the system, and no one entity (let alone person) can have
               | a view of the whole situation.
               | 
               | In the end, the risk is moved around, but the bank run is
               | still a possibility and no amount of financial
               | abstraction can truly remove the fact that the liquidity
               | term mismatch is a fundamental aspect of such an
               | operation that can't be erased, only managed.
        
               | mindslight wrote:
               | While I see where you're coming from about shifting risk
               | around, I disagree with its applicability to what I said.
               | The amount of risk can still be increased/decreased by
               | changing the fundamentals. The straightforward way to
               | reduce the risk of running out of slack in the system is
               | to have more of a buffer to begin with, which is why I
               | mentioned reserve requirements.
               | 
               | Furthermore I'd argue that insuring deposit banks through
               | the asset-limited FDIC is yet another setup to socialize
               | catastrophic losses. If bank deposits were guaranteed by
               | the Fed directly, the Fed could print an unlimited number
               | of dollars to make depositors whole, thus completely
               | eliminating the risk that a USD-denominated deposit
               | simply vanished. (The realized damage would instead be
               | expressed as monetary inflation)
        
             | pjc50 wrote:
             | Hmm. Duration mismatching is kind of fundamental to the
             | loan business. There used to be a lot more savings accounts
             | that didn't offer at-sight withdrawal, partly because of
             | this; if you make people wait 30 or 90 days you can have
             | more time for things to settle.
             | 
             | On the other hand, in order to do that, you have to pay
             | them a higher interest rate to make it worthwhile. And
             | rates have been driven to the floor.
        
               | HPsquared wrote:
               | Low rates have certainly broken a lot of incentive
               | structures that used to work.
        
           | londons_explore wrote:
           | I would imagine the FBI to be able to trace the holders of
           | all the big withdrawals through the blockchain.
        
             | yellow_lead wrote:
             | How? The blockchain doesn't store names or SSNs for every
             | address. If the victim/user uses a mixer they can get their
             | coins out easily and anonymously.
        
               | chrisjc wrote:
               | I've been watching some of Coffeezilla's videos lately
               | and he often gets into the analysis of "following the
               | money" from one crypto wallet to another to show how lots
               | of his subjects conducted their scams.
               | 
               | Were these individuals just sloppy (probably) or is there
               | some kind of forensic analysis that can be performed
               | blockchains to trace the path of tokens/funds/credits
               | through a mixer?
               | 
               | Although I know nothing about crypto, blockchain, defi, I
               | imagine credits/tokens/funds can be split and merged in
               | every imaginable way by a "mixer" and transactions can
               | probably occur across different blockchains via exchanges
               | as well as occur outside in the real world, but I'm
               | curious about any sort of signal that might be extracted
               | from such analysis, other than signals arising from just
               | pure sloppiness.
               | 
               | BTW, I'm not disputing your asserting about being able to
               | track people... more about breadcrumbs in general, even
               | if they're anonymous.
        
               | yellow_lead wrote:
               | I watch those videos as well but many of those
               | influencers are dumb enough to put their wallets in their
               | twitter bios (eg their ENS names), or its because they
               | are linked to their project from the flow of large
               | amounts of tokens.
        
               | limaoscarjuliet wrote:
               | You are anonymous as long as you have not used your
               | wallet somewhere where you can be identified. Read about
               | "welcome to video" child porn bust possible due to
               | chainanalysis. From https://www.wired.com/story/tracers-
               | in-the-dark-welcome-to-v...
               | 
               | Chainalysis had combined these techniques for de-
               | anonymizing Bitcoin users with methods that allowed it to
               | "cluster" addresses, showing that anywhere from dozens to
               | millions of addresses sometimes belonged to a single
               | person or organization. When coins from two or more
               | addresses were spent in a single transaction, for
               | instance, it revealed that whoever created that "multi-
               | input" transaction must have control of both spender
               | addresses, allowing Chainalysis to lump them into a
               | single identity. In other cases, Chainalysis and its
               | users could follow a "peel chain"--a process analogous to
               | tracking a single wad of cash as a user repeatedly pulled
               | it out, peeled off a few bills, and put it back in a
               | different pocket. In those peel chains, bitcoins would be
               | moved out of one address as a fraction was paid to a
               | recipient and then the remainder returned to the spender
               | at a "change" address. Distinguishing those change
               | addresses could allow an investigator to follow a sum of
               | money as it hopped from one address to the next, charting
               | its path through the noise of Bitcoin's blockchain.
        
               | pjc50 wrote:
               | Note that everybody who uses a mixer is potentially
               | participating in money laundering, sanctions evasion,
               | etc.
               | 
               | The whole premise is that you put money in and are given
               | some different money out. But where does your money that
               | you originally put in go? If it went to North Korea,
               | congratulations on your crime.
        
               | yellow_lead wrote:
               | I would be interested if you've heard of any prosecutions
               | against individuals solely for using a mixer. In itself,
               | I don't believe that it is illegal to use a mixer, but it
               | is likely illegal to operate a mixer in most countries.
        
       | _throwawayaway wrote:
       | I've never seen a Russian name written like that: Ivan Turogin
        
         | icepat wrote:
         | That's an Estonian name. Estonians are _not_ Russian, though
         | there 's a Russian speaking city, Narva, in the east.
         | 
         | Calling Estonians Russians is not taken well at all. The
         | relationship between the Russian minority, and the Estonian
         | majority is... tense.
        
           | gggggg5 wrote:
           | Of course Turygin is a Russian name. Spelling it using
           | Estonian script doesn't change anything.
           | 
           | Looking up other Turogins in Estonia, they all have very
           | obviously Russian first names and zero obviously Estonian
           | names.
           | 
           | There's no doubt that Ivan Turogins parents fully intended to
           | give him a Russian name, even if Estonia requires Estonian
           | script on Estonian identity documents.
           | 
           | Even Estonians call these names "Russian names", that's what
           | they are. If someone in Estonia decides to name their kid
           | Muhamed, that doesn't magically become an Estonian name.
           | 
           | > Calling Estonians Russians is not taken well at all
           | 
           | I suspect that your comment wouldn't be taken very well by
           | Estonian Turogins
        
             | icepat wrote:
             | > If someone in Estonia decides to name their kid Muhamed,
             | that doesn't magically become an Estonian name.
             | 
             | Correct, but it does not suddenly make them another
             | nationality. Also, it's not spelled as you spelled it for a
             | reason -- it's Estonian you're looking at. Not Russian. The
             | reason it looks different, is because they're Estonian, so
             | the name will be different.
             | 
             | My second point, which is pretty clear in the first place,
             | is that a nation of people illegally occupied by Russia for
             | decades, isn't keen on being labelled as Russian.
        
               | gggggg5 wrote:
               | Nobody was called Russian. _throwawayaway correctly
               | called it a Russian name, you incorrectly replied with
               | "That's an Estonian name", which it isn't.
               | 
               | Most of the Estonians with Russian names do identify as
               | Russian, even if they aren't necessarily Russian
               | nationals. It's an ethnic group, these are ethnic
               | Russians.
               | 
               | > The reason it looks different, is because they're
               | Estonian, so the name will be different
               | 
               | This is false. It's spelled the way it is spelled because
               | that's how Estonian government wants names spelled. Also,
               | because it would be awkward to interact with a society
               | where most people do not know the Cyrillic alphabet.
        
               | icepat wrote:
               | > This is false. It's spelled the way it is spelled
               | because that's how Estonian government wants names
               | spelled.
               | 
               | He's quite literally an Estonian national, go check the
               | FBI report that was released.
        
               | gggggg5 wrote:
               | Yes, he is an ethnic Russian who happens to be an
               | Estonian national. "Russian" does not refer to the
               | nationality, it is an ethnicity. There are vast amounts
               | of Russian nationals who are not Russian.
               | 
               | https://en.wikipedia.org/wiki/Russians
               | 
               | In Estonia these people are referred to as Russians too,
               | because that is what they are and what they identify as.
        
               | icepat wrote:
               | I've met plenty of Estonians who have a Russian ethnic
               | background, however identify as Estonian, speak Estonian,
               | and do not consider themselves Russian. Again, I think
               | the point of what I was getting at should be clear.
               | 
               | And, to your point about them being called Russian in
               | Estonia, I've heard them called "Russian speaking" more
               | than Russian. Then, again, the Estonians I know take a
               | pro-integration position on the matter. The "ethnic
               | Russian" terminology is often used in pro-separatist
               | circles to justify non-integration, or by anti-Russian
               | Estonians.
        
               | gggggg5 wrote:
               | The point you were getting at simply doesn't exist. Ask
               | those ethnic Russians if that's an Estonian or Russian
               | name, they will tell you it's a Russian name.
               | 
               | Writing Russian names in Estonian script does not make
               | them Estonian names.
        
               | [deleted]
        
       | garganzol wrote:
       | This whole story sounds like an intro track of an imaginary "Wild
       | Crypto of ICO 2017" album if it was a thing. There are so many
       | tracks yet to be discovered.
        
       | throwawaybutwhy wrote:
       | I'd wager 10C/ that this is primarily driven by AML efforts.
        
       | deafpiano wrote:
       | only took them 7 years, great work!
        
       | fortran77 wrote:
       | If someone wants to pour money into a crazy scheme, why should
       | our government waste resources to protect them? The website says
       | "The FBI is legally mandated to identify victims of federal
       | crimes that it investigates" so I suppose that's the stated
       | reason, but why should they care?
       | 
       | If someone was illegally selling securities that they claimed
       | were regulated or audited, or that depositor's funds were FDIC or
       | SPIC insured, certainly law enforcement should step in for the
       | "victims." But why waste FBI manpower in this case? Why not just
       | let "a fool and his money" go anyway they want? (Is it because
       | the stolen money went to fund nefarious things, like North
       | Korea?)
        
         | UncleEntity wrote:
         | > But why waste FBI manpower in this case?
         | 
         | Because half of the purpose of punishment for crime is
         | deterrence?
         | 
         | If "they should have known better" was a valid legal defense
         | for fraud...
        
         | everfree wrote:
         | Are you asking why the government should prosecute crimes, or
         | are you asking why securities laws exist in the first place?
        
         | astrange wrote:
         | North Korea can steal crypto directly and doesn't need help
         | from Estonians.
         | 
         | Though Lazarus doesn't seem to have been indicted for anything
         | yet.
        
       | 123123213444 wrote:
       | [flagged]
        
       | andrewfromx wrote:
       | seems to be a legit request from the fbi about a web3 token
        
       | 123123213444 wrote:
       | [flagged]
        
       | ZhangSWEFAANG wrote:
       | [flagged]
        
       | csomar wrote:
       | Related arrests of the individuals involved:
       | https://www.justice.gov/usao-wdwa/pr/two-estonian-citizens-a...
        
         | ZhangSWEFAANG wrote:
         | [flagged]
        
       | simple-thoughts wrote:
       | Who in their right mind would share their wallet info with the
       | FBI. That's an easy way to get shortlisted.
        
         | voytec wrote:
         | Not sure about the right mind but the BTC core developer who
         | "lost" 216 BTC a few days back apparently tried asking FBI for
         | help[1].
         | 
         | [1] https://twitter.com/LukeDashjr/status/1609630432546406404#m
        
           | redog wrote:
           | [flagged]
        
           | judge2020 wrote:
           | As long as you were going to pay taxes and weren't actually
           | defrauding people, might as well file a report in case
           | anything comes of it.
        
             | lfodofod wrote:
             | It's worth noting that Luke would be a prime target for
             | nation state hackers from DPRK and the likes.
             | 
             | What happened here was likely a failed attempt to slip a
             | backdoor into bitcoin core, attackers pulled out and took
             | his bitcoins as a consolation prize after he realised his
             | server had been compromised.
             | 
             | The FBI should absolutely be jumping on this, not because
             | of bitcoin, but because of the likely perpetrators.
        
               | luma wrote:
               | Luke had his wallet sitting on a server that he knew to
               | be compromised for months. There is no reason to expect a
               | nation state actor, his loss was 100% his own poor
               | security. It also says a lot about the "wisdom" of
               | hosting your own wallet. Can't trust the exchanges, and
               | you can't trust your own wallet.
        
               | gggggg5 wrote:
               | > Luke had his wallet sitting on a server that he knew to
               | be compromised for months
               | 
               | How do you know this? Luke has denied this over and over
               | again. It seems like you've invented this in order to
               | defame him.
        
             | astrange wrote:
             | Well, he can now take a $3000 capital loss deduction for
             | the next 1223 years.
        
         | neilv wrote:
         | I default to pro-privacy, on principle, but are you talking
         | about a more specific threat?
         | 
         | A threat that outweighs the benefits of: possibly increasing
         | the likelihood/degree of takedown of an alleged scammer, and
         | also possibly being more likely to be compensated for losses?
        
           | simple-thoughts wrote:
           | The FBI maintains databases of individuals that they consider
           | potential terrorism with such weak definitions that anyone
           | who uses a blockchain application would qualify[1]. When you
           | are put on the list, they will never confirm or deny whether
           | you are on the list. However you will find yourself losing
           | rights to internationally travel freely without harassment,
           | may have computing devices compromised by agents, may have
           | wiretaps or microphones placed in your residence, and more.
           | 
           | I will admit that they do target US citizens less than
           | others, but most hashflare victims are not US citizens and do
           | not get those protections.
           | 
           | [1] https://www.fbi.gov/investigate/terrorism/tsc
        
             | pjc50 wrote:
             | If you're not a US national, you've no reason to appeal to
             | the FBI anyway; speak to your local authorities.
        
         | nindalf wrote:
         | Yeah! Don't trust the man! The man is only interested in ...
         | something! There must be an ulterior motive in trying to bring
         | scammers to book!
         | 
         | Just think for a second. If someone has been scammed out of
         | millions, you think they're not going to talk to law
         | enforcement about it? They wouldn't only if they were
         | perpetrating their own scam.
         | 
         | At some point privacy nuts on HN have to really stop and think
         | before typing.
        
           | nonethewiser wrote:
           | I'm not exactly sure what the FBI would gain here, and it may
           | be nothing, but distrusting them by default seems rational
           | given their long history of corruption.
        
             | nindalf wrote:
             | Again, this communication from the FBI is specifically
             | targeted at victims of a particular scam. The victims have
             | already lost more than what the FBI could hypothetically
             | maybe do to them.
             | 
             | Unless we live in Scooby Doo-verse and the FBI agent
             | removes his mask to reveal that he was the IRS all along
             | and this was all a ploy to get people to pay their taxes.
        
               | jojobas wrote:
               | I guess if you used crypto to trade in heroin you could
               | lose quite a bit more.
        
               | kolbe wrote:
               | I think the real fear is that you never know what the FBI
               | really wants. So unless you feel confident that you've
               | covered all of the possible angles that an intelligence
               | agency with 10000x the information you have could only be
               | seeking exactly what they claim to be seeking, then sure,
               | answering their call is fine.
               | 
               | But the general rule is to never ever talk with them
               | unless you have a lawyer present. You have no clue
               | whether you're the target of an investigation. You have
               | no clue whether the FBI knows some percentage of their
               | targets were victims of this scam, and are using it to
               | get an in with them (you). You just don't know anything
               | going on behind the scenes.
        
               | saalweachter wrote:
               | Do you get to write off rug pulls like any other capital
               | loss?
               | 
               | For that matter, what are the tax implications of getting
               | mugged?
        
               | nradov wrote:
               | Losses from theft are generally tax deductible.
               | 
               | https://www.irs.gov/taxtopics/tc515
        
             | dsfyu404ed wrote:
             | By corruption I assume you mean "a 100yr history doing
             | nasty things that benefit the agency and/or the political
             | goals of specific agency leaders and/or the political goals
             | of specific people close to those leaders in direct or near
             | direct contradiction of the organization's mandate and/or
             | law.
             | 
             | Basically they're evil, not corrupt.
        
             | themitigating wrote:
             | Their long history of corruption compared to all the non-
             | corrupt things they have done?
        
           | burner9918 wrote:
           | Give the Minneapolis FBI whistleblower account a read and
           | then think for a second
           | 
           | https://www.nytimes.com/2021/09/01/magazine/fbi-terrorism-
           | te...
        
           | simple-thoughts wrote:
           | When considering which corporate bodies to trust, I consider
           | their public statements and policies, their historical
           | behaviors, and reports from other users of their services.
           | The FBI's official policy is to harasses individuals they
           | place on secret watchlists. Historically, the agency has been
           | one of the most corrupt from the beginning, especially the
           | Hoover era, and has never gone through a period of
           | substantive reform to resolve these issues. Additionally,
           | multiple victims of crimes who have reported their situation
           | to the FBI have either seen no positive actions or have even
           | been harassed themselves by FBI employees. Currently there's
           | a severe shortage of reputable cybercrime security providers
           | that also have enough capabilities to enforce the result of
           | investigations, but the FBI is such a poor organization that
           | it would be foolish to even consider requesting their
           | services.
        
             | themitigating wrote:
             | "Historically, the agency has been one of the most corrupt
             | from the beginning,"
             | 
             | What proof do you that the FBI is more corrupt than other
             | government agencies?
        
               | simple-thoughts wrote:
               | Most USG agencies did not have programs similar to
               | COINTELPRO. The FBI is the USG secret police and as such
               | share they same set of problems other secret police have
               | in other countries - since secret police suppress
               | internal dissent with tactics veiled in secrecy, they are
               | able to violate human rights much more easily than
               | agencies that have more openness and less political
               | valence.
        
       | prettywoman wrote:
       | [dead]
        
       | [deleted]
        
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