Bitcoiner loses almost $100K of BTC in wallet transfer bungle

The Redditor attempted to transfer a wallet to a new computer without confirming the password to the private keys was accessible.

A Redditor has issued a warning to “overconfident” HODLers after losing the password to their crypto wallet by not acting cautiously enough.

A Bitcoiner with the username Onnar posted they had lost access to 2.6 Bitcoin (BTC) — roughly $96,400 at the time of publication — while attempting to transfer a wallet to a new computer purchased over the holidays. The user claimed to have formatted the drive of their old system without double checking whether the password manager still contained the password needed to access the private keys.

“I go to my password manager to grab it and… it’s not there,” said Onnar. “No mention of a BTC password anywhere to be found. I spend the next 30 mins rechecking and rechecking, but it’s not there.”

The Redditor admits the mistake is “100% my fault”  because they did not confirm the files could be decrypted before wiping the disk. Onnar theorizes that the password was copied to the password manager, but not automatically saved.

“I’ve spent the past week and a half going through all my remaining disk files and notes, the password is nowhere to be found.”

Many Reddit users were sympathetic to Onnar’s plight, reacting with stories of their own crypto mistakes. Redditor notmattdamon1 said he had “lost a much smaller amount than that in a similar fashion” and was mad at himself for weeks.

Others stepped up with advice to avoid similar accidents in the future. “The standard now is to use a hardware wallet and write down the seed on paper plus on a metal plate,” said bjman22. “The standard is not to encrypt your seed words in a computer file for very good reasons.”

Crypto mistakes are unfortunately fairly common. Last year, gold bug and Bitcoin critic Peter Schiff said he had lost access to his crypto holdings after mistaking the pin of his wallet for his password.

Just before the holidays, a Chainlink user accidentally sent $50,000 in LINK to a smart contract which did not support the token. However, he was able to recoup 20% of his losses after the crypto community sent $11,000 through an Aavegotchi donation page.

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File comments against new crypto FinCEN rule, Coin Center leader urges

The crypto space needs your help to impact the outcome of the United States’ Treasury’s crypto wallet proposal.

With the two-week commentary period winding down, Jerry Brito, executive director of non-profit crypto policy advocate group Coin Center, says comments could make a difference in the ultimate outcome of the self-custodied wallet ruling recently proposed by the U.S. Treasury. 

“Coin Center is working with folks in Congress to get some letters sent to Secretary Mnuchin requesting an extension to the rushed comment period,” Brito said in a Dec. 28 tweet, adding:

“Everyone in the cryptocurrency ecosystem should file a comment with FinCEN explaining how this rule would affect them and pointing out the unintended consequences. Filing a comment really does help.”

With his likely exit from office looming next month, U.S. Treasury Secretary Steven Mnuchin dropped a regulatory proposal on the crypto space on Dec. 18. If passed, the new law would essentially mandate that U.S.-based crypto services must check users’ identities and their respective wallets whenever they withdraw over $3,000 to a self-custodied wallet, or if they move more than $10,000 to another platform.

Rather than the normal 60-day period, the regulatory body only left the crypto industry with a 15-day window for feedback on the proposal. Brito posited feedback from the crypto industry could help the situation by pushing back the deadline.

“Mnuchin wants to get this rule finalized before he leaves office on Jan 20,” Brito tweeted. “But FinCEN is required by law to consider every comment before finalizing the rule,” he added. “If there are a lot of substantive comments filed, they won’t be able to finalize the rule before Jan 20.”

Pushing the proposal’s decision date past Jan. 20 would leave the law undecided until after government leaders change seats. Delaying the proposal through that date would likely lead to a more thought-out legislation, according to Brito.

“Ideally you should write a unique, substantive letter that describes how the rule will affect you or your firm,” he added, pointing toward an example proposed on Twitter by Jake Chervinsky, general counsel for crypto project Compound. Comments need to be in to the Treasury by Jan. 4. Industry folks can also send in shorter remarks via a digital rights entity called Fight for the Future.

U.S. regulatory bodies have ramped up their engagement in the crypto space in 2020, evident in a number of headlines throughout the year.

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South African Regulator’s Probe Into Mirror Trading International Unearths Previously Undeclared Losses and Missing Bitcoins

South African Regulator's Probe Into Mirror Trading International Unearths Previously Undeclared Losses and Missing BitcoinsSouth African financial regulator, the Financial Sector Conduct Authority (FSCA), has filed criminal charges with local law enforcement against Mirror Trading International (MTI), the alleged online bitcoin trading scam. The regulator says its decision to press charges follows an investigation into MTI that unearthed the company’s use of fake trade statements, undeclared losses, and possible […]

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It’s here: Treasury proposes rule to monitor crypto going to self-hosted wallets

Many have called the long-rumored rules an existential threat to peer-to-peer transactions.

The Treasury has released its long-awaited proposal to restrict money services businesses, including U.S.-registered crypto exchanges, from dealing with self-hosted wallets.

In a Friday evening announcement, the Treasury’s Financial Crimes Enforcement Network, or FinCEN, announced proposed rules requiring registered crypto exchanges to verify the “identity of their customers, if a counterparty uses an unhosted or otherwise covered wallet and the transaction is greater than $3,000.” 

The rule is currently just a proposal. The Treasury has given stakeholders 15 days to respond with comments. 

Rumors of the proposed rules have been circulating for the past month. With Treasury Secretary Steven Mnuchin on his way out the door as a new administration comes in, they have been viewed as a parting shot at crypto. Of the announcement, he said: 

“This rule addresses substantial national security concerns in the CVC market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime.”

A number of leading lawmakers have already come out in opposition to the proposed rule, which many see as an assault on the nature of peer-to-peer transactions. However, in the absence of a formal law, the Treasury has considerable rulemaking power in this area.

That said, the current proposal is not as radical as some feared. It would, rather, apply existing requirements to keep reports on transactions — the $3,000 threshold of the Travel Rule — to registered entities interacting with self-hosted wallets. Among registered entities, that threshold would instead be $10,000. 

This story is breaking and will be subject to updates. 

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The $700 Million Wallet Crack: Bitcoin’s 7th Largest Address Is Under Constant Attack

The $700 Million Wallet Crack: Bitcoin's 7th Largest Address Is Under Constant AttackDuring the last two years, hackers have been trying to crack the seventh-largest bitcoin wallet, an address that holds 69,370 BTC or $712 million using today’s exchange rate. According to the CTO of the cybercrime intelligence firm, Hudson Rock, the wallet is being publicized on hacking forums in order to crack the password. Wallets with […]

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