Is there really such a thing as "stolen Bitcoin"? \ stacker news ~bitcoin

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Is there really such a thing as "stolen Bitcoin"?

2296 sats \ 22 comments \ @SwapMarket 15h bitcoin

Bitcoin was designed as a censorship resistant p2p payment system. Yet, thanks to Lazarus, we are in a situation right now where any p2p transaction can yield you a tainted coin. Third party AML verifiers like BitOK and GreenStage will identify your UTXO as "stolen", and Binance or any other regulated entity will use this as an excuse to block your account.

This is a serious attack on fundamental principles of Bitcoin Network. What can we do? Start asking everyone to show you the UTXO they will use before the transaction? Chainanalysis companies, for a fee, will gladly help you decide. But their results are not a yes or no answer, but rather a percentage:

Address Report

Address: xxxx Blockchain: bitcoin Risk: 96.8% Cluster: xxxx Category:

91.3% consists of Stolen Coins
4.8% consists of Mixing Service
2.8% consists of Exchange With Low ML Risk
0.5% consists of Exchange With Moderate ML Risk
0.2% consists of Payment Processor
0.1% consists of Miner Status: Active First: Mar 25, 2025 01:55 PM Last: Mar 25, 2025 01:55 PM Received: 0.61132493 BTC Sent: 0 BTC Transactions: 1

AML-check crypto-address by GreenStageBot https://t.me/green_stage_bot

Or this: ㅤ 🔵 Address: yyyy

⛓️ Blockchain: Bitcoin (BTC)

Connections of the address:

• Dust - 34.8% • Exchange - 32.0% • Mixer - 24.0% • Custodial wallet - 7.4% • Stolen Funds - 0.6% • Scam - 0.4% • Mining - 0.3% • Payment Service Provider - 0.1%

Less than 0.1%:

• Other • High-Risk Exchange • Darknet Market • Mining Pool

📈 Risk level: Medium (74.0%)

Is "medium" risk of 74% good or bad? Will a CEX block your account if you move your coin there??

I think this whole chainanalysis situation is utter nonsence. Neither we, Bitcoin users, nor the judge and jury can understand or verify how the reports were produced. But Binance trusts them and blocks the accounts, so what can you do if this happens to you?

This is a grey area: use normies legal system, such is English Law, to defend against a purely technical accusation of money laundering.

I think a CEX client should write to the exchange and argue using this legal vocabulary: "I acquired these tainted coins in good faith during an arm's length transaction." Swapping Lightning for onchain at Boltz is an arm's length transaction, for example.

Make such cases public, hire real lawyers if the amount is worth it. Either all UTXOs should be ruled equal, or people should stop using CEXes at all.

The specific situation with Lazarus is hypocritical, in my view. They are not stolen coins, they are spoils of war. Of a cyberwarfare of North Korea against some other countries, to be exact. And in the North Korea's legal framework, these coins are not tainted or stolen, they are legally obtained in a special operation.

Three centuries ago, English privateers looted Spanish galleons lawfully. They had a license from the Crown to do so. They did not have to launder anything - the looted gold went right back into international circulation. I say we came full circle - Lazarus hackers had a license from Kim to plunder ByBit. Karma is a bitch.

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105 sats \ 5 replies \ @justin_shocknet 14h

An exchange has a right to decline service as long as they are up-front in their terms just as the customer has a right to take their business elsewhere based on those terms.

It's at their discretion what they consider valid chain-analysis and who they sanction.

they are spoils of war

By this logic any exchange not-domiciled in a North Korea aligned country should keep their coins for themselves as well as their customers for consorting with the enemy. So you're effectively arguing against yourself in one pointless virtue signal.

0 sats \ 4 replies \ @SwapMarket OP 13h

After coins changed hands in a bona-fide arm's length transaction, they are no longer Koreans'. By your logic, most gold must be confiscated, because at some point in history those atoms were stolen by someone from someone else.

0 sats \ 3 replies \ @justin_shocknet 11h

must

The only one talking about authoritarian control is you, these are self-policing reputational systems.

0 sats \ 2 replies \ @SwapMarket OP 11h

You mean Binance blocking users accounts, citing third-party AML reports? What happens next? I've been in such situations a few times already, presumed guilty until proven innocent beyond a shred of doubt. Not pleasant!

10 sats \ 1 reply \ @justin_shocknet 11h

Don't use Binance then? Or do you want the President of Bitcoin to force them to be your service provider?

5 sats \ 0 replies \ @SwapMarket OP 11h

I don't. This can happen at any time with any KYC custodial. Two ways to deal with this:

protest AML chainanalysis practices
quit using KYC providers altogether

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205 sats \ 0 replies \ @Undisciplined 14h

From a philosophical standpoint there probably isn’t, because there’s no physical material being stolen.

In most cases the crime is more like trespass and vandalism, with the lost purchasing power being part of the damages.

At least that’s my attempt to describe it in a Hoppean legal framework.

100 sats \ 7 replies \ @kepford 14h

In short yes. There is.

5 sats \ 6 replies \ @SwapMarket OP 14h

It is stolen only from the perspective of specific nation states/their legal systems. It is lawfully acquired from the perspective of North Koreans. Russians and Iranians will likely side with the latter. It is hard to look at Bitcoin as a trans-national monetary system, though it is one. Governments try to mold it to circulate just like one's national currency, but like water, it will always leak. You can't exclude certain UTXOs from circulation, you can only exclude certain unlucky citizens from using those.

0 sats \ 4 replies \ @kepford 14h

Your title is more broad than your thesis here. Many things can be stolen. How that is handled after the theft is secondary to the question of can bitcoin be stolen. More broadly, governments are in the business of theft. Stolen goods recirculate. I agree with you. But this has little to do with the question you posed.

5 sats \ 3 replies \ @SwapMarket OP 13h

Maybe. I tried to argue that "stolen" is a legal construct, making sense only within the accepted definitions of common law. But "common law" are rules made by rulers for their subjects: citizens. Foreign nationals are not subject to the same rules. And since bitcoin is cross border, it cannot be stolen in a legal sense - because there are no universal laws. ByBit lost their coins because they did not see the holes in the Ethereum smart contract. Lazarus was smarter. Meritocracy in action.

12 sats \ 2 replies \ @kepford 13h

But "common law" are rules made by rulers

Not really what common law is. At least not my understanding of the term. Law pre-exists the state and doesn't require a monopoly on violence. Many anarchists have written about this for many years.

I hear what you are saying though... but theft is a pretty universally accepted wrong. Even the way you are describing what happened sounds like theft to me. Its like saying the lock on my door was weak so it was ok that someone came in and took my computer. Its not.

That said, criminals steal from one another all the time. I'm not super concerned about what happened to ByBit. Unless I'm missing something... its theft and the moral hazard I read in your logic is a much bigger threat if it were to take hold. Its the kind of moral relativism that makes people think they are heroes for doing wrongs. But maybe I'm reading to much into it.

Edit:

So maybe I'm missing what you are saying. Sounds like you are saying the contract was not violated, but a flaw was found, IE the contract was not violated. Maybe, in that case its not theft. Still feels like it though.

5 sats \ 1 reply \ @SwapMarket OP 13h

Sure, moral rights and wrongs are tough. Nature is cruel in how it operates, and us humans are the worst. But what is an alternative to deal with "tainted" Bitcoin? Supply each UTXO with a provenance certificate? It is what it is - an electronic ledger that tracks full history.

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0 sats \ 0 replies \ @kepford 14h

My view of the world is that each nation state is in a anarchic relationship with all other states. This does not mean that they cannot steal from another state. Just as a man living in a stateless situation can take possession of another's property. Theft exists both in stateless and state ruled societies.

With that in mind, how are the NK, Russians, and Iranians not stealing? Curious if I'm just misunderstanding you. Keep in mind, I'm not saying the US or the companies are moral. That has zero role.

44 sats \ 0 replies \ @Jp_digital 10h

I couldn't agree more. Bitcoin is enemy money. If you have the private key. U have the coins. The burden is on ByBit to keep their Eth safe. They didn't bc they chose to opt for the most basic of security protocols. Had they improved their op-sec, the ByBit hack wouldn't have occurred most likely. Cryptocurrency like bitcoin and eth required personal responsibility, unlike trad-fi where mistakes are fixable with a phone call and a password reset. This is self reliance at its core. It's a reflex for humans to assign blame. But ByBit is the only one at fault here.

0 sats \ 0 replies \ @xz 4h

If I photocopied ..

a page from a purchased Holy Bible that was found in a coffe shop without permission, is that theft?
a confidential document that is of national security interest without permission, is that theft?
a seed phrase that I found on a bus without permission, is that theft?

I would say that only one of these is due to the fact that I must have entered into some kind of contract that states I'm not to do that by law.

I don't think there is a law against entering a seed phrase into wallet software. There is only a law that prevents unlawful access. This is a little different.

Am I wrong on this?

0 sats \ 2 replies \ @itsrealfake 8h

there's no such thing as a bitcoin.

you can definitely steal private keys for UTXOs

0 sats \ 1 reply \ @SwapMarket OP 8h

yes. there is no spoon. it was an Ethereum multisig smart contract hacked, so how come Bitcoin UTXOs are tainted??

0 sats \ 0 replies \ @itsrealfake 6h

tainted til the gov sells it back to us.

0 sats \ 1 reply \ @denlillaapan 12h

Guess the slight difference is that coins don't come with UTXO/blockchain history.

some, e.g. stolen Spanish are obvious, but could be melted down. Gold is gold.

Maybe one day bitcoin is bitcoin.

0 sats \ 0 replies \ @SwapMarket OP 12h

Exactly right. Melted and recycled. Legally!! That's what Koreans are doing through atomic swaps and DEXes, but chainanalysis fraudulent companies pretend they can catch the culprits.