A Bitcoin Blunder for the Ages: $40 Billion Accidentally Given Away (msn.com) 67
An anonymous reader shares a report: The hundreds of prize payouts were mostly just a few bucks each, part of a promotional campaign by a South Korean cryptocurrency exchange. The total reward pot: 620,000 Korean won, or about $425. Then came a colossal mistake. A staffer for Bithumb, South Korea's No. 2 crypto exchange, didn't distribute 620,000 Korean won. Rather, the prizes, due to an input error, emerged in a different currency: 620,000 bitcoins, valued at more than $40 billion.
That meant a winner who should have received a sum of 2,000 won -- enough to buy a cheap cup of coffee -- reaped, at least momentarily, more than $120 million in bitcoins. Enough recipients sought to sell or withdraw bitcoin that the market sank 17%, before Bithumb halted transactions after roughly 30 minutes. Those affected included investors who had held bitcoin before the botched giveaway. The losses totaled about $685,000, Bithumb says.
The company has since said it has reversed the transactions or had recipients voluntarily return more than 99% of the misdistributed bitcoins. But Bithumb is still trying to convince users who during the brief window of trading managed to offload more than 100 bitcoins, valued at roughly $9 million, to give back the equivalent funds.
That meant a winner who should have received a sum of 2,000 won -- enough to buy a cheap cup of coffee -- reaped, at least momentarily, more than $120 million in bitcoins. Enough recipients sought to sell or withdraw bitcoin that the market sank 17%, before Bithumb halted transactions after roughly 30 minutes. Those affected included investors who had held bitcoin before the botched giveaway. The losses totaled about $685,000, Bithumb says.
The company has since said it has reversed the transactions or had recipients voluntarily return more than 99% of the misdistributed bitcoins. But Bithumb is still trying to convince users who during the brief window of trading managed to offload more than 100 bitcoins, valued at roughly $9 million, to give back the equivalent funds.
Life Imitates Art (Score:4, Funny)
Yeah, I am a pretty honest guy and I love my currently life; but if I saw that much in show up in my account I would move it immediately and then seriously consider disappearing to another country and starting over.
Good luck getting that $9 million in untraceable money back.
Re: Life Imitates Art (Score:2)
Bitcoin is the opposite of untraceable. There's literally a public journal of every transaction. If you can be connected to a wallet then every transaction you've conducted is exposed.
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0.000000294 Bitcoin has been added to your account (And now I have your wallet address).
Re: Life Imitates Art (Score:5, Insightful)
it is entirely traceable and at least in the US and UK and it consider theft if you knowingly keep a deposit paid to you in error. My 'guess' would that courts would consider that applies to crypto currency ledgers as well.
Now when this crypto stuff was new I suspect prosecutors would have said 'wtf is a bitcoin, I am to busy for this computer nerd nonsense' and let you skate, but we not there anymore.
Sure maybe this no financial institution that can undo your transaction but property law broadly exists outside of banking and finance, and the notion that if someone over pays you a few million dollars worth of bitcoin and your going to say 'sorry Charlie, mine now' is just plain stupid. Some guy in a black robe is going to say return the money and I am going to jail you for contempt if you don't until you do' at least if you are ripping off any of the sorts of people governments tend to protect. If you are ripping off the other sorts of people with millions worth of bitcoin to over pay you in the first place well better look over your shoulder...
take that bitcoin and let the courts work it out w (Score:4, Insightful)
take that bitcoin and let the courts work it out will the rules of bitcoin in the court room
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Remember, its not money when in your favor, but if in any way its against your favor, then yeah it's obviously money.
So it's easy to figure out whether bitcoin is actually a currency or not.
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the notion that if someone over pays you a few million dollars worth of bitcoin and your going to say 'sorry Charlie, mine now' is just plain stupid. Some guy in a black robe is going to say return the money and I am going to jail you for contempt if you don't until you do'
Judge: Return the money
Me: I would love to your honor, the only problem is in all the excitement, I lost my private key!
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In some jurisdictions, having lost your encryption key is purely a _you_ problem, and you can sit in jail semi-permanently for contempt of court.
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if you knowingly keep a deposit paid to you in error
But in this case it was sent to the correct recipient, and it was sent explicitly as a gift. Assuming the prize amounts were not published in advance, there's no way I can KNOW that it was in error. I might assume, believe, think, etc. - but not KNOW.
Yes, nitpicking. But law is essentially all nitpicking.
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Oh, not sure. The whole cryptocurrency scene routinely throws around millions.
But yeah, UK.
In the US you would probably give it back, then sue them for twice the amount due to the "emotional distress" of thinking you were rich and then having that shattered.
Re: Life Imitates Art (Score:2)
How would you react if the bank would take $120 millions from your account to your detriment... by mistake?
Also, I would be cautious about "untraceable". I would say "hard to trace for someone who is not determined to look it up".
But maybe that's just me...
Re: Life Imitates Art (Score:3)
They're not a bank.
Re:Life Imitates Art (Score:4, Insightful)
The safer approach would simply be to say, "You want that coin back? We gonna fight about it in court. Unless you figure out how to make this go away". Because theres a good chance a judge would say "This guy didnt do a fraud, you gave him those coins all by yourself". He might also say you have to give it back. Lawyers hate that sort of uncertainty, so its highly likely a settlement would be on the table.
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I don't know about Korea, but under UK law if you have money accidentally transferred to you, you have to give it back. Keeping it is theft, especially once the mistake has been made clear to you.
Of course if I had that $9 million I'd spend all of it on legal fees to fight giving it back, litigating every word of the contract.
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Of course if I had that $9 million I'd spend all of it on legal fees to fight giving it back, litigating every word of the contract.
If the judge orders you pay back that $9M, which seems likely, it's not like "Oops, sorry, I spent it all on legal fees" is a way out. That debt is going to follow you. Best case is that you can file for bankruptcy, assuming such debt can even be discharged that way.
'reversed the transactions.' someone explain. (Score:5, Insightful)
Re: 'reversed the transactions.' someone explain. (Score:5, Interesting)
Re: 'reversed the transactions.' someone explain. (Score:4, Insightful)
That's correct. Bitcoin transactions are too slow and expensive, so exchanges don't actually execute them all or truly move them among wallets. They just keep track of where the various amounts belongs and can move it as needed within their own system, then pay it out when requested. Much like your bank doesn't physically move a pile of money from one account to another, they simply change their ledger as of where to move it.
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The mistake many recipients made was to, on that exchange, try and sell their "coins" for cash. That's what would have dropped the BTC value there. Forget that, get the coins OFF the exchange first. Then cash them out, slowly.
I expect so few coins were actually lost because there are some limits as to how many coins you can exfiltrate at a time. Likely the exchange actually possessed far fewer real BTC in its vault than it purported to give away anyway.
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If you're selling them off anyways, it doesn't matter that they kill the value while doing so. And be real, those using those exchanges don't know how to transfer off the exchange and then sell them. If they did they wouldn't be using the exchange in the first place.
Re: 'reversed the transactions.' someone explain. (Score:4, Insightful)
So in other words, they're lying to you, telling you that you're invested in Bitcoin, when actually they just gave you an account that is "supposed to be" backed by Bitcoin.
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Litecoin, and Monero are the ones to actually use for ecommerce. Transaction fees are low enough that this is viable. I buy my VPNs and pay for some VPSs using those coins. Generally buying LTC from a public exchange, converting to XMR on privacy-focussed no KYC hands-off exchange, and then self-mixing XMR through a couple more wallets a few times. XMR's transaction fees are exceedingly low, it's still very hard to pierce where transactions go, and is actually a great way to pay for an account I don't n
Re: 'reversed the transactions.' someone explain. (Score:4, Insightful)
I believe one of the big selling points was you didn't have to trust anyone, but instead of trusting banks that have regulation and audits ensuring they don't take your money. To make bitcoin work you have to trust exchanges which don't have nearly as much controls.
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Well, if all of the business is transacted in Bitcoin, then there isn't much tying a person to an address.
The problem is when people want to convert Bitcoin to anything else. Money changers often like to know who they are dealing with :)
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Of course there is, you go into a shop and by a loaf of bread, they now know when it happened, if they know the retails wallet they can get the security footage. After a few transaction they have narrowed you down. You mean as long as you don't use bitcoin to buy anything real then sure you are anonymous, but the moment you transact with any wallet that is known you are exposed. It hardly makes a good form of money if you can't buy anything real.
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Re: 'reversed the transactions.' someone explain. (Score:3)
Again, wasn't the point of bitcoin that you didn't need to trust some other jerk to store your assets?
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Not quite. In these Bitcoin exchanges, you don't really truly control your wallet. The exchange does. They have full access and control of your wallet. This allows them to automate transfers. In reality, you don't actually possess the bitcoin, they do. So they can simply reverse the transaction.
Much like your money in your bank isn't truly in your control, it's under the banks control. They can move things around on their ledger and if they make a mistake they can reverse it.
Now, if this wasn't an exchange
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No they didn't lie. Transactions on the ledger are permanent and not reversable. The thing is, it takes anywhere between 10-60 minutes for a confirmation of a ledger entry, and most financial entities require multiple confirmations before recognising the transaction as legitimate, so it could take several hours before a transaction is considered immutable.
So unless you like your pizza really really cold and starting to go stale, someone (usually an exchange) will act as an escrow for the transaction.
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It's the difference between a "custodial" and "non-custodial" wallet. They didn't lie - they just have a custodial wallet system there. That means when you transfer coins there, they keep custody of them, and give you a number in an account that says how many are credited to you. Like any bank - a bank is a custodial wallet for fiat currency.
I would never leave my funds in a custodial wallet, I keep the few I ever use in non-custodial, almost entirely self-managed wallets. I don't keep much anyway, I do
That means they had 620K in BC, right? (Score:3, Interesting)
That's a lot of bitcoin to possess.
South Korean lawmakers have raised concern over the so-called âoephantom coinâ issue: How Bithumb was able to distribute 620,000 bitcoins when its own stockpile appeared to have numbered closer to 50,000.
Wait, how does the blockchain even allow you to spend what you don't have?
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Wait, how does the blockchain even allow you to spend what you don't have?
Ask the Federal Reserve.
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The Federal Reserve understands how BC's blockchain works??? Who knew?
As for "printing money"/spending what you don't have, yes, I'm familiar with how that works in fiat currencies. I just didn't think it was possible with BitCoin.
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Not on the blockchain (Score:2)
That's a lot of bitcoin to possess.
That's merely a big number in some database.
Wait, how does the blockchain even allow you to spend what you don't have?
Because this thing is not technically on the blockchain.
The transactions happening on the blockchain are between your own self-managed wallet and the exchange's infrastructure.
(A banking metaphor: Think you getting cash from your pocket and inserting it in the ATM input slot)
The transactions on the exchange are just internal number keeping by the exchange's software stack to keep track of who has how much and oews how much to whom.
(A banking metaphor: when you sen
What's that saying again? (Score:1)
But Bithumb is still trying to convince users who during the brief window of trading managed to offload more than 100 bitcoins, valued at roughly $9 million, to give back the equivalent funds.
What's that saying again? "Code is Law"?
Those 100 bitcoins are gone. Tough shit to those guys.
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Why? If any coins moved at all (bold assumption) it was no doubt into accounts controlled by the owners. "Oops we accidentally gave away $40 billion, that totally happened and we're not crypto scammers trying to promote ourselves!"
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If a bank deposits money into your account by accident, and you spend that money, you are liable for returning it. It's settled law. You can't claim you didn't know or thought it was a "gift" from the bank.
If these people choose not to return the money then the next step would be to freeze their wallets/accounts.
Re: What's that saying again? (Score:3)
They aren't a bank.
Re: What's that saying again? (Score:2)
Bingo.
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What is bingo? The complete lack of understanding of laws? The law isn't about banks, it's about transactions. Being a bank or not is irrelevant.
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Irrelevant. "Bank" in this case is just a party to the transaction. You're not entitled to keep anything that was obviously sent to you in error, even if it's a private transaction between individuals.
On top of that, quickly turning around the transaction to try and prevent the money getting clawed back is usually considered by the courts to be direct evidence that a party knew the transaction was in error.
It's like if you go to an ATM and get out $5 and it spits out a $50. You often get to keep it. If you
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You're not entitled to keep anything that was obviously sent to you in error
This is obviously false. You get to keep many things obviously sent to you in error.
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Bitcoin is not money, it's an asset. That's also settled law. If someone sends you something, you're not required to return it. There used to be extortion schemes were companies would mail products to people and then bill them for it. Returning the items was difficult and often had fees on top of shipping charges, so people were forced to pay for things they didn't order. Laws changed to allow you to keep things mailed to you.
You'd have to argue it out in court, but there's a reasonable chance you'd be
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Actually the law is law, and the code is code, and the code of bitcoin is not anonymous (quite the opposite). The law says the people who tried to make the 100 bitcoins disappear are in trouble if someone investigates them and follows up on this.
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WHERE'S MY LAWSUIT YOU TROLL
They got it all back (Score:2)
The transactions were reversed by the company. So much for "code is law".
Tech Writers (Score:2)
One winner?
More than one winner? Or not winners, just exchange clients? Did one winner start disbursing to his friends?
The global market sank? Because of 10 lost Bitcoin? Was there a rumor that went viral? Was it the exchange's local bid/ask table?
BTC txns? Their database of custodial accounts?
Had held? Did something
"Promotional campaign" (Score:2)
Promotional campaign, yeah I'm sure. I'm sure they had 40 billion worth of bitcoin lying around and managed to transfer it to actual other bitcoin accounts without anyone noticing.
No lying around (Score:2)
You're right being sarcastic:
I'm sure they had 40 billion worth of bitcoin lying around and managed to transfer it to actual other bitcoin accounts without anyone noticing.
Nope, they didn't have 620'000 BTCs (more like 50'000 BTC, mentionned elsewhere in the discussions).
They didn't make actual transaction on the blockchain giving out 620'000 to some random bitcoin account.
They just accidentally wrote +620'000 BTC in the database that manages the exchange (which tracks the internal state of who is selling how much to whom).
So suddenly some user was supposed to be in possession of 620'000 BTCs on the exchange according to the web interface, even if
real-life Michael Bolton (Score:4, Informative)
Headline is wrong... (Score:2)
They didn't accidentally give away $40 billion. They accidentally gave away the equivalent of a little less than $10 million. $40 billion was just the theoretical value attached to their fat finger error had they actually given away the number of bitcoin instead of the Korean won they intended.
Can the libertarians explain what the point is? (Score:2)
The article says:
For years you have been waxing poetic about how crypto doesn't have middle-men and is free of government oversight. Bitcoin is as tightly regu
gift (Score:2)
But Bithumb is still trying to convince users [...] to give back the equivalent funds.
Why? They called it a gift, didn't they?