Crypto Startup Bankrupt After Losing Password to $38.9M Crypto Wallet

Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by acdha on Friday August 25, 2023 @09:46PM (#37269180)

I’m reminded of the dotcom bubble when companies would proudly show off their “we’re in the big boy club” server rooms with millions of dollars in Cisco and Sun hardware, Oracle and BEA licenses, etc. and hope you wouldn’t notice that they had three customers and no sysadmins. Around the time you’re paying someone to metal etch your encryption keys, anyone with a shred of ethics should be asking whether that’s anything but marketing to the gullible – or a sign that your underlying technology isn’t a good choice.

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by csomar on Friday August 25, 2023 @10:03PM (#37269273)

This is a solved problem in crypto and having even a billion in a single wallet is fine. That’s why multi-sig were created, it’s used more as a redundancy mechanism than a voting one.

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by MaxwellKahn on Saturday August 26, 2023 @12:39AM (#37269988)

Even with multisig, each individual key holder has to manage their device, and the steel backup for that device. And there exists possibility of collusion between n of m of the multi sig holders against the other holders. Seems like it would still keep me up at night (though with SVB, standard bank accounts are starting to look shaky too).

Having not worked for a crypto company, curious what the standard best practices are for securing the "keys to the kingdom" (literally).

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by csomar on Saturday August 26, 2023 @04:22AM (#37270801)

There is no collusion, that’s the point of multi-sig, it’s akin to voting powers.

You can use multisig yourself too: ie you can use a key you remember, or the one in your safe. Along with a key in your phone. So two out of three. If someone gets the key in your safe, he can’t access your coins (he’ll need your phone too).

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by DannyBee on Saturday August 26, 2023 @07:19AM (#37271744)

There is collusion, of exactly the form described. Just because the collusion happens through voting doesn't make it not collusion.

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by dustymcp on Saturday August 26, 2023 @11:42AM (#37273841)

even the laser etcher is a problem :)

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by MaxwellKahn on Saturday August 26, 2023 @04:52PM (#37276802)

I was super paranoid, and bought one of these metal stamping tools(https://www.amazon.com/gp/product/B07ZFB5J15), and made my condo neighbors angry for one evening :) but hey, completely airgapped!

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by HumanOstrich on Saturday August 26, 2023 @03:47AM (#37270675)

It's definitely not a "solved problem", especially the non-technical aspects. For example, uh, see this current post we are on.

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Re:Crypto Startup Bankrupt After Losing Password to $38.9M C... by acdha on Saturday August 26, 2023 @07:15AM (#37271729)

multi-sig addresses one aspect of the problem but not everything. The underlying problem is that the system is brittle rather than robust, and multisig only helps with a specific challenge (“I don’t want a single key loss to lose everything, but don’t want to make copies of the same key”). It doesn’t help with many common scenarios: “I was compromised”, “my employee abused access to my keys”, “someone made a typo in a transfer”, “I am choosing not to comply with a court order”, “our CFO died unexpectedly”, etc.

Contrast this with how easily this could have been resolved in the financial systems which are actually used and you get an immediate appreciation of how valuable it is to have a way to handle human error in systems used by humans.

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