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Comment by gruez | Hacker News Reader

>absent exploits or insiders

Insiders can be press ganged with threats of violence, which the state has a monopoly on.

It's never not gonna be funny watching "code is law" people find out that law is, indeed, law.

You think a state’s monopoly on violence is relevant when they’re beating you to steal cryptocurrency from you? Anyone off the street can do the same.

If someone from the street does this there is a force called police which will help you. When the government does this, there is no one who will help you.

The police will generally accept a police report and then laugh at you

when the seconds count the police are only minutes away

Oh man, not in the rich, sunny SoCal city that I live in. Those princesses are still sore about that time we burned down one of their police stations in the BLM protests a few years ago.

Like they refused to show up for a man stalking his ex and trying to break in, during daylight and in full view of everyone in the complex, and they continued to not show until after he murdered her.

I had assumed that they had some kind of obtuse M of N scheme with no sufficient number of parties in the same place at once, but that was perhaps too optimistic (?) of me.

That's can be pulled off, but actually requires planning and forethought to pull off. For instance, you'd want the keys to be on HSMs/hardware wallets in different jurisdictions (ideally rivals like US and Russia). Obviously this wasn't something they considered or planned for considering many (most?) of the higher ups were living in a shared penthouse in the Bahamas. Although, to be fair I don't fault them for not planning for this. If things get bad enough that men with guns are demanding you to do something, being able to reject their request would be pretty low on my list of priorities.

Armed government agents show up to your door asking you for half a billion dollars. You tell them "can't do it, I need this other key that's held by my partner in a different place". What do you think is going to happen next? "Understandable, have a good day" and they go home? Or they hold you in jail until you somehow find a way to comply?

Exactly, and we have a recent example of this:

"Mr Zhong pleaded guilty on 4 November to hacking the website and has forfeited his Bitcoin and assets to police as he awaits sentencing." https://news.yahoo.com/stolen-3bn-bitcoin-mystery-ends-17073...

Absolutely the latter. My surprise comes more from FTX seemingly not even trying to do some kind of key protection scheme; it seems as though they made it easy for this seizure to happen. To my mind, this speaks large volumes about the quantity of misplaced confidence in these firms.

They made it easy to move the funds around on purpose, so that they could move the funds around any time they wanted. "They" being a very small handful of people, maybe just SBF himself, maybe a couple others. They didn't want it to be hard to move funds because that would require more accountability. Accountability was the last thing they wanted.

but that's the very purpose of such schemes, to render you unable to comply.

if such an event happens in a more or less civilized country, you might eventually get some third party to confirm that you're unable to disclose the key

"Call your friend and convince them to hand over their key if you want out"

"If I ever ask you for the key over the phone, play along and send me random bits and feign ignorance to my further requests"

What's your endgame here? Stay in jail with the satisfaction of knowing that the government didn't take the $500M and nobody can access them anymore?

it's just how I'm picturing this scheme could work, not necessarily in FTX scenario

And how would you ever comply? The government can hold you hostage, but absent the consent of your collaborators there’s nothing you or the government can do. Which is not a great situation to be in, to be fair.

The government can let you call your collaborators. While they torture you. Of course you picked your partners carefully to be absolute psychopaths that would rather see you suffer and die than give up their keys. That's how you picked them as trustworthy partners in the first place!

They'll hold you and go get your partner in the other place next.

If he's in a different jurisdiction, they get the other country to cooperate and share the seized funds.

According to some of the chapter 11 filings, the keys were stored in a shared email account with a shared password for key employees.

Yeah.

That's not the secret sharing Shamir had in mind!

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