I always curious how this crime starts. You’re already presiding over a popular exchange with billions in customer funds. Surely you could just run that legitimately and still make a ton of money?
A book named "How will you measure your life?" by Clayton Christiansen that dives pretty deeply into the topic, among other things.
The theory presented was called "The Trap of Marginal Thinking". On the margin, it may appear to make sense to do something or push some boundary or take on some more leverage because it, on the margin, is most likely going to work out. But by doing so, we end up putting ourselves and companies in a dangerous position when looking at the whole.
I agree with his view overall, but the current atmosphere seems to reward boundary-pushing more and more. There's never been a better time to be a stress-resistant psychopath or its company equivalent.
Some - not all - very wealthy people don't feel constrained by what is legal, moral, or enough. Being very wealthy can mean you don't derive your security from your community moral standing, but instead by purchasing security.
And they are not necessarily wrong in the logical sense, because as a society, we have allowed much financial crime to go unpunished or mildly punished so there is low deterrence effect for such people.
I think many people are programmed to seek a continual sense of improvement and accomplishment to feel our life is progressing and not regressing or staying static. If you already have a billion dollars and everything you could possibly want, how do you achieve that feeling? Maybe through altruistic work, but that's not your MO. Your MO is making money, so the answer is: 2 billion.
That's an achievement just as much as starting the next bottle of bourbon after finishing the first one is an achievement. There is happiness hiding in that SECOND bottle/billion.
Example: Carlos Ghosn was simultaneously CEO of Renault, Nissan, and Mitsubishi. He turned two of those from bankruptcy into the 4th-largest auto group in the world. He met all the world's leaders and spoke in all the high places. And made probably $10M/month.
And he stole $8M.
Was caught, lost all his positions, and is living the life of a fugitive. Had to be smuggled out of Japan in a box.
Don't be a pig.
[Note, story is from memory, might have some details fuzzy - but easy to research.]
This assumes that you have a legitimate business at all. A lot of these ventures quickly discover that there's just not much there, that all of crypto is just people gambling on number go up. At that point what do they do? Go down with the ship or exit scam?
This is often thrown out as a shorthand for systemic failures, e.g. renters blaming individual landlords for rising rents. But I think it applies here. Short-term optimisation at the expense of long-term value. Optimising for the margin at the risk of the whole. Irrational, self-destructive maximalism: greed.
Paranoia probably. Is there anybody you could trust to do something that illegal with that much money, that wouldn't ghost you after they had it? Maybe close family or friends, but the closer they are to you, the easier the plot is for investigators to unravel.
How could this possibly go wrong? Let me count the ways:
- You pay the hacker to hack you, the hacker takes the payment and disappears.
- The hacker hacks you, steals all the money for themselves and disappears.
- The hacker turns you in and collects a reward from the government, because the hacker has a moral conscience | is actually a Fed | decides getting a small amount of reward money legitimately from the government or potential victims has a better risk/reward tradeoff than conspiring with a stranger to steal a huge amount of money.
- The hacker hacks you, but keeps records of messages showing your complicity and blackmails you with them.
Basically it boils down to:
- No honor among thieves (you can't just trust the hacker to keep his word if he has a lot of incentives to break it)
- The courts won't help (generally if you say in court "I paid this guy to commit a crime and he took the money but didn't commit the crime," not only will the court refuse to enforce the contract and order the hacker to pay you, but you've now confessed -- under oath, no less! -- to being involved in a crime, which makes it quite likely you'll be arrested on the spot and prosecuted for your actions)
- Physical violence doesn't work well on the Internet. (Traditional organized crime enforces its "contracts" by threatening or carrying out physical violence against contract breakers or their family. This would only work if you knew your hacker's real name and location, and presumably the sort of people who sell illegal hacking services to anonymous strangers are quite, um, shy about giving their clients any information about their identity or location, for exactly the reason they don't want a crazed client to show up and physically attack them.)
I remember that one of the technical employees of the said exchange claimed cyber attacks to their servers were so rampant and many succesful that they were simply not able to continue business with all the stolen funds. I honestly believe that incompetentness might have played a huge role in this "fraud" story.
Being incompetent is far less illegal than covering up your incompetence with fraud.
If you don't cover up the first stolen funds, people will have a sense of the risk you pose and there will be less opportunity for future stolen funds because your customers will leave or beat you with a stick until your security improves.
Are perpetual swaps inherently impossible outside the cryptocurrency space, or is this just a "… on the blockchain!" invention?
I'm unconvinced that AMM is an actual good. It's like HFT, where you're counting centimeters of fiber to the exchange, to win algorithmically. The solution there isn't to democratize HFT by (in the analogy) allowing the little guy to also colocate with the exchange. The solution is to remove the penny tray theft that is HFT altogether, as it can't be justified as paying for value added. These last nanoseconds don't actually add any liquidity.
With good behavior he could be out in 28,395 years do he’s got that going for him.
We need more of this, more jail for corporate malfeasance. Fine just become the cost of doing business.
Compare this to China who executed two executives over contaminated infant formula [1] whereas we were almost rewarding Abbott for similar malfeasance.
> The Albanian minister for internal affairs, Bledar Chuchi, said that the fugitive's identity was confirmed post-arrest by biometric results: Özer had apparently shaved his head.
Seems they might not even have realized who they arrested until they tested him, or they just re-confirmed who it was post-arrest. If the former, any idea what he initially got arrested for?
Different countries have different laws but generally you're allowed to arrest someone when you have reasonable suspicion that they've committed a crime (say 99%) and then only confirm it 100% once they're arrested.
Yeah, I understand that, but you still need reasonable suspicion, and I don't think generally police in various countries are A) aware of all the faces on the Interpol lists and B) suspect people of fraudulently closing down cryptocurrency exchanges and running away from their countries.
The guy steals over $100M and decides to hide in Albania of all places? What's the deal with that? He could've paid less than $10k to get into Schengen (super low risk, the "high end" operators will drop you from a plane with a skydiving instructor) and had much more places to hide and way better places to spend his money at.
I know this isn't a humor site, but the three comments above were worthy of any comedy writing team. Result? Instant, involuntary, and un-stifle-able laughter. Thanks!
So not exactly the great Houdini after all. [0] Oh well. You can run but you can't hide alive.
Now he has all the time to practice his disappearing tricks in prison. By the time he has perfected it, he would have already disappeared from life itself.
The phrase "rug pull" is almost cartoonishly evil. It implies waiting until the victims are feeling nice and secure, and then you rip everything out from under them as quickly as possible. The fact that the phrase has become so closely related to crypto activities is really telling.
Prosecution of crime discourages further crime, so yes the ecosystem is being helped directly by the government regardless of whether these few investors get their money back or not.
Especially in Bitcoin circles, the classical economic view of property rights is pretty much a cornerstone of the ideology. Many would argue defending property rights is one of the most legitimate utilizations of Government force. I'm not sure I understand your point, at all.
• The blockchain is an immutable distributed source of truth outside the control of any central authority
and
• The government can pass judgement, seize your assets and give them to someone else
are fundamentally contradictory.
If you want the government to be the final arbiter of property rights then you are conceding that they control property allocation, not some global ledger.
Outside the control of something does not mean the same as outside the reach of. For a typical tech example consider e.g. owning a word processor vs using a word processing software as a service. In the former your usage of that is outside the control of any central authority, but certainly not outside their potential reach.
If the government deems your copy of that software is illegal, they may come for you [and it], but at the same time they can't simply whisk it out of existence - because they don't control it. By contrast, in the SaaS case - they can indeed simply whisk it out of existence, so far as you are concerned.
This also has nothing to do with conceding who "controls property allocation." It's all about control/ownership.
What pays for all the investigations to find the fraudsters and the funds? It's taxes, but a large proportion of people in crypto circles say that taxation is theft.
When I read your post I interpreted it as the government making people whole out of the general tax fund. However, after reading the articles, it seems the government seized assets from fraudsters and then returned the assets to the victims.
This comment is not intended to argue about anything, just adding a clarification.
i actually think this is a valid point. Either enforce property right laws correctly or people will turn to vigilanteeism. Just because the property happens to be crypto rather than real estate or your car, doesn't mean it's any less deserving of due process.
> Are they being bailed out by the government? I didn't see anything that said the government is making the investors whole here, do you?
Isn't the whole thing that code is the new law?
If you transfer ownership to your cryptos to that exchange, they should be the "legitimate" owner if you follow that logic. However it seems that all of this is just avoid the actual law when it seems convenient and cry back when it's not.
The standard expectation in the cryptocurrency space is that all problems are adjudicated via blockchain mechanisms (on chain, off chain, etc.) in a decentralized way. The fact that the government (a centralized, non-blockchain entity) has to step in to address a problem indicates a failure of the cryptocurrency ideal.
Is he saying that, or is he simply expressing a disdain for what he sees as anti-regulation crypto investors? He's overgeneralizing to suggest all crypto investors hate regulation, which no one believes is true. It's not even clear the majority oppose regulation in the crypto space.
The crypto ideal does not use custodial exchanges. Exchanges and brokerages have traditionally been regulated. They are convenient and not really the crypto ethos.
Since you said it was a standard expectation, you can point to polls that show this sentiment, right? Leaders of major projects saying that blockchain means stealing is ok and the government shouldn't prosecute it?
Or is it a thing you made up to win an argument. It is, isn't it. You made this up.
> What value does this comment add to the discussion?
Some of us advocate for a crypto tax to cover the cost of investigating, prosecuting and remunerating victims. This is currently borne by the public purse. Given the disproportionate contribution of crypto to fraud, and animated by the community’s general disdain for the law, this seems fair.
essentially turning that crytpo into the financial system that the original crypto (bitcoin) was trying to differentiate itself from (or make obsolete, we do not know satoshi's political intentions)
Things like this aren't a single charge with a 40k year sentence, it's ~2000 charges of ~20 years, served sequentially. It means that if he's found not guilty of ~1999 of those charges, he still serves 20 years for the 2000th. And conversely, if he is found guilty of all ~2000 separate crimes, why shouldn't he receive a sentence for each? It might seem like a silly result, but what would you propose changing?
In the US those would likely be grouped for sentencing, and he'd get somewhere near whatever the longest possible sentence is for fraud under the Federal Sentencing Guidelines with enhancements for the total amount of damage caused, maybe racketeering, and maybe a few others. It would essentially be treated as one big crime with 2000 victims, not 2000 separate crimes.
In the US whenever you see a story about an incredibly long sentence it is almost always because someone did not take into account grouping for sentencing, or they did not take into account that a person is often charges with multiple levels of a crime from the same act, and if convicted on more than one of those charges they are only sentenced on the most severe.
For example in most jurisdictions in if I were to shoot you to death the US there would be multiple degrees of murder that I might be charged with, maybe also multiple degrees of negligent homicide and manslaughter and maybe even others. My sentence if convicted would be the sentence of whichever of those has the longest sentence.
Unfortunately in the US when the Department of Justice issues a press release touting charging someone they don't take those things into account, and so the press release says the person is facing some number of years that can be several times too high.
I'd hold back on believing that he's really facing ~40k years in Turkey until someone familiar with Turkish law and sentencing verifies that things really so work that way in Turkey.
This is prosecutors gaming the system to try and make something stick.
If you're comfortable with prosecutors being able to play games with people's lives because they've made a personal judgment call to maximize their ability to punish people, great! The system is working the way you want it to.
I'm broadly in favor of shorter (or no) prison sentences for most offenses, but my empathy doesn't extend quite as far for someone who runs a crypto scam to dupe and and steal $2B from thousands of middle-class people. I think that most white collar offenses are disgustingly under-punished, and the knowledge that this will likely come down considerably means I'm not at all offended by this.
It was probably imprecise to say "most", because I suppose I don't know the proportional breakdown of which crimes led to all of the convictions, or the breakdown of what all the crimes are.
That said, I think most property crime is motivated by desperation, and prison rarely does anything to help improve the lives of someone who only resorted to anti-social behavior because they had little other choice. So I think most robbery should only be punished because of the violent aspect, and most burglary should be "punished" with halfway houses or a system like the Civilian Conservation Corps. I also think drug related crime is a huge waste of time, and that the damage caused by drug dealing/smuggling/manufacturing is a fairly direct result of it being illegal, rather than intrinsic to the "industry".
I think the justice system would need to be entirely reformed before it would make sense to reduce prison sentences for violent crime like murder, rape, or kidnapping. Though I think we're doing more harm than good throwing such people in prison for decades without any real rehabilitation involved.
> will they keep him alive for 40k years or how does that work?
Imagine how awful that would be.
> ~2000 charges of ~20 years
And that makes me wonder. Maybe that would be too harsh a sentence then. Do we want to basically "end" someone's life at an insane cost to the tax payer for something with no impact on others other than financial? I have no answer, it just feels somewhat suboptimal to me.
If you steal a billion dollars from a whole bunch of middle class folks, you are, in aggregate "ending" a whole lot of life in small amounts distributed across many people.
A problem with money is that it abstracts away harm so that a person stops thinking like it's so bad to take money away from people because it's just money, when in fact you're actually taking away the things people can do with that money.
Did zero people end up homeless as a result of this fraud? Did zero people lose a job? Did zero people turn to crime to get by? Did zero people get pushed over the edge to suicide? How many years of life were lost due to stress or more difficult life situations? To depression? To hunger?
I doubt any of those numbers are zero. The stories are just hidden behind the abstraction of money.
Crypto companies preying on gullible people more vulnerable to the loss of large sums of money and then losing their money due to management incompetence and fraud are indeed responsible for a lot of real world harm.
That's a good point. I hope the punishment was in fact based on actual real world impacts (of having stolen that money) that you described and not simply based on some monetary amount multiplied by number of occurrences.
It's just what prosecutors are accusing and the sentence attached in their proposal. A new charge for each of the people affected, which was a couple thousand apparently. One doesn't have to read all that much into the wishlist of prosecutors. Throwing a lot at the wall and seeing what sticks is a pretty standard practice.
But what we have here is essentially somebody leading a bank taking all the money left after losing a bunch of it to hacks and running away with it. Whatever it was, it was an enormous amount of money and not the kind of thing anyone needs to be particularly forgiving about.
Life in prison for stealing between $20MM and $125MM from customers isn't out of the question. (on top of the fraud that lost them the rest of their money)
Eventually, when we have brain uploading, we will make 2000 copies of the defendant and have them each serve a 20 year sentence, and then merge them back together at the end, leaving them with the memory of having served 40,000 years.
I honestly think the only rational reaction to brain upload technology existing is to erase as many traces of your existence as possible before self-terminating. Bet Pascal didn't picture this wager
There's infinitely more than one way to turn a list of numbers into one number, not just summing them up. In some countries you serve the maximum sentence out of all those that you've been convicted for.
I think a more fitting punishment would be to make an AI that measures how much pain he caused each of his customers, and then makes him sit through that pain. It would probably take hundreds of years, but the AI could make him live that long too. But I don't know if this is ethical. Someone chime in?
Sounds like "an eye for an eye". Apparently "it leaves the whole world blind", and that is why it's undesirable.
The second thing is that there's no way to measure pain, and also what we feel as pain is more like two things, actual pain, as in nervous system reaction, and suffering, which you create in your mind. There's two-way causation between the two by default, but the effect of one on the other is not deterministic, and can be learnt to that you feel pain, but do not suffer (as much you did previously). So we couldn't measure the pain before, and now we cannot measure the suffering to an even lesser degree.
The third thing is, which usually comes up with regards to crime, is punishment vs rehabilitation. What you describe with the AI, as it stands, is punishment. It's up the person being punished to learn something there. I don't have high expectation of someone who's returned to society after such lengthy torture (or are we killing them afterwards, or keeping them otherwise captive?). In case you're a victim of a crime, or just someone affected, it's natural to thirst punishment for the perpetrator. On a societal level however, it seems like that we're better off with rehabilitation. It creates a better social environment for all.
