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Coinbase Blocks 25,000 Crypto Wallets Linked To Russia Users (bloombergquint.com) 57

Posted by BeauHD from the cease-and-desist dept.
An anonymous reader quotes a report from Bloomberg Quint: Cryptocurrency trading platform Coinbase said it blocked over 25,000 wallet addresses related to Russian individuals or entities that it believes to be engaging in illicit activity. The blocked addresses represent about 0.2% of Coinbase's 11.4 million monthly transacting users, based on 2021 data. In a company blog, Paul Grewal, Coinbase's chief legal officer, said the largest U.S. crypto exchange has banned access for sanctioned individuals and is using blockchain analytics to identify addresses potentially linked to them, which it also adds to an internal blocklist. "Today, Coinbase blocks over 25,000 addresses related to Russian individuals or entities we believe to be engaging in illicit activity, many of which we have identified through our own proactive investigations," Grewal wrote. "We shared them with the government to further support sanctions enforcement."
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Coinbase Blocks 25,000 Crypto Wallets Linked To Russia Users More

Coinbase Blocks 25,000 Crypto Wallets Linked To Russia Users

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  • Crypto users thought they were anonymous, then discovered it is not really the case.

    Then they said they are going to declare independence from the tyranny of central banks and govt ...

    Turns out they traded it for the tyranny of their wallet exchanges.

    Welcome to the real world.

    So all that crypto going through the roof over the last few months are basically Russian insiders trying to protect their assets preparing for war?

    • as soon as the exchanges and the mining pools started working together.

      The 2 need each other to survive. The miners need the exchanges to move their mined currency. And the exchanges need the mining pools to keep the market growing.

      The problem is that the mining pools have enough computing power to do a 51% attack, and the exchanges economic power (by threatening to cut off the mining pools from the exchange's market) to force the mining pools to _do_ that 51% attack.

      So any time a real world pow

      • The problem is that the mining pools have enough computing power to do a 51% attack, and the exchanges economic power (by threatening to cut off the mining pools from the exchange's market) to force the mining pools to _do_ that 51% attack.

        That's not what's happening here. This has nothing to do with miners or a 51% attack on the blockchain. What's happening here is that Coinbase is a US-based company and a prolonged audit by Uncle Sam to make sure they're fully complying with the Patriot Act would be very bad for business.

        The government has no need to ask miners to perform acts of fuckery with the blockchain, so long as businesses which accept and/or trade in cryptocurrency still have to follow the laws of the land.

        • Re: (Score:2)

          by jbengt ( 874751 )
          If I understand it, and I maybe don't, the real issue hurting crypto-coin owners is their use of 3rd-party wallets.
          • The real problem that I'm trying to get out here is that there has been a massive amount of centralization thanks to the mining pools and the exchanges and the way the two of them depend on each other in order to survive. By themselves neither the miners nor the exchanges could really do a 51% attack. The miners have the power but they don't have a reason to do it and the exchanges have a reason (which is a desire to stay in good terms with the main Banks and governments) but they don't have the mining powe

            • One of the exchanges was talking with the mining pools about actually doing a 51% attack to undo the theft and they were going to do it right up until when the thieves got caught.

              Have you got a link to this conversation? Or any evidence of it at all?

              • You'll have to dig through old slashdot stories to find it, but ask yourself this : do you really think I'm clever enough to come up with something as complex as this system? Do you think I came up with this idea on my own? What do you think I observed it in the wild?

                One thing I'm not is a clever man. I wouldn't be wasting my time posting here if I was. So once again ask yourself do you think I came up with this idea of myself what do you think I saw it happening in the world at Large?

                • You'll have to dig through old slashdot stories to find it

                  So no, you don't have any citation or any evidence that this conversation, by people you don't know, actually happened.

                  but ask yourself this : do you really think I'm clever enough to come up with something as complex as this system?

                  It's not complex at all. Even if it were possible all it would do is drive their wealth to zero, so what would be the point?

                  One thing I'm not is a clever man. I wouldn't be wasting my time posting here if I was. So once again ask yourself do you think I came up with this idea of myself what do you think I saw it happening in the world at Large?

                  So you have an idea that makes no sense, an adament position that you aren't smart enough to have come up this idea yourself but also no clue about where this idea came from. Not really very compelling.

          • Re: (Score:2)

            by AmiMoJo ( 196126 )

            The problem is that if you don't use a service like Coinbase to store your crypto, it's essentially like having hundreds of thousands of Euros under your mattress. You can store it on a USB device, but if it dies or gets lost/stolen you lose your money. You can store it on your computer or phone, but there is plenty of malware out there looking to pilfer it.

            That's why banks became popular. They had decent security and insurance against getting robbed.

            • There is a big difference with cash: you can store copies of your wallet, as many as you need to feel comfortable about the prospect of getting one or two stolen or destroyed.

              • Re: (Score:2)

                by AmiMoJo ( 196126 )

                If someone steals your wallet and moves the currency out of it, it won't help to have a backup copy. As far as the blockchain is concerned, that money is not yours anymore.

        • my point is that all this talk about if crypto as an alternative to fiat is moot. Because of all the centralization (between mining pools and exchanges) and the fact that they're now large businesses big enough to be connected to the larger finance markets, crypto is now damaged goods as far as freedom is concerned.

          Crypto didn't work. The goal was to be decentralized, but to do that you needed miners, and they centralized. Crypto could've survived even that, except they exchanges became their main sourc

      • So any time a real world power (e.g. a government or a military) wants to do a 51% attack they go to the exchanges, who go to the mining pools, and say "do it" and they will.

        This is a really interesting point; However I feel they would not comply so easily, because the first time this occurred the value of most crypto would go to zero almost instantly. And that would be enough of a shock to the entire world banking system at this point that the government or military would not command this.

        Government need

      • I'm guessing you've also never actually traded cryptocurrency, based on your misunderstanding that this is some sort of "51% attack". The way exchanges work is that every user's balance ledger of the various coins and fiat they're holding is maintained by the exchange itself. If Coinbase decided they didn't like you, they could lock you out and zero your balances and there'd be little you could realistically do about it.

        You wouldn't be faulted for wrongly assuming that trades take place on the blockchain

    • Turns out they traded it for the tyranny of their wallet exchanges.

      To which definition of "tyranny" are you referring to here? (from Google)

      1. cruel and oppressive government or rule
      2. a nation under cruel and oppressive government
      3. cruel, unreasonable, or arbitrary use of power or control
      4. rule by one who has absolute power without legal right

      'Cause Coinbase isn't a government oppressing people (that would be Russia in Ukraine *and* Russia) or someone trying to rule with absolute power w/o legal right (that would be Putin in Ukraine) and their ban doesn't seem "unreasonable or arbitrary" (there are sanctions against Russia).

      • Were you this concerned and pedantic about the usage and meaning of tyranny when the right wing kooks were calling social media giants tyrants?

        • Were you this concerned and pedantic about the usage and meaning of tyranny when the right wing kooks were calling social media giants tyrants?

          It was/is annoying, but then I remembered that those snowflakes are right-wing kooks. :-)

      • Maybe it was a metaphor and not literal tyranny?

        P.S. War is Hell. Argument is war [wikipedia.org]. Therefor argument is Hell.

        • I'm familiar with metaphors... From Volunteers [wikipedia.org]:

          Chung Mee: Opium is my business. The bridge mean more traffic. More traffic mean more business. More business mean money. More money mean more power.
          Lawrence Bourne III: Yeah, well, before I commit any of that to memory, would there be anything in this for me?
          Chung Mee: Speed is important in business. Time is money.
          Lawrence Bourne III: You said opium was money.
          Chung Mee: Money is Money.
          Lawrence Bourne III: Well then, what is time again?

      • Re: (Score:2)

        by jbengt ( 874751 )

        To which definition of "tyranny" are you referring to here?

        Number 3.

        • To which definition of "tyranny" are you referring to here?

          Number 3.

          Ya, but Coinbase isn't being "unreasonable or arbitrary" as there are actual sanctions on Russia. Just because one doesn't like something doesn't make it tyrannical -- contrary to what (many) Republicans and Conservatives think...

      • there are sanctions against Russia

        I can help you with this misunderstanding: Sanctions have very specific implications for what can and can't be done and with whom. The USA currently has 37 active sanctions against a variety of nations. These sanctions involve very specifically what kind of business can be done, how and with whom. At present there are zero sanctions that prevent you doing business with common Russian people with all sanctions exclusive tied in some way to the government or financing of the war.

        Coinbase would be required to

    • Re: (Score:3)

      by gweihir ( 88907 )

      Pretty much. Only instead of regulated banks that can not do this without a government order and may even then not be allowed to do it, the crypto-morons put their funds in the hand of unregulated entities that can just decide something like this any time they want. What, you say "use the blockchain directly"? Well, good luck with that. Dog slow, exceptionally expensive per transaction and if you make a mistake with your computer security everything is gone.

      Well, like any good scam crypto-"currencies" promi

    • Crypto users thought they were anonymous, then discovered it is not really the case.

      It can be. You just can't use the exchanges for anything but, well, exchanging currency for crypto.

      As Coinbase just showed, they aren't really a crypto wallet, because a wallet is something you control totally, not a third party.

      So if right after you exchange your currency for crypto you transmit that crypto to a wallet you actually control, it's perfectly safe, anonymous, and accessible no matter what governments or Coinba

      • Now if you start making purchases probably the likelihood of it being really anonymous goes down, but at least the funds are still usable directly with another party, which is the real value to my mind way more than the anonymity.

        Ultimately though, somewhere down the line there will eventually be someone who wants to turn that cryptocurrency back into fiat.

        • Ultimately though, somewhere down the line there will eventually be someone who wants to turn that cryptocurrency back into fiat.

          True but you can do that via a private exchange, with another individual, it's only if a huge group of people stop wanting crypto that becomes an issue. And I don't see that cat going back in that bag, not with governments everywhere showing that traditional currencies in banks mean nothing now, they will just take what the like or freeze what you have.

          The made up number in your

    • Coinbase users never thought they were anonymous, believe me. Still, I don't think this will hurt them that much. It's like if someone froze my 401k, I'd be like... I got 20 years until this is a problem.
    • Majority of Coinbase "crypto users" don't fully understand how bitcoin works. Keeping balance in "managed" wallet like Coinbase is like keeping balance in Paypal - they can cut off your access to the funds at any time because of their "corporate policies".
  • How's that DeFi working for you now?
    • The governments still control the on / off ramps. Exchanges are unregulated and could be shutdown. Stable coins are just unregulated money market funds and can be shutdown too. If western government decide to shut them all down at the same time, bitcoin and eth is worth a little more than Russian equities.

      • Exchanges are unregulated and could be shutdown.

        Sometimes, if you're particularly unlucky, they get "hacked" and all your coins go *poof*.

        Gambling on cryptocurrency is stupid. "Investing" more than you can afford to lose is stupider. Storing your cryptocurrency on an exchange's wallet is stupidest.

    • Works great. I don't feel bad for people who have been using exchanges as wallets and got burned. They have been warned for years not to do this. Coinbase and Bitcoin do not define all of crypto

  • insert Michael Jackson with popcorn gif here

  • I was like F* the system with your fiat currencies and I was feeling free as a bird in the sky with my crypto coins.
    Up until now.

  • Perhaps this can help drive a nail in the coffin of bitcoin.

  • Presumably Coinbase cannot simply reassign the crypto from 25,000 wallets to themselves. I wonder how much of this will ever re-enter circulation? We put sanctions on Cuba 60 years ago and they're still in place...

    • Re: (Score:2)

      by batkiwi ( 137781 )

      Why can't they?

      They SHOULDN'T, but they obviously can since they hold the keys to the wallets. If they can reassign your crypto to someone else on your behalf when you "sell" it, they can reassign it to themselves.

      • But their entire business is built on trust they will not steal their depositor's funds. Seems like it would only make sense as an exit strategy.

        • But their entire business is built on trust

          Which is ironic given the whole reason people support crypto in the first place, i.e. the complete lack of trust.

    • Re: (Score:2)

      by cfalcon ( 779563 )

      Coinbase can't reassign the crypto from even a single wallet that they don't control to themselves.

      However, that's not how coinbase accounts work. When you have a coinbase account with some number of bitcoin and dollars in it, they don't literally make a bitcoin wallet for YOUR coins, any more than they ask a bank to create an account for the dollars you store with them. They track how much of what they owe you, and you can withdraw it from them. But it's all stored in some smallish number of coinbase wa

  • The smart russians never would have stored any btc with coinbase to begin with. The not-so-smart ones are now learning a lesson.

    The remaining millions of coinbase users will apparently have to wait to receive their lesson some other time.

  • They said cryptocurrency was safe from these type of things... Well, this will make you think twice of storing your money on US companies servers.
  • If a Russian wallet sent 0.000000000000000000000001 BTC to every wallet, would everyone's account be considered Russian related?

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