Early Bitcoin Adopters Facing Extortion Threats

An anonymous reader writes Wired recounts the story of Hal Finney, one of the very first adopters of Bitcoin. Finney died earlier this year after a long fight with Lou Gehrig's disease. But for months before his death, he was a victim of constant harassment from somebody trying to extort his Bitcoins. He and his family faced a variety of threats, and had a SWAT team called on their residence. And it turns out Finney is not alone — other early adopters are being targeted with similar threats. "That's when someone using the names Nitrous and Savaged hacked into [early adopter Roger Ver's] email accounts and demanded that he cough up 37 bitcoins—about $20,000 at the time—in order to prevent his private information from being published online. Ver refused, and the hacker apparently backed off after Ver put a 37 bitcoin bounty on his head. Ver, who was himself sentenced to 10 months in federal prison for illegally shipping explosive across state lines, believes that Savaged is not only the same person who swatted Hal Finney, but also the person who gained access to Satoshi Nakamoto's email account earlier this year."

Comments

Told you so

[Anonymous Coward]

Unregulated currency FTW

Re:Told you so

[NotDrWho]

The only currency more corrupt, sleazy, and propped-up-by-bullshit more than Bitcoin is the U.S. Dollar.

Re:Told you so

[itzly]

Yeah, because nobody ever got extorted for US dollars, or other currencies.

Re:Told you so

[nosfucious]

Really? US dollar? Swiss Franc is much more stable. Euro, is very spendable, mostly stable. Petro-Euro could easily replace Petro-Dollar (but ask Saddam Hussien how that turned out).

US Dollar is not worth its weight in paper.

China holds vast amount of US Dollars and the moment they decide to sell some or all of these, the currency will start to look like the Zimbabwe Dollar.

Re:Told you so

[Lunix Nutcase]

Euro, is very spendable, mostly stable.

Then you've never watched it's 25%+ fluctuations up and down over the last 10 years.

Re:Told you so

[Shakrai]

Petro-Euro could easily replace Petro-Dollar (but ask Saddam Hussien how that turned out).

Only when the EU decides to try its hand at keeping the Middle East stable. You might wish to keep the Brits (and French) out of it though, I hear they like to draw borders with no regards to ethic or tribal history. :)

Re:Told you so

[sanvila]

Euro, is very spendable, mostly stable.

Then you've never watched it's 25%+ fluctuations up and down over the last 10 years.

You can't measure the stability of a currency just by comparing it to your own currency. If we followed that line of reasoning, the only stable currency to you would be one which is pegged to the US Dollar. The price of one Euro fluctuates if you measure it in Dollars, yes, but that does not speak against the stability of the Euro more than it does against the stability of the Dollar.

Re:Told you so

[Iconoclysm]

Nothing like a little bigotry in your financial discussion, eh?!

Re:Told you so

[ultranova]

Unregulated currency FTW

Bitcoin's not unregulated. Its regulations are simply enforced by technical rather than legal means. Or are you perhaps confusing currency regulations with regulations against extortion?

Re:Told you so

[ultranova]

US Dollar is not worth its weight in paper.

According to Wikipedia, a dollar bill weights around 1g. According to Alibaba, a ton of offset printing paper costs around $600 per ton. That means paper costs around 0.06 cents per gram, or put another way, a dollar bill is about 16 times its weight in paper.

Re:Told you so

[Richard_at_work]

Similar then to the huge fluctuations of the dollar to the GBP then?

Re:Told you so

[Anonymous Coward]

Or 1600 times its weight in paper, if you remember that a cent is not a dollar :p

Re:Told you so

[gwolf]

Right, I see what you did there...

I am Mexican. We have been told the peso has been mostly stable for almost two decades... Well, lets say, a decade and a half. When Vicente Fox was appointed president (2000), one dollar was at about MX$10, and it has very slowly slided. This year started with the dollar at ~MX$13. (Our last couple of months notwithstanding, as we are now at about 15). You can look at the last 10 years' graph

However, when the Euro started circulating (2002), one Euro was at about 7 pesos. It has since gone up to 17, then down a little. That is, it has moved from ~US$0.80 to ~US$1.40; it has peaked at US$1.60, and in the last 10 years, had valleys of US$1.20. (you can see the last ten years exchange levels history)

So, in short: There's quite a bit more to it if you dig into the whole world of currencies :)

Re:Told you so

[AK Marc]

Is that fluctuation in comparison to oil in Germany or bread in France? Or in comparison to some unrelated arbitrary currency? OMG, it fluctuates wildly compared to the BHT !!11!!

Re:Told you so

[AK Marc]

What happens there is that the peso is unofficially tied to the dollar, and both the US and Mexico work to keep the rates stable, because that improves trade. So they are not independent currencies. They just fluctuate together, within reason.

Re:Told you so

[Kaenneth]

DRM is enforced by 'technical' means; Bitcoin is enforced by mathematical means.

Re:Told you so

[david_thornley]

How do you avoid essentially useless computation with a trustless distributed ledger? If it's computationally easy to verify the ledger, it's computationally easy to verify a fake, and if not many computrons are spent on verification it's easy to outspend the honest folks.

Re:Told you so

[AK Marc]

Did you not read? If you add trust, then you get trivial computations. The system for bitcoin is no more secure. The network can be attacked with "fake" transactions relatively easily. Any nation-state could take over and collapse bitcoin for liss than 1/100th the "value" of all the bitcoins on the planet. Sure, there'd be a fork and things would "change" but the damage would be done.

If the US really wanted to take down bitcoin, they should build $10B of mining gear. Then push through piles of fraudulent transactions stealing all the bitcoins they can. The only problem with that is if they get sued for illegal taking.

Re:Told you so

[NitroWolf]

You do realize that it takes much more energy to create and distribute the US dollar than it does to create and distribute bitcoins, right? So if Bitcoin is anti-environment, then the US Dollar is super-anti-I-fucking-hate-all-living-things environment.

So why are you using USD, since that is so anti-environment?

Re:Told you so

[NitroWolf]

Oh, so the US Government can be trusted to not fuck up a monetary system? I mean, it's worked so well with USD, why wouldn't it work with another version of it?

You are the reason there is a problem. You don't even understand what the problem is, so how can you be expected to form an viable opinion on it?

Re:Told you so

[gwolf]

Nope. The peso floats freely; twice in the last five years there has been economic unstability, and the central bank "intervened" by selling a chunk of its reserves in order to keep the peso from falling further. It has worked: In the 2008-2010 period (remember, global economic recession), stable exchange levels jumped from 10 to 12, but we did at some point reach (for just a couple of days) 16, then went back to 12. And a similar thing seems to be happening now, as the dollar jumped from ~12.50 to ~15, and seems to have stabilized.

But no, the Mexican peso is not tied to the dollar, or to any other currency.

Re:Told you so

[gwolf]

Oh - Sorry, I jumped to answering. You did say unoficiallyUS and Mexico work to keep the rates stable.

That's exactly true. It's not that the peso is artificially held at a fixed per-dollar level (as it happened in the past), but that it is kept in a relatively stable value through "real" action.

But, of course, this is because the USA is not only Mexico's closest economic partner but its neighbour country. But anyway, the reason I sent here my original comment is that in the 2002-2014 period, the Euro went to over double of its original value against the US Dollar, then down a bit.

Re:Told you so

[AK Marc]

No, I didn't know that. How much energy does it take to print and distribute a paper bill?

I buy and earn in USD, but haven't seen paper money in 7 years, aside from a $2 bill I keep around as a curiosity. So your assertion that paper (or coin) is required for the USD to be useful is provably false.

Re:Told you so

[AK Marc]

Where did I advocate the USD? Oh, I didn't, and you are lying? Try again when you are willing to read what's written, and not what's convenient for you to strawman.

Re:Told you so

[AK Marc]

my original comment is that in the 2002-2014 period, the Euro went to over double of its original value against the US Dollar, then down a bit.

And how did the Euro perform against the AUD and GBP? Comparing two things doesn't prove one is more stable than the other. The USD fell against the Euro, then rose. It's the USD that's unstable. Compare them to the price of commodities.

Re: Told you so

[AK Marc]

I move $40,000 USD a year. But I don't live in the US. One can survive electronically. And when I lived in the US, I never saw debit fail that left the store open. I've seen Wal-Marts close because their machines were down. They can't do customer service, gift cards, refunds, or anything else. When debit is down, they close stores, not go back to cash, which many people don't carry anymore.

Still can't believe

[Kobun]

That swatting is a thing. How can it be that a single, anonymous phone call is all it takes to deploy a militarized police team to your front door? It blows my mind. That it keeps happening over and over ... ugh.

Re:Still can't believe

[Cigarra]

Because police departments have all this budget and military gear and they're itching to use it?

Re:Still can't believe

[Anonymous Coward]

Because if someone calls in and they don't break your house and kill your dogs, someone will sue them?

Whereas if they follow procedure, heed the call, break your house and kill your dogs, they're in the clear.

Doing this creates wealth (jobs).

It's Capitalism 101.

Captcha: misuses

Re:Still can't believe

[taxman_10m]

It applies to lots of things. In this instance here someone filed a fake claim of child abuse.
http://www.bostonglobe.com/met...

Re:Still can't believe

[Translation Error]

Because if someone calls in and they don't break your house and kill your dogs, someone will sue them?

Suing the police for not responding to actual violent crimes has been tried. The courts ruled that the police have no obligation.

Re:Still can't believe

[TheCarp]

That assumes they even are "departments". Here in MA swat teams are private companies, which seems to have gone unnoticed until someone tried to file FOIA requests for information about how often they are deployed; and they refused to answer.

Because of course, knowing how often and why they are deployed is only reporting to the public on exactly what we pay them for, its not something the public has any right to know or anything.

Re:Still can't believe

[Sperbels]

There are reasonable responses, and there are unreasonable responses. The police usually lean toward the unreasonable responses these days. They smash in the door with guns blazing when the only indication that something is amiss is a single phone call from an anonymous source.

Re:Still can't believe

[ultranova]

when you give people the simplified choice of, should this tragedy have happened, or do we prevent it in the future, they will always pick the "lets prevent this in the future option". Because they are not writing the budges, they are not directly taking money out of schools or medical care. They are not deciding exactly what rights to trampled on.

Yes, it's the dumb public who's at fault. Except... for some strange reason the police don't behave this way in, say, Nordic countries, despite them being openly and officially huge-government welfare nanny states straight from Ayn Rand's worst nightmares. So perhaps, just perhaps, the problem behind the police acting like an occupying force is not the public but the police themselves?

Re:Still can't believe

[VGPowerlord]

What happens when you file a FOIA against the police/911 office that dispatched them?

Re:Still can't believe

[liquid_schwartz]

Oddly enough yes. Don't believe me, check with the family court system and see the lopsided numbers and seemingly infinite stories of how bad a deal a dad gets.

Re:Still can't believe

[FooAtWFU]

It's Capitalism 101.

While the general snark in this comment is evident, I have to protest about conflating private ownership of the means of production with government agencies wasting money doing useless tasks (to say nothing of the risks associated with it).

Perhaps the inability to differentiate these two is actually something that's common these days, though, which would explain a lot about modern discourse on the topic -- likewise the conflation of "jobs" and "wealth" (the former being a means to an end).

Re:Still can't believe

[rtaylor]

It's still not up to the private company to tell you that. In fact, disclosing those details might be a violation of their contract with their employer.

Ask the public office that hires and pays the team how often they are deployed and what for.

Re:Still can't believe

[Anonymous Coward]

Oddly enough yes. Don't believe me, check with the family court system and see the lopsided numbers and seemingly infinite stories of how bad a deal a dad gets.

But with the oppression of men being done by men, not women, shouldn't more of the anger and frustration be directed at men, not women? Because it isn't the women doing the oppression, it is just you disagreeing with your fellow men in power about how things should be. Like many other issues. So if you really want change it might be more productive to engage politically based on that premise, not on fighting "feminists".

Re:Still can't believe

[ebvwfbw]

.... Here in MA swat teams are private companies, ...

Not gone un-noticed. I know about it clear down in Maryland. So do others. Last I knew they did that so they wouldn't have to answer FOIA requests. You know, try to hide their stupidity. I thought there was legislation to remove their ability to do that. MA is way out of my zone to care about, other than it could spread. Look into it and get it outlawed if that's not already under way. Understand that your life if you live in MA may depend on it. Less Rambo, more Sheriff Taylor.

The end point to this police/racial hoaxes recently is the crazy left wants to nationalize the police. Then we're all screwed.

Fireworks

[Orgasmatron]

http://dailyanarchist.com/2012...

http://www.cpsc.gov/en/Newsroo...

He was charged for selling agricultural fireworks (to scare away pests) on ebay. Turns out that the manufacturer was making them too powerful and/or not following regulations that limit their sale to farmers, ranchers, and growers.

He was also the only person prosecuted over the incident, despite the same fireworks being sold all over, including Cabelas. (Ken Shearer is mentioned in the CPSC press release, but his case is unrelated.)

No "Bounty On His Head": Timmy Fails Again

[Anonymous Coward]

Ver refused, and the hacker apparently backed off after Ver put a 37 bitcoin bounty on his head.

From TFA: "Then Ver responded with a link to a Facebook post offering that 37-bitcoin bounty for information leading to Nitrous’s arrest, and Nitrous immediately backed down. To be clear, Ver didn’t put a bounty on Nitrous’s head. He merely said he’ll pay out the money when Nitrous is arrested for hacking his accounts."

Re:No "Bounty On His Head": Timmy Fails Again

[Richard_at_work]

Its a perfectly reasonable modern use of the term.

Ten months?

[AndyKron]

10 months in federal prison for illegally shipping explosive across state lines? That's it? Ten months?

Re:Ten months?

[nedlohs]

The "explosives" in question were firecrackers designed to scare birds sold on ebay...

Cojones

[puddingebola]

I don't know, extortion is evil but you've got some cojones to try and squeeze somebody who ships explosives across state lines. Maybe you're 37 bitcoins will include a special package delivery from Hal Finney. That's odd, this box is ticking.

Re:"Bounty On His Head": I Fail Again

[Anonymous Coward]

Whoops! I fail this time.

From TFA: "Ver refused, and the hacker apparently backed off after Ver put a 37 bitcoin bounty on his head."

However, that statement links to this article which states that: "Then Ver responded with a link to a Facebook post offering that 37-bitcoin bounty for information leading to Nitrous’s arrest, and Nitrous immediately backed down. To be clear, Ver didn’t put a bounty on Nitrous’s head. He merely said he’ll pay out the money when Nitrous is arrested for hacking his accounts."

I suck. Apologies to Timmy.

Take a pack of Black Cats camping

[raymorris]

If you go camping and take a pack of Black Cats with you, you may have just illegally transported explosives. Details matter.

anonymous!

[140Mandak262Jamuna]

Aren't bitcoins supposed to be anonymous? So anonymous no government jack booted thugs can find you? So great you could pay off goons in bitcoins to knock off spouses with inconvenient pre-nuptial agreements?

If random hackers find you and shake you down, your imagined immunity from FBI is just imaginary, isn't it? Shows without a legal government backing it up and providing for a non-violent conflict resolution options and contract enforcement options, all these "digital anonymous currencies" are just jokes, created by folks unconnected with reality creating castles in the air.

Re:anonymous!

[Anonymous Coward]

"Aren't bitcoins supposed to be anonymous?"

No, they aren't. This has been covered many times already.

Re:anonymous!

[GuldKalle]

He might not have tried to be anonymous, though. No amount of obfuscation or anonymity can stop you from proclaiming who you are.

Re:anonymous!

[koan]

They can be, however people keeping their mouths shut is another thing all together.

Re:anonymous!

[Anonymous Coward]

BitCoins are not anonymous. Wallets are.

It isn't tough to guard your BitCoin stash from the bad guys:

1: Keep it offline. Buy a cheapie netbook, slap Linux on it, create and do your wallet stuff on that. Make sure to back the wallet up. This can be done in a number of ways.

2: If you have a real stash of BTC, go with a paper wallet. If you want a proper "currency" feeling, go to bitcoinpaperwallet.com, and buy some pieces of paper, seals, bags, and even a Ubuntu live CD with the wallet software on it for use offline. then treat said wallet as you do valuable currency and stash it as such. [1]

3: If afraid of the guy with the wrench (XKCD panel 538), you can split a wallet among friends in a "need x out of y pieces." That way, if people know you got hauled off in Lower Elbonia since the 1 BTC will double the GDP there, people in the US or Latveria don't have to give up their pieces, keeping the wallet secure, and no amount of rubber hose action can do anything about it.

4: There are always cast-off Android phones or tablets and BTC wallet software. I've wondered why someone doesn't make an Android PDA whose main interface is via a USB port. It would not have 3G, nor Wi-Fi, nor BlueTooth, but when not connected, would be completely air-gapped, similar to my old Palm V. That would be a nice combination of offline security with online ease of use.

All and all, BitCoins are not anonymous. FinCen can still fry someone quite easily with the blockchain records to convict. However, BitCoins can be a secure currency if one knows what they are doing, and once someone is paid, they stay paid.

[1]: A few years back, there were "gold consultants" who would make customized storage systems for people, where one part would be a stash of metal in a safe to appease thieves, while the rest was put away in a stash, be it in drywall, buried underground with tin cans scattered about to throw off metal detectors, or many other spots. Right now, even though metals had a price hike today, the market is pretty sluggish with silver in the mid $16 range. However, the problem with precious metals is that they do nothing. I can buy stock, get dividends. I can buy chickens, get eggs. I can buy real estate, lease the land out. Precious metals do nothing but just sit there, so all the profit has to come from the sale.

Re:anonymous!

[AK Marc]

They are, so long as you create an infinite number of wallets, and transfer them randomly around them to "launder" them.

Hmm

[koan]

but also the person who gained access to Satoshi Nakamoto's email account earlier this year."

Wait... now we know who Satoshi Nakamoto is? Or rather he has an email account.

Take a pack of Black Cats camping

[Anonymous Coward]

I had a cousin convicted and spent time in jail under a "manufacturing explosives" charge for putting drain cleaner & tin foil in a pop bottle. Our "justice" system is certifiably insane these days.

An hour or a month?

[raymorris]

How much time? If he spent a day in jail and that nipped it in the bud, so he didn't make acetone peroxide without a license, I'm okay with that. If he spent a month, probably meaning nobody bailed him out, that sucks.

Re:Bitcoin

[Anonymous Coward]

The first rule of bitcoin. Don't talk about bitcoin.

Re:Bitcoin

[serviscope_minor]

Anonymous

The creators of bitcoin never claimed that.

and secure. LOL.

That's more or less equivalent to saying "lol RSA 4096 isn't secure because someone can beat you up and force you to reveal the password lol". Bitcoin is secure.

Euro debuted at parity with dollar

[peter303]

Then gradually lost about 25% to the price you quote. Then up over 50% on the dollar. Currently just 20% over dollar.

China owns 8% of US debt. Just 8%

[sjbe]

Really? US dollar?

Absolutely.

Swiss Franc is much more stable.

The Swiss Franc is the currency of a relatively small country with a GDP around $350 billion. That is not big enough to protect itself against heavy currency speculation and certainly isn't big enough to be as safe as the dollar, yuan or euro. The Swiss economy is increasingly dependent on foreign investment and that should be worrisome if you think it is some sort of safe haven.

Euro, is very spendable, mostly stable

The Euro may not even exist in 10 years and it is anything but stable. Have you paid NO attention to the currency crises in Europe for the last 5 years?

US Dollar is not worth its weight in paper.

Really? Because the people who actually put their money where their mouth is completely disagree with you. If the dollar wasn't considered safe then interest rates should be going through the roof. Instead interest rates are near all time lows meaning that investors consider the dollar to be among the safest places to invest.

China holds vast amount of US Dollars and the moment they decide to sell some or all of these, the currency will start to look like the Zimbabwe Dollar.

Who do you think China is going to sell them to? Seriously, who? The answer is no one. There isn't another buyer that can buy or wants to buy $1 Trillion in US debt. China owns that US debt so that they can keep their currency cheap and thereby support their export driven economy. The moment they sell a substantial portion of their US debt holdings, the yuan will appreciate in value and every single export from China will immediately become more expensive overseas. There is NOTHING China can do to dump their US debt holdings that will not hurt China worse than it will hurt the US. China only holds about 8% of US debt. It's a nice sound bite but the notion that they somehow now "own" the US is absurd to anyone who isn't clueless.

Re:Bitcoin

[SuricouRaven]

Bitcoin is precisely as secure as the computer on which the wallet is stored. No more, no less.

Would that be "butt-coin"?

[knorthern knight]

> Your ass

Paying with your ass... would that be "butt-coin"?

damn. Nobody read the law

[raymorris]

That sucks. It sounds like nobody on his side read the law he was charged under, probably, because with zero property damage it would be a class C misdemeanor (ticket) in most states. You didn't mention which state, but it sounds like the prosecutor, the defendant, and perhaps failed to read the law.

Federal charges for manufacturing explosives involved in interstate commerce are serious, but I don't think that type of device would qualify as an explosive under federal law, since there is no explosive composition; it's just a slow build-up of hydrogen gas.