Chinese Police Arrest Hackers Behind $87 Million Cryptocurrency Theft
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Chinese police have reportedly arrested three suspected hacked alleged to have stolen bitcoins and other cryptocurrencies worth $87 million.
According to a report in , China’s state-owned press agency, police in the city of Xi’an in northern China first began investigating a complaint by a victim who alleged hackers had compromised his computer to steal 100 million yuan (approx. $15 million) in cryptocurrencies that included bitcoin, ethereum, and others.
A task force was set up and a preliminary investigation revealed that hackers had used remote hijacking techniques to gain access and control of cryptocurrency accounts belonging to the victim – only identified as Zhang – with nearly no footprints of the crime.
The investigation progressed and three months later, the task force was able to spot a suspect, named Zhou, with the help of ‘well-known’ internet companies in China. Authorities kept their distance and began tracking Zhou’s activities for a further two months. Before long, police identified two other accomplices by snooping in on Zhou’s communication.
The three suspects are altogether alleged to have stolen an initially estimated 600 million yuan (approx.$87 million) by targeting corporate and personal network systems through a number of illegal means including cyber-intrusion and hacking, police claim.
Zhou, who belongs to the central Chinese province of Hunan, is currently in custody along with his two alleged accomplices. Despite the eye-watering value of stolen cryptocurrencies involved in the alleged theft, police across three provinces continue to work together in a still-ongoing investigation. It remains to be seen if the value of the stolen cryptocurrencies exceeds the police’s current initial estimate.
While financial authorities in China have effectively banned trading of cryptocurrencies following crippling regulations in 2017, Chinese police have also been quick to crack down on crypto-related criminal activity including crypto jacking – a technique wherein malware is deployed on a victim’s computer to surreptitiously mine cryptocurrency, and electricity theft for crypto mining operations.
In July, a joint law enforcement effort between Chinese authorities led to the arrests of developers of malware that amassed in cryptocurrency by allegedly mining them across a million infected computers in the country.
During the last few months, police in the city of and the have also arrested cryptocurrency miners for stealing electricity to power their mining rigs, equipment which has also been seized by the authorities.
Featured image from Shutterstock.
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“Trustlessness” is a term often
quoted as a feature of blockchain technology but what does that mean and is absolute
zero trust a myth or really true? Praised as one of the characteristics that
make the blockchain so revolutionary, a trustless system is one where two peers
can enter a virtual hand shake agreement, i.e. , without relying on a
trusted third party to facilitate.
Blockchains are good at being
permissionless and having decentralized tasks that are recorded on an auditable
ledger, yet not all blockchains are completely trustless, and achieving full
trustlessness is challenging if not impossible. Even
an open-source project like bitcoin that is constantly being reviewed can have
trust issues, not from the code but by the developers and reviewers of the
code. So trustlessness is more of a term describing an ideal state on the
blockchain where code is law with the caveat that humans write code and to err
is human.
Before looking at how a fully
trustless blockchain can be implemented by privacy advocates like — an open-source project that is building
a decentralized ecommerce application on the blockchain — let’s look at the
obstacles standing in the way.
I Trust
You, Until I Don’t
We’re conditioned to think of
trust as a good thing. Traditionally, positive human relationships have
required a level of trust.From an economic perspective, however, trust has significant
downsides.
The greatest drawback is that trust
can be broken. When you engage in a transaction with someone you believe to be
trustworthy, but then they fail to deliver the promised goods or services, you
suffer.In
addition, trust is not efficient. It has to be cultivated and you have to
invest time in evaluating how much another party can be trusted before you
engage in a trade.
Blockchain technology can be
leveraged to overcome the risks and inefficiencies that are associated with
trust.With
the right approach, it’s possible to make reliable transactions on the
blockchain without knowing or trusting the person or group you are dealing with.
That is because the blockchain can be used to enforce good behavior.
In Particl’s case, by creating
a simple smart contract, you can ensure that if one party in a transaction
fails to uphold their end of a deal, the blockchain can automatically cancel
the transaction or punish the misbehaving party in another way. In effect, this
feature makes it impossible for a malicious user to profit by taking advantage
of the trust that another user places in them without inflicting harm on
themselves as well.
The
Trustless Challenge
If you buy or sell something
using bitcoin, you don’t automatically gain protection against being cheated: default bitcoin transactions are non-reversible. The ability of the blockchain to
enable transactions that are both trustless and reliable is difficult because
it needs to be done without the intervention of a third party. In conventional
trading contexts, transactions are typically policed by a central authority that
evaluates claims about broken trust and responds accordingly. For example, if a
seller cheats you on eBay, you can complain to eBay and request a refund. These
authorities also charge fees or percentages of sales revenue whether they are
used or not.
The downside to this approach
is that it compromises privacy. In order to provide this protection against
broken trust, a platform like eBay oversees transactions. It knows what buyers
and sellers are doing.With a two-person trustless escrow, in contrast, reliable
transactions can be implemented without the oversight of a third party. You
don’t have to lose privacy to gain reliability.
The tricky thing about
achieving true trustlessness on a privacy-focused blockchain is that it doesn’t
happen by default. Although multiple times more efficient than building trust
in public, smart contracts still need to be signed and the exchange of goods or
services still needs to happen. The beauty is that an agreement can be made and
successfully carried out even if one or both parties don’t fully trust each
other.
A Trustless
Solution
Particl leverages bitcoin as
the underlying blockchain protocol, but adds privacy enhancements that make it
possible for users to perform transactions that are trustless, reliable and
private. In an innovative development, PART transactions do not require users
to write smart contracts themselves. Instead, this feature is built into the
platform.
Central to Particl’s approach
to trustless transactions is mutually assured destruction (MAD) escrow. is a special type of smart contract that prevents either party from
profiting in the event that one cheats during a transaction.
In addition, because the smart
contract is enforced automatically via the blockchain, Particl developers play
no role in overseeing transactions. Their platform guarantees privacy while
achieving trustlessness at the same time. Two people from anywhere in the world
can enter into a binding agreement that is only finalized when both agree it is
completed.
Blockchain technology’s promise
is that users are no longer bound by the inefficiencies and risks associated
with trust in order to make transactions. Most blockchains, however, do not yet
implement truly trustless transactions. Particl is an exception, as it was developed
with trustlessness at its core from the start. Particl developers aim to “square
the circle” by delivering trustless ecommerce without compromising reliability
or privacy.
