Germany: Police seize bitcoins worth €2B | Hacker News Reader

Germany: Police seize bitcoins worth €2B

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153 pointstaimurkazmi129 comments

The project they were running was movie2k.to in case anyone is curious as it's not mentioned in the article.

I always wondered what happened to that website. Good times!

This is correct. I also found some other articles do mention movie2k, eg.: https://www.spiegel.de/netzwelt/web/movie2k-to-beschuldigter...

For those that don't read the article. They stopped in 2013, so it was worth a lot less than that back then.

not smart enough to use cold storage either. probably had the private keys on desktop in plain text

> cold storage

This is the equivalent of 19th century criminals burying their cash. It’s fine. You just put the person in jail until they cooperate or die.

in modern day, at least stories I heard, criminals will be placed in temp holding sell (worst places), once max time in temp jail is expiring (legally allowed), they just add new charges, so effectively, you will be held in worst jail cell possible for weeks if not months, this is how I understood from stories of multiple life time criminals with 10+ years in jail time served.

Wat? They had cold storage, the cops just used a $5 wrench attack, kind of. Basically they stashed their profits from the operation to BTC, then just held it.

do you think German police used 5$ wrench attack? this is not North Korea.

Not a literal wrench, but more like... persuasive talking, backed by credible threat of incarceration.

The point of the "$5 wrench attack" is that it's not a cryptographic break.

Germany has very lax sentencing. for $2 billion I would just do the time. I am still guessing it was unprotected file on desktop. Probably the criminals kept the only copy of keys on a thumb drive , which when confiscated meant they had no choice but to comply.

You think you can just get out of prison and use the money? They will be watching you and anything you buy with it or any cash you convert it to will be seized again. Might as well give it up for reduced sentence.

Obviously you'd want to leave the country and never return like Kim Dotcom or Mark Karpelès.

Or Carlos Ghosn (a prisoner in Lebanon)

the TV miniseries on his case is well worth watching.

€2bn buys a nice life for you and everyone you've ever been acquainted with, somewhere without an extradition treaty.

There aren't any nice places without extradition treaties where you won't be murdered by the people in charge, police, criminal gangs, et al. Or otherwise de facto forced to turn over the money for protection, after which you'll be discarded if you're lucky (and disappeared for convenience if you're not).

Montenegro?

They extradite:

https://www.reuters.com/world/europe/montenegro-court-approv...

Snowden seems to have a much better life than he would in a federal prison, don't you think?

Doesn't Putin have an incentive to show that he treats defectors well?

Brazil

So I am unclear on this. In Germany or the US, if you rob a bank, hide the money, get arrested, and serve a X year sentence, what happens when you are released? Could you use the money? You have already served for the crime. I suppose they could keep some criminal charges in reserve? If nothing else, eventually the statute of limitations would kick in where the money is fair game? Just be sure to declare it on your taxes, lest they get you like Capone.

IANAL but I suspect this is the kind of thing civil forfeiture is originally intended for. You would have to sue in court and prove the cash was obtained through legal means.

In the US, you may be ordered to pay restitutions or the bank can sue you for the loss.

Plus, these guys were (mentally) able to keep to those bitcoin for 100x of growth. I would guess they are likely to have more from other, legal sources, which potentially makes them millionaires. Why (indefenitely) stay in prison with a billion when you can go free with a million.

> Plus, these guys were (mentally) able to keep to those bitcoin for 100x of growth.

Given the time, I'd wager growth was completely fortuitous. They held it for the same reason I hold mine. Conversion requires either a source willing to exchange large amounts of cash for crypto, which tends to be impractical. Converting to cash through conventional sources (legal exchanges), necessarily involve either large bank deposits or, in cases like Coinbase or Kraken, conversions to cash are directly reported to IRS. I only say this because I'm in the same situation, except I didn't obtain it illegally.

"$5 wrench" refers to https://xkcd.com/538/

The 5$ wrench is just a simple example of social engineering. No amount of cryptography will help you if the guy holding the keys can be talked/pressured into handing them over.

https://xkcd.com/538/

I wouldn't say all social engineering is a $5 wrench attack. A $5 wrench attack is having physical access to the person and using physical means (handcuffs, prison cells, guns) to convince them to comply.

You’re taking it way too literally. The joke is that all this fancy-pants cryptography is meaningless when the nerds that employ it will mess their britches at the first whiff of real consequence.

I’d also add that a lot of the rhetoric in the cryptocurrency world is based on this very board game-y mentality where it’s like a contest to set the rules up so you win, which completely misses that in the real-world people just choose not to follow your preferred rules.

No police force says “oh, you have impregnable cryptography and a 42 character password, well, we only have one prisoner slot so you can go free now”.

Reference: https://xkcd.com/538/

Yeah it would be a proper German made 50€ wrench at minimum!

It would probably be a 5 euro wrench, they don't use dollars in Germany

It would probably be a €500 Knippex adjustable torque wrench. Assuming a German would use a tool for anything except it's intended purpose.

I laughed reading this. I'm now feeling ungerman, because, you know - humor!

>Assuming a German would use a tool for anything except it's intended purpose

I heard they made some shower heads that did something else.

oof

It's still cleaning... thoroughly.

I only read the German news and there they make it sound as if it was handed over voluntarily.

Now, what voluntarily means exactly when dealing with criminals and law enforcement is probably nuanced, but they definitely didn't say it was seized.

Also, it was not the only transfer in connection with that site, only the latest and biggest, so the overall total is even higher.

Well, "seize" = court order or a police action.

If police shows up to seize something then you can either cooperate (hand it over voluntarily) or risk additional penalties (fines, prison time, ...).

I read this story as "law enforcement was able to figure out that they have bitcoins, so they knocked on their door, and the criminals opted to hand it over instead of prison time".

So yes, they transferred it, but I wouldn't call this voluntarily. It's just that the applied force is as visible as the seized bitcoins.

"I lost the keys"

Boating accident. We've all been there.

The way things are going with these seizures, soon governments are going to be largest holders of bitcoins.

Good work on getting a currency without government control peeps!

It would be rather strange to expect a mechanism that bars governments from holding bitcoins to be built into the protocol, and thus it is rather strange that you expect this to have ever been the intention.

Whatever the "intention" was, what the parent says was the second most advertised supposed feature of Bitcoin by crypto bros (second, as first was "getting rich quick").

Sure, lack of government control is a main selling point, they just did not mean the term "control" in the way that both of you appear to be interpreting it.

> The seizure came after the "accused voluntarily transferred" the bitcoins to an official wallet of the Federal Criminal Police Office (BKA), police added in a statement.

Seizure is a technical word here, not what laypeople expect when they hear the word.

But yes, governments are already very big holders. https://bitcointreasuries.net/?maximized=treemap

The US Government is already one of or the largest know holder of Bitcoin. And that is without the assumption that the US Government owns the Satoshi coins. It would be fine if governments decided they want to hold Bitcoin. I see no issues.

Dumb take, anybody can hold Bitcoin.

I don't think bitcoin was designed to be impervious to government influence. The intention was to not be limited to a single controller, not that no controller be a government. Despite what some people think, bitcoin is not a "stick it to the man" invention

Ultimately if bitcoin is to reach the peak of a standard currency that some feel is inevitable (and some feel is futile) it would necessarily require government involvement. It wouldn't be a single government however. Monetary policy would have to be driven by a consensus of nations. That would possibly be the best (or least worst) way do do things.

None of this has any particular bearing on today's Bitcoin, if it's going to replace money it's not going to be in the next few decades. If it's still working in 50 years time, there might be a chance.

If you eliminate the noise of speculation on day-to-day levels of bitcoin, the underlying value difference between the current usefulness of bitcoin and the current trading price represents people placing bets on the likelihood of that success condition.

I think Bitcoin was designed to be decentralized money, and the rest was all emergent behaviour.

A lot of bitcoin holders do want it to be free from governments, though.

They dont want unilateral government seizure and dont want transactions whitelisted, and it accomplishes that

How that further manifests to some bitcoin enthusiasts probably cant cover all opinions

But its not a “government not allowed” system and its not important/useful for it to be

As long as government can't print more Bitcoin, I don't see the problem!

superpowers already are in the top 10 for some time

I was wondering why they would give up the 2B EUR, as the prison sentence here in Germany can't be that long afaik. But then imagined they could probably be extradited to the US for their 'crimes'. Not sure if that'd actually happen though... Germany refused extradition based on too low prison living standards before.

Then again, if you can't leave Germany and have 2B EUR that would be seized if you try to use it, it is game-theoretically a loss as well.

Maybe they saw a deal as their only possible restart in life.

Crypto lost the anonymous value long time ago when against a state power. So the money are not really their to begin with, particular when it is 2B.

Really depends if the coins were really known/tainted. I'm sure you could find ways to mix it in intervals, in smaller amounts, that could allow you a luxurious life indefinitely. Although I have to admit I don't know how much harder it has become, as I exited crypto some 5 years ago.

Bitcoin yes, Crypto no. Monero can still be anonymous in practice, for example.

Germany forbids extradition of their citizens. So unless the suspects were not German extradition should not have been a fear.

The site contained no piracy, only links. If it was a "piracy website" why are German authorities not going after Google, Yandex & co?

There was no law forbidding what they did at the time they ran the site, even if there have been law changes since. It's the PirateBay nonsense all over. In that case it was later discovered that one of the police officers investigating the site had previously worked for Warner Brothers before returning to the Swedish police.

> In that case it was later discovered that one of the police officers investigating the site had previously worked for Warner Brothers before returning to the Swedish police.

Revolving doors [0], IMHO should not be permitted.

[0] https://en.wikipedia.org/wiki/Revolving_door_(politics)

Rules for thee...

That's evil. Vicious copyright predators with lawful monopoly for violence and escalation. How worse it can turn?

A hell of a lot more. What you describe is the PG-13 version.

It’s kind of irrelevant who the police officer worked for. In the end courts have to interpret the law and decided how a law is applied. Even if a law might not explicitly state the exact circumstances, the court may decided that the spirit of the law was broken. It’s of course a more difficult case to make for investigators, why law makers might then codify the law more precisely.

This has been discussed numerous times over the years, you can read the court documents for the "kino.to" case which was very similar here: https://openjur.de/u/961112.html

The key is usually the part where it's done with the explicit goal of making money exclusively off copyrighted material ("gewerbsmäßig begangene unerlaubte Verwertung von urheberrechtlich geschützten Werken"), that's also why the court case of TPB was so focused on how much money their ad business made.

Google, YouTube and other similar players are very well integrated in the whole DMCA takedown process and you can't really compare them.

Friends of mine who watch movie streams on similar sites tell me they always get their links from Google. Apparently all you have to do is input the movie name, together with relevant keywords.

Since authorities started cracking down on these streaming link sites, they now have to frequently change their URLs, so ironically general search engines like Google are the fastest way of finding the latest working links. Google has the exact same business model of making money with ads on their site, which people visit to get those links.

It's easy to look up rulings and see that European courts interpret the law the way you say - 100% correct. It's rule of corporations, not rule of law. Google will never be touched, even though they have served a larger number of supposedly illegal links to users. Of course Hollywood doesn't go after them because it's a fight they could not win.

Friends of mine told me that someone automated that for you https://github.com/movie-web/movie-web

The point is not if you are able to find streaming links on Google in the window of time before the copyright holder files a DMCA (https://lumendatabase.org/notices/search?term=google+streami...) notice and they are blocked from the index or not, but if the site has a legal process to process these.

I don't find it very hard to see a difference between "illegal" streaming site with no contact information, imprint or company behind it vs. large companies that have a working legal framework to take down content and do so all the time.

Not a valid comparison for two reasons:

1. The primary use case of Google is not to find pirated streams.

2. Google responds to lawful take-down requests.

> Google has the exact same business model of making money with ads on their site, which people visit to get those links.

This is a disingenuous claim for the reasons mentioned above.

> Google will never be touched, even though they have served a larger number of supposedly illegal links to users.

False equivalence for the reasons above. Piracy links are a small fraction of Google's use case, not the primary advertised function. They're also responsive to following lawful requests.

Law is not code that evaluates exactly as written without any exception, any time someone commits an act deemed illegal.

Law (usually) considers the full context of the situation, like the intent, malice, or negligence of the person involved.

But why would the law be vague about this? What if I accidentally link a copyrighted work and I happen to run ads on my site?

In fact, what if I link to something and it is changed to a copyrighted work silently?

Computers don't care what you intended, but the law cares a whole lot. As programmers we sometimes aren't used to that. There law isn't executed by a computer, but by judges who can see that the clear purpose of a website like this is piracy.

> What if I accidentally link a copyrighted work and I happen to run ads on my site?

If you make a site that legitimately serves a different purpose, then you accidentally post a single link to pirated content in a truly good-faith accidental manner, then you response to any requests to take it down with a good-faith action in a timely manner, you are in a completely different category than dedicated piracy websites.

There is no equivalence.

Furthermore, the law generally takes intent into account. You can start reading on the general concept on Wikipedia: https://en.wikipedia.org/wiki/Mens_rea

>But why would the law be vague about this?

Because the real world is vague too. The law is dynamic, not static, any specifics are taken into account by judges and prosecutors, non specifics are speculated, intent and malice is considered, and so on.

>In fact, what if I link to something and it is changed to a copyrighted work silently?

Then you'll 99.99999% just get away with it, as nobody cares for some lowly link.

If (and it's a big if) it attracts attention for some reason (perhaps it gains tons of traffic and suddenly some music/movie label is calling for your prosecution), then you might be prosecuted.

In which case your prosecutor will assume your guilt, your lawyer will argue that you are innocent and somebody switched your original link, and the court will try to find what really went on, after hearing all of them, and checking any evidence, looking into whether there was intent and malice involved, and so on.

Same as if you stayed in a hotel with a friend, and the other day you were found sleeping, and the friend murdered. The law doesn't have a special provision for "but what if somebody else came in the room with a spare key and murdered my friend" either.

Do we know for a fact that the operators didn't run file hosters as well with links to those hosters being preferred?

Because that was the business model of their predecessor.

When are we going to stop calculating BTC total value by multiplying number of BTC times what is, let's face it, a spot price. There is no way you could sell 2 billion euros worth of BTC. You can't convert them into real property.

Sure you can, you’ll have to do it slowly over years.

A quick look at the 24-hour trading volumes of the top 10 crypto exchanges (only a single trading pair per exchange of BTC against a USD or equivalent) gives a total volume of ~3.8 billion dollars. Many people say that there is a lot of fake volume in crypto but this is still a pretty conservative number. The total BTC volume according to CoinMarketCap is about 23 billion, but I prefer the smaller number because it gives a much better picture of the volume that could be feasibly captured with pretty unremarkable exchange access. If we assume that one can capture 5% of this 24-hour volume (a reasonably conservative assumption given good enough trading infrastructure), it would take about 11 days to offload that amount of bitcoin by selling across the top 10 exchanges.

So you absolutely could convert an amount like that into "real" assets. 11 days doesn't seem like an unreasonable amount of time to me, and we haven't even talked about OTC deals or other providers offering block trading services.

You think that there is the equivalent of 3.8b dollars of inflowing to Bitcoin specifically every day?

The total amount individual traders put into stocks in the first week of the year is ~7b. Is Bitcoin actually > 3x higher than that?

https://www.bloomberg.com/news/articles/2024-01-05/bofa-says...

they didn't say that, they said 3.8b of volume

the new ETFs have had inflows that high over just the last week, so, yes? if bitcoins price has barely moved by ETFs that buy bitcoin based on how much people bought the ETFs then yes there is that much liquidity

The bitcoin ETFs have had 7b in us dollar inflows in a week?

The ETFs had net inflows of less than $1B. GBTC had significant outflows.

I probably had not been reading net then, thanks.

Looks like the German government will have no issue liquidating their amount quickly over several trading sessions, venues and OTC if they desire to

A billion dollars isn't a lot of money any more. We could start seeing trillionaires appear on stage in about 25 years; which would imply "billionaire" being what millionaire is now.

I'm talking purely in relative terms to the entire us stock market.

Those numbers aren't new inflows of capital into Bitcoin. They're the total volume traded both buys and sells. There are traders, market makers, etc both buying and selling many times a day, and anyone wanting to make large block trades can get a sufficiently modest piece of that. 5% is very achievable with very little price impact even in markets with lower liquidity than Bitcoin.

All that matters is if there if fresh money coming in and how much there is if the German government tried to sell. We have no idea how much money is fresh and how much there is wash until someone places a legitimate market sell for a large quantity of BTC.

I'm not saying it is wash trading since I don't have a cristal ball or insider info but after the recent lack of price action from the ETFs, it doesn't suggest the existing volume is legitimate.

> All that matters is if there if fresh money coming in

Every time a trade happens, someone is "coming in" and someone is "getting out". The more trades there are, the more opportunities there are for anyone (including the German government) to take the other side.

> after the recent lack of price action from the ETFs, it doesn't suggest the existing volume is legitimate.

This is by no means the only reasonable interpretation of the price action surrounding the ETF approval. It's totally plausible that the lack of price action just means that the amount of money "selling the news" of the final ETF approval is around the same as the amount of money "buying the rumor" of a big influx of cash.

> Every time a trade happens, someone is "coming in" and someone is "getting out"

This is not true in a wash trade which is what I have repeatedly been saying.

That volume is not wash trading (i.e. "fake volume" in my words). There is fake volume in crypto but that happens largely on the smaller, less established exchanges that are trying to make a name for themselves. You can see this from the "**" markings on CoinMarketCap that indicate that they don't include that volume in their total volume calculations. I did not include any **'d volume in my above calculations.

But don't take it from me. This comment https://news.ycombinator.com/item?id=39200966 elsewhere in this thread agrees that you can move that amount of Bitcoin in a small number of weeks.

We have no idea how much wash trading is happening. I know for a fact that it is not all wash trading but it's also not 0% wash trading. Both extremes are equally absurd to claim.

2013 called and wanted its argument back

that hasnt been true for a very very long time

and its simply the same standard used for all other asset classes. lets normalize talking about bitcoin using the same standards we use on other things, of course that would require even knowing how other assets are talked about

It is pretty normal to consider the trading volume of a stock or asset when discussing valuation of huge lots.

when discussing selling them, which no party in the article is talking about. and its not normal when simply discussing balances

This thread, the one you replied to, is explicitly discussing selling: https://news.ycombinator.com/item?id=39197062 .

I don’t see that

and the article

> investigators cited by German news agency dpa said no decisions had been made regarding cashing in the bitcoins

As someone who worked for a trading firm that did some* crypto stuff, you absolutely could sell 2B Euros worth of BTC, in a matter of weeks (contingent on market conditions), without significantly impacting the price.

*Some being trading volumes under but approaching $1B/month, although we didn't really have directional price exposure.

Previous discussion: https://news.ycombinator.com/item?id=39188364

"An investigation is still underway and no charges have yet been filed, police said."

Whoa.

> "The seizure came after the "accused voluntarily transferred" the bitcoins to an official wallet of the Federal Criminal Police Office (BKA), police added in a statement."

What are the odds this was a trade - "give us the coins or we proceed/extradite you to somewhere else"?

From a service that was taken down in 2013? That's a hell of a long time to build a case.

It’s a very weird case.

They were sitting on this amount of money for over ten years and couldn’t spend it without leaving a paper trail, and Germans are pretty good at paper trails. It’s “taxes, taxes and taxes” rather than “death and taxes” here.

Personally I would have hosted a German only reverse lottery, where the bitcoins would be divided up between every person that submitted their wallet address and proof of one entry per person with a German identity card. Boom, mass traction of bitcoin in Germany, and you’re god damn Robin Hood. No way the state is going to force millions of people to pay it back.

German nationals can’t be extradited to non-EU countries and if they would be, they still serve their sentence in Germany.

Article 16(2) of the German Constitution, 2(3) AICCM

Under the TCA, Germany has made the respective notification under article LAW.SURR.83(2)/article Law.Other. 134(1) (now articles 603, 690) that it will not surrender its own nationals. Accusation warrants: Germans can be extradited, but only to EU member states and only under the condition that after their conviction, they will be transferred back to Germany to serve the sentence there.

Conviction warrants: German citizens can only be extradited if they consent (section 80, AICCM)

German police want to scare bitcoin investors just before the halving event...

2 bits ?

I don't think if I had $2 billion in proceeds from a piracy website I would choose to reside in Germany.

sure better than residing in the US which hands out huge sentences like Halloween candy .

Very true, the guy who hacked into Valve and leaked HL2 got 2 years probation in Germany.

https://www.svg.com/899802/the-real-reason-valve-wanted-to-o...

The only thing with you do not f*k around in Germany is taxes. For the rest, the fines and sentences are a joke.

This one is also questionable in a country that allows you to buy a Porsche with cash, and which in general has its capital full cash only casinos and bars.

But yes, if you play by the book, you definitely don't want to mess with the Finanzamt.

There's a planned limit making sales above 10k Euro in cash illegal, afaik.

> you definitely don't want to mess with the Finanzamt.

*as a nonaffluent individual.

> allows you to buy a Porsche with cash

What's wrong with that?

It's well-known that the Italian mobsters are coming to Germany to buy cars with their drug money with nobody noticing. For example.

Not a good enough reason to place arbitrary limits on the use of cash. People should be free to buy a car with cash.

It seems like a very law-abiding, low-crime place. Are fines and sentences ineffective?

The rate of violent crimes against people is low, but higher that you may feel by reading the newspapers. There is lots of crime, but typically not violent against other people. Having you home break-in is relatively common.

You'd need both: law enforcement that looks the other way when it comes to the crimes you commit and good infrastructure. Countries with one or the other are easy to find, but both?

You can rent infrastructure from a provider from a country you don't reside in.

While the people behind this website were indeed caught in Germany, providers of similar popular streaming piracy sites (kinox.to and movie4k.to) have/had warrants out for them internationally as well as house searches all over Europe. They really don't joke around when it comes to copyright infringement.

Beyond what other wrote: A polish and a german citizen. Website was taken down in 2013, but they were imprisoned in 2019. Maybe they thought they had got away with it?

This could have a significant downward impact on bitcoin's market price. I imagine they will be sold fairly quickly.

The volume today is 22 billion. 2 billion in downwards pressure would lower the price but it’s really not a huge deal.

Most deals like that are not done on the open market though.

it is a lot but it would not be sold at once. probably sold in secondary/OTC market

If it’s sold at an auction or anything like that I don’t know how much arbitrage you can really get. Especially since there might be fees or taxes

Governments aren't fools, they generally don't just yolo a market sell order when liquidating seized financial instruments.

They may be sold to a financial institution at some discount on face value, which would then do the best they can with them.

Reply on news.ycombinator.com