157 points | by tuananh15 hours ago
> The wallet in question appears to have sent 401,346 ETH ($1.1 billion) as well as several other iterations of staked ether (stETH) to a fresh wallet, which is now liquidating mETH and stETH on decentralized exchanges, etherscan shows. The wallet has sold around $200 million worth of stETH so far.
If you showed me a paragraph like this a decade ago and told me it was from 2025, I would have a difficult time believing you.
Like the weird part about a pyramid is that depending on your risk tolerance it may actually make sense to participate in a pyramid even if everyone involved knows it’s a pyramid. So are that many people being scammed as in tricked (seems hard to believe), or is it just a risky form of gambling that is outlawed in legacy formats.
EDIT: Ponzi -> Pyramid
They are usually a lot more vague when I ask about their realized gains.
As opposed to what?
Now we don't even pretend that $DOGE/$TRUMP/whatever has any utility aside from speculation.
It’s basically phishing at a transaction signing level.
I only found the term a few weeks ago and thought I was the one left out, sorry for not defining it earlier.
It’s got an eerie ring to it though, right?
From the article. Not that I endorse crypto, in fact I despise it. But at least per this statement, it seems to have been handled offline. How a hacker could get access to this is another story to unpack.
edit: I guess this is the story that "unpacks". One more reason to not believe in crypto.
Put differently, it’s been seventeen years of constant and escalating mayhem. What would finally be enough to shake your faith?
Bias. I expect believers to have earned a profit or still hold significant quantities of crypto assets.
But in their favor, trust in any currency is the foundation of its value. States create it by collecting taxes and paying employees. Crypto currencies generally lack that heavy weight central authority, so they kind of have to believe to the point where they get burned.
Crypto scams run by top government officials? Oh, wait...
1. Upgrade protocol to include protections for well known cold wallets held by exchanges (ex: API call has to be made to the exchange's security endpoint to validate each transaction out of the wallet. Exchange staff would need to manually allowlist large transactions before they are transmitted).
2. Decentralized voting on reversal of transactions (90-95%+ vote needed to reverse to avoid 51% attacks)
> Both the sender and receiver need to sign after the first transaction has been mined
That makes no sense; miners don't mine transactions unless they're guaranteed to be valid. All signing must be done before transactions are even published. Otherwise one could DoD-attack the network by having it forward tons of invalid transactions.
Illicit addresses sending to thousands of random recipients and making them all marked by automated KYC systems.
eg. Was client software compromised? Did the multisig keyholders succumb to social engineering? Were the signers using airgapped machines / hardware devices?
https://blockworks.co/news/bybit-hack-raises-security-questi...
I have very limited knowledge about EVM, but those computations are bounded by gas, right? Evaluating them is a finite process.
You'd think they could at least show a blockie representing the contract, or reputational party who cryptographically vouched for it.
There is no action on the CEO since the hack in July 2024. He sits in Dubai. He just got a nod from Supreme Court of SG to just average out the funds and distribute it among the users.
No action has been initiated against the company/ceo for losing the fund. He is geared up to launch another company/exchange.
Bybit claims to be regulated by the Virtual Assets Regulatory Authority of Dubai.[1] But the lookup page at VARA says they only have "In-principle approval", not a full license. "Applicants holding an IPA are strictly prohibited from initiating operations, conducting any virtual asset activities, or servicing clients until they have obtained their full VASP licence from VARA."
Uh oh.
[1] https://www.vara.ae/en/licenses-and-register/public-register...
This isn't your run-of-the-mill Coinbase style exchange, right?
Don’t forget FTX willingly hired the Ultimate Bet “god mode” guy.
> [The hacker] took control of the specific ETH cold wallet and transferred all the ETH in the cold wallet to this unidentified address.
Did the hacker physically break into their office or what?
Or some part of their system failed and the key was compromised without them realising it (like the Debian insecure keys debacle or whatever)
I have yet to see a thorough explanation of what specifically was hacked here anyhow
I spent several years pointing out to my last employer that every former employee could have walked off with secrets that allowed them access to our backends. The were already slowly working on hardening write access but read access was still being worked on a couple months before I left, when I got to write about half of the last mile code for the user facing bits.
This is not a unique experience by any means. I’ve seen this sort of thing enough to pay attention when acquaintances bitch about it too.
But one mistake we make over and over is that we write code that just does its best to answer questions as quickly as possible. And when those questions show up 10x as quickly as they have any other time in our company history, they either just plug right along or maybe throw an error.
Someone shouldn't be able to empty a billion dollars out of an exchange in 10 minutes, unless they do $250B in daily traffic. And I suspect most of them can be, and in even less time than that.
Unreal.
He just left off the implied part.
Bybit CEO Ben Zhou wrote on X that a hacker "took control of the specific ETH cold wallet and transferred all the ETH in the cold wallet to this unidentified address."
> Article 12 – dealing directly with the acquisition and disposition of interests (including security interests) in “controllable electronic records,” which would include Bitcoin, Ether, and a variety of other digital assets ... a good faith purchaser for value who obtains control (a “qualifying purchaser”) takes its interest free of conflicting property claims... Control under Article 12 is designed to be a technology-neutral functional equivalent of “possession.” It generally encompasses circumstances when a party has the “private key”
As in: "The hacker gained access to" "The hacker took charge of" "The hacker assumed authority over"
> The wallet has sold around $200 million worth of stETH so far
If some of those sales took place within jurisdiction of a U.S. state that has ratified UCC Article 12, then the buyer of the stolen cryptocurrency is now the new legal owner.
2023, American Bar Association, https://www.americanbar.org/groups/business_law/resources/bu...
.. “take free” regime introduced by the 2022 UCC Amendments for these assets. Under these rules, a person who acquires a CER for value, in good faith and without notice of any conflicting property claims, is deemed a “qualifying purchaser” and, as such, takes it free from any preexisting property claims.
The 2022 UCC Amendments draw heavily from the UCC Article 3 provisions for negotiable instruments, and these provisions have the effect of making CERs negotiable. It follows that if a secured creditor obtained a security interest in CER inventory and only perfected by filing, that creditor would be at risk of the debtor disposing of the collateral and transferring control to a qualifying purchaser that would take it free from any competing claim.https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-...
Unregulated asset exchanges. Haven't we been there before a loong time ago?
Every pseudo-intellectual thinks that the fiscal world is "too complicated" and they're going to "simplify" it by making some token, only for people to realize that the monetary world is just complicated, and they have to reinvent everything that already existed in the traditional banking system.
I had to do some work on an ACH system a couple years ago [1], and I read through a large chunk of the ACH standard, which was about 800 pages. It's easy to see and hear that and think "that's way too complicated, what could possibly be so hard about money transfers that necessitates an 700 page specification??", but as I read it and saw how many edge cases it took into account, it was easy to see why it got so huge. It turns out that dealing with money is just a really hard problem at scale.
I fell for the cryptocurrency hype of 2021, and I will fully acknowledge that that came out of a complete lack of understanding of how fiscal systems work. I wish everyone else would just grow up already.
[1] Usually disclaimer: not hard to find my work history, it's not hidden, but I ask that you do not post anything about it (or at least any proper nouns about it) here.
What you are describing are the systems of power which create a stable financial system. That is, one where you can put a nickel into a bank account and expect it to be there in a year or a hundred years.
That indeed requires a complex web of power structures, because its top line goal is to be stable and dependable. And stability within a complex landscape requires an equally complex network of power.
Crypto provides the exact opposite value: it cannot be controlled, no matter how robust your power structure is. It can be insured, at a significant cost, but not controlled.
That means in the face of even totalitarian powers someone could still move crypto across any boundary that is permeable to information, which it turns out is a set that roughly approximates the set of all boundaries.
This is a terrible way to pay for candy bars, because candy bars are not worth insuring.
But what I think the crypto opponents miss is that there is a set of transactions—some criminal, some legal, some immoral, some righteous—which cannot be made in a state controlled financial systems.
And that these transactions are what gives crypto value as a currency.
To me, where I would like the debate to go is not “is crypto a scam?” but “how does society protect people from the violence facilitated by crypto?”
Yes, financial “violence”, which can be insured against, but also real violence: human trafficking, extortion, etc.
We anarchists sometimes like to pretend that without rulers we will be freed to care for each other. But in the shadow of a history of violence, there will be more violence too.
And the “crypto is a scam” argument I fear is a red herring that distracts from this, the real issue.
Or if government is smarter, they can slowly gain control over it. Allow trading traceable currencies via official channels, but with good KYC measures. Do not allow fully anonymous systems. Go after mixers. Prosecute exchanges which do not verify their customers. Once there are plenty of government-sanctioned exchanges in the country, there will be little incentive to create unsanctioned ones, and someone with coins that were marked "North Korean-originated" won't be able to spend them in the country.
It has this kind of veil of "high techness" to it that is appealing to smart-but-uninformed people (like me in 2021). I'm embarrassed that I fell for it, but on the bright side it does make me a bit more sympathetic for other people who also fell for it.
I don't know about you, but I barely follow cryptocurrency news, and I've still been hearing about major players getting "hacked" several times a year for over a decade.
Either it's Mt Gox or FTX or The DAO or Bitfinex or QuadrigaCX or Terra/Luna or rug-pull meme coins or dollar-backed coins that actually aren't or any of a dozen other things.
Anyone who isn't being extremely careful to avoid scams, given the constant drumbeat of reports about how you have to be extremely careful to avoid scams when dealing with cryptocurrency, is pretty gullible.
My parents, both smart people but neither of which know much about distributed systems or concurrent computing or cryptocurrency, see the news reports about Mt Gox or BitConnect and think "that sounds like a scam", avoid it, and put money into a Vanguard or something.
On the other hand, you have people like me (and probably a not-insignificant percentage of people on HN), who have learned a fair amount of distributed and concurrent programming, and see the "neatness" factor of cryptocurrency, and since the crypto is laundered through interesting tech, we fall for it.
I haven't touched any cryptocurrency since I fell for the unregistered security calling itself Gemini Earn [1] (so almost three years now), but I did think that stuff like Filecoin was pretty cool. Hell, I'll still acknowledge the coolness factor of stuff like Filecoin and Storj and Sia. I just think that the currency itself is wishful-thinking-at-best, and fraudulent at worst (probably somewhere in between).
I don't think I'm an especially gullible person, but no one thinks that they're gullible, so I'll acknowledge that I probably am, but I think a lot of the educated people who got into crypto got into it because they kind of had horse-blinders on when looking at the interesting tech.
[1] Not my opinion, but the SEC's for what it's worth: https://www.sec.gov/newsroom/press-releases/2023-7
I don't think most academics would fall for the "Nigerian Prince" chain emails, or the "Romance Scams" you see on YouTube, which are things I usually associate with extremely gullible people.
Pretend money, at least in my opinion, is not one of those uses.
These things can take time; it might be thirty years or more before someone does anything actually useful with the stuff learned from the crypto world.
My thought was it will some day either be worth a lot or be worth 0 and I'm OK with both of those possibilities. I don't really think I was gullible about anything and yes I thought about it as a risky investment that turned out to pay off quite well.
Crypto is the same thing. You put money in and you may cash out quickly with a big number, but someone who knows can swoop in and steal your money in a way that is much easier than if you used more traditional investment and banking vehicles.
¯\_(ツ)_/¯
When you decentralize finance like this what becomes okay to do according to system rules is exactly what is possible to do according to system rules. We don't have humans in that loop anymore to enforce moral judgments about what constitutes unlawful theft (except for 1 or 2 rare "hard-forks" of various blockchains to reverse devastating transactions).
I feel bad for people who lose large volumes of cryptocurrency to malicious actors in the same way I feel bad for people who lose large volumes of real money to a casino.
It is 2025 now and we all know that anyone who can somehow get your private-key to whatever blockchain backed assets you have "owns" those assets just as much as you do and they are permitted to take them under the rules of the system so whatever you do do not lose that key.
There is no higher arbiter of justice in this space so use it at your own risk.
A "cleverly masked exploit that altered the smart contract logic"[1] = congratulations!! the contract gives you $1.46B free money!!
I anticipate that the defi community will celebrate the inexorable operation of their logical contracts.
[1] https://cryptonews.com/news/bybit-crypto-exchange-faces-1-5-...
1) Their multi-signature wallet signing employees lazily clicked through in unison to approve a new smart contract without examining the contents to see if it was unusual.
2) Bad security architecture to keep too much in a single wallet that wasn't properly kept cold. There should have been a few fully cold wallets, that only rarely transact with mostly-cold intermediary "airlock" wallets which are also separated from the exchange operations and wallets. The signers also need to be different combinations of people for each of those wallets - preferably some of those signers being additionally liable 3rd party technical experts.
when code is law, there can't be any bugs or vulnerabilities, only features.
https://ethereumclassic.org/blog/2024-04-03-ethereum-classic...
Are those appropriate sources?
what r u talkin ab?
For context, guluarte is referring to a moderately contentious hardfork done by the Ethereum developers and mining community to reverse TheDAO Hack in 2016 or so. The stakes were much larger then -- Ethereum was newer, not yet battle tested, and TheDAO had something like 10% of all ETH in it.
A fork was formed -- "ETH Classic" -- ticker ETC -- which did not reverse the DAO hack, and you can see from valuations that the public preferred the reversal.
Code is law, up until it costs me.
Other transactions besides the one that created 184 billion BTC in that block was effectively “rolled back” on the working chain.
No interesting discussions ever. Just axes being sharpened and people who dislike it taking the opportunity to gloat. I would characterize the pro crypto people but I don’t see any. Which is said because over the last 5 years I have found crypto, bitcoin, and stable coins to be extremely useful when helping family members in emerging markets.
But hey it’s all trash, the west doesn’t need it so let’s all dance on its grave.. i guess we will keep dancing for another 15 years.