WEBVTT 1 00:00:00.140 --> 00:00:12.260 Welcome back to Bitcoin Season two. So you remember that eighty thousand Bitcoin whale that moved over the summer that then later was revealed to have been liquidated or sold those Bitcoin by Galaxy Digital? 2 00:00:12.700 --> 00:00:19.660 Well, at the time, you may remember there was a bunch of conspiracy theory around who this was and what was happening. 3 00:00:20.100 --> 00:00:34.310 In particular, one detail is that supposedly there were some messages sent to the addresses of this Bitcoin whale identifying this Bitcoin as abandoned. Well, guess what? We actually have some resolution on this. 4 00:00:34.460 --> 00:00:47.200 Galaxy Digital researchers put together a deep dive on this, and it goes way deeper and is way more interesting than you imagine. I've got one of the co-authors of that report with me on this pod today. 5 00:00:47.220 --> 00:01:05.220 Welcome back to Bitcoin Season two. Let's kick it off. [upbeat music] Welcome back. It's me and Colin. We are joined by Zach Pokorny. How do I say your last name, Zach? Exactly, yeah. One shot at it. Oh, sweet. 6 00:01:05.300 --> 00:01:18.300 Okay, nice. That's why I'm in podcasting, 'cause I can say last names. Um, yeah. So Zach, uh, we've got you. You teamed up with another friend of the pod, Will Owens, on this research report. 7 00:01:19.000 --> 00:01:25.020 Um, I will just jump in and give a little bit of context beyond just the hook I did at the top. 8 00:01:25.140 --> 00:01:37.920 So there were some eighty thousand Bitcoin last summer, and, um, they started moving, and immediately the conspiracy theorists like go all of Twitter and come up with all sorts of interesting things and angles. 9 00:01:38.460 --> 00:01:46.060 Later on, Galaxy reveals, "Hey, we sold this Bitcoin for the client." Put a cool press release in Opera Turn on it. 10 00:01:46.800 --> 00:02:04.140 But a lot has been lost to memory because one of the core like, you know, things that were s- that was like around-- that was driving the conspiracy is someone had been sending messages to the addresses of this eighty thousand Bitcoin saying like, "Your Bitcoin's abandoned. 11 00:02:04.420 --> 00:02:14.720 Here's a link to a website. Um, go do this." And a lot of people were wondering is-- was like quant-- was-- did somebody like quantum break this? Is there some actual legal angle where this is abandoned Bitcoin? 12 00:02:15.060 --> 00:02:28.360 Let me just, uh, ask you, Zach, um, what other kind of like context do you think is important for the listener to like-- just to get out so we can start talking about your investigation? Yeah. 13 00:02:28.440 --> 00:02:36.900 No, I mean, I think the, the big takeaway that, that most people missed when this happened was just the sheer breadth of the, the message campaign. 14 00:02:37.040 --> 00:02:47.880 You know, this spammed forty-one thousand plus messages, thirty-nine thousand plus addresses. Uh, when, when the ADK whale received its message, it was very early on in the campaign. 15 00:02:47.940 --> 00:02:50.460 At that point, only a few thousand messages had actually been sent. 16 00:02:51.080 --> 00:03:01.820 So we really just saw the, the tip of the iceberg, and then as this entity started selling, that just kind of took front seat to the messages themselves, and we all, uh, just kind of forgot about it. 17 00:03:02.020 --> 00:03:08.619 But, you know, that-that's like the big takeaway here is the sheer breadth and, and magnitude of the entire thing. Yeah. 18 00:03:08.700 --> 00:03:23.760 And, um, I actually have-- if-- a lot of people may not remember this, but I think that one of the core like conspiracy like drivers was this one, I believe, was an AI-generated article on this goofy website called Cipher Talks. 19 00:03:24.120 --> 00:03:32.540 I had multiple, multiple people send this to me, and it was the most terribly worded article. And obviously, look at this, the article no longer exists. 20 00:03:33.020 --> 00:03:41.760 So like, to me, like that was a very clear indicator that like a lot of this speculation was, was mostly unfounded. And I actually... I'll flex this a bit. 21 00:03:42.600 --> 00:03:51.820 I even, at the time, identified this as being a classic tactic of like Craig Wright and Calvin Ayre. I'll play the clip. 22 00:03:52.200 --> 00:04:07.760 This type of messaging strategy where you message, you know, an old wallet on Bitcoin with a message in Opera Turn, which has some kind of like scary legal boogeyman message in it, this is actually a pretty common tactic that Calvin Ayre has used over the years. 23 00:04:07.860 --> 00:04:17.600 If you're not familiar with Calvin Ayre, he is the former billionaire who, uh, funds Craig Wright, the guy who's been claiming to be Satoshi and suing Bitcoin Core developers. 24 00:04:18.040 --> 00:04:29.880 So this is, uh, actually a strategy that he has used before to, uh, take these messages and try to use them in court to, uh, basically harass, legally, um, various notable people in Bitcoin. 25 00:04:30.320 --> 00:04:42.580 I'm not saying that that's what this is, but, you know, this has the hallmarks of an unrelated, uh, just inexpensive to execute kind of like goofy, uh, attack. That was my take. I'm done tooting my own horn. 26 00:04:42.620 --> 00:04:51.680 I'm gonna throw it back to you to take us deeper into this. Um, is the company-- So where-- So what was in these like messages, and what did they, what did they like say? 27 00:04:52.160 --> 00:04:56.500 Yeah, I mean, the, the short end of it was just these coins haven't moved in a while. 28 00:04:57.080 --> 00:05:06.000 They appear to be abandoned, uh, kind of along the, the spiritual lines of abandoned property laws in a number of, of states across the, the US. 29 00:05:06.680 --> 00:05:20.680 And that because they've been sitting for so long, that the sender of the messages, which came under this sort of like Salomon Brothers branding but was actually a client thereof, it wasn't actually Salomon Brothers sending the messages. 30 00:05:20.920 --> 00:05:33.200 Um, but they kind of sought some legal claim to these coins just for the mere fact that they haven't moved in X number of years, um, which for most states is three. Others range up to five. 31 00:05:33.240 --> 00:05:40.940 The vast majority of the addresses hadn't moved coins in at least three years. Um, but yeah, I think your takeaway really coincides with what we found as well. 32 00:05:41.500 --> 00:05:51.280 Like, quantum vulnerability in Bitcoin seems to be ill-founded. Um, zero sort of signs of that, and that this kind of resembles lawfare over anything else. 33 00:05:51.780 --> 00:06:05.300 I want to step back for a second, um, and just lay some context down for people who might be walking into this. Um, specifically, you have this legal definition in the report, which I think is really good. 34 00:06:05.880 --> 00:06:18.030 And the Opera Turns specifically cite, um-Uh, you know, uh, what, what's, what's the na-- like, what's the d-- what's the legal definition? Like abandoned property? Abandoned property law? Yeah. 35 00:06:18.470 --> 00:06:29.430 Um, but Cornell Law School's Legal Information Institute, quoting directly from the report here, defines constructive possession, there we go, constructive possession as the legal possession of an object that is not in the, um, person's direct physical control. 36 00:06:29.850 --> 00:06:39.370 For example, someone with keys to a safe deposit box may have constructive possession to the contents of that box. So where I think this gets, like, in some weird... 37 00:06:39.410 --> 00:06:51.010 This gets in, like, a weird gray area because they're sending these op return messages to these dormant wallets. They don't know whether or not the person actually controls the keys still. 38 00:06:51.040 --> 00:06:56.670 And then it opens up the other question, if it is, like, a lost wallet, then what's even the point? No one has the keys to begin with. 39 00:06:57.410 --> 00:07:07.430 Um, and then you also raise the question in here, let's say this does go through the courts, how do you even identify where these people live? Are they going to just divulge that information? 40 00:07:07.450 --> 00:07:15.490 There's this really interesting bit in here where Salomon Brothers, when they're talking about this, they say, "Well, we're not gonna take Bitcoin from people who actually control the wallets. 41 00:07:15.590 --> 00:07:17.450 We just wanna prove that they actually control them." 42 00:07:17.870 --> 00:07:25.420 And there's this thing in here where they were talking about setting up a process where you could actually prove that you are still controlling the wallet, you just haven't made transactions in, in a few years. 43 00:07:25.850 --> 00:07:28.810 Just a totally preposterous and, and ridiculous thing. 44 00:07:29.410 --> 00:07:40.250 You, you don't need to prove anything to these people, and there's not even, as I understand from reading legal opinions on Twitter, there's not even an ac-- there's not even clear indication that this would hold up in court. 45 00:07:40.330 --> 00:07:48.190 Um, did you-- w-did your, did your research indicate anything a-along those lines? Yeah, I mean, the, the enforcement gap on this stuff is, is massive. 46 00:07:48.570 --> 00:07:52.230 Like, if you don't have the private keys, like, you physically cannot move the coins. 47 00:07:52.950 --> 00:08:03.990 And if somebody is just holding them in their own private wallet and never touches, uh, a centralized intermediary or the like, like, there is no way that this can, can be enforced, um, in our view. 48 00:08:04.590 --> 00:08:22.150 Now, if somebody were to get one of these notices and maybe move it to Coinbase or some other centralized intermediary that falls under the holder definition, um, which is essentially like, um, a centralized institution that holds coins on somebody's behalf, they track who they are, where they're from, 49 00:08:23.350 --> 00:08:30.720 age, all that information, um, then maybe tho-those folks could get embroiled in some kind of legal tangle up. 50 00:08:30.850 --> 00:08:40.970 But even then, it's like at that point you've already proved that you own the coins and they moved, so then how does the whole, like, abandoned property definition even stand up? 51 00:08:41.530 --> 00:08:48.390 So yeah, uh, there, there's just, like, little, little chance that this could actually be enforced, uh, from a number of angles. Okay. 52 00:08:49.110 --> 00:09:00.270 So I think maybe the s-the hilarious burning question is, is Salomon Brothers a real company? Like [laughs] what's- This is, this is- Yeah... really important. Can you- Yeah. What is, what is this company, Zach? 53 00:09:00.430 --> 00:09:06.500 Can you break down what's happening here? Because there are gonna be some younger people listening to this who have no idea what Salomon Brothers was. 54 00:09:06.510 --> 00:09:16.610 There are gonna be some boomers listening to this that are having flashbacks to the dot-com boom. Um, I believe Salomon Brothers dissolved in two thousand and three. Um, and, and now we have this kind of, 55 00:09:17.570 --> 00:09:30.770 uh, I don't know, a pastiche of the old Salomon Brothers or alumni trying to start a new one. Can you explain exactly what Salomon Brothers was, what the new Salomon Brothers is, and why they fit into this at all? Yeah. 56 00:09:30.850 --> 00:09:41.450 I mean, I fell into the super young people camp. I had no idea what Salomon Brothers was [laughs] until I looked into the report. But yeah, they were a s- a storied investment bank that goes back over a century. 57 00:09:42.030 --> 00:09:52.790 Uh, big bond traders, had many books and, and movies made about them, um, and then eventually were, were absorbed by, um, a, a number of companies along, along the way. 58 00:09:53.470 --> 00:09:59.450 Um, but then what ended up happening was a few years ago, a few alumni came together and they were like, "Let's, let's get the band back together," essentially. 59 00:09:59.990 --> 00:10:09.950 Um, bought, bought the trademark to the old Salomon Brothers and kind of spun up into this, what they call Salomon Encore. Um, so, like, the old Salomon Brothers is not what we're seeing here. 60 00:10:10.010 --> 00:10:15.750 It, it's merely just, like, a phantom, uh, company, uh, with the name Salomon Brothers. 61 00:10:15.890 --> 00:10:23.470 So there's really no direct connection between the old one that, that everybody knows that's, like, super famous and storied versus what we have here today. 62 00:10:23.610 --> 00:10:29.610 It's just a group of alumni who came together, bought the trademark, and are essentially using the branding to carry on their business today. 63 00:10:29.910 --> 00:10:39.790 And trying to piggyback on the name, which is another thing that I think is, i-is fascinating. And, um, uh, let, um, cut this next part, Damian. I wanna make sure I have my facts straight. 64 00:10:40.150 --> 00:10:50.840 Salomon Brothers basically dissolved because of, like, they were implicated in some sort of fraud, right? Am I right about that? Yeah. Okay. Um, yeah, that, that is my understanding. Okay. So Damian, cut back in here. 65 00:10:50.850 --> 00:10:55.590 Or they, they, they were, like, fined and, and penalized along some line. 66 00:10:55.970 --> 00:11:02.530 Um, I'm not sure I actually included that in, in the report, but yeah, they, they did get in some trouble, or a few traders at the firm got in some trouble. 67 00:11:02.930 --> 00:11:11.690 Which is just really funny because there was a trading scandal, right? And, um, they ended up getting fined, and that was part of the reason I think why they ended up selling. 68 00:11:11.750 --> 00:11:15.560 Um, it, it, it, it, you know, completely shattered their reputation. 69 00:11:15.570 --> 00:11:29.350 But it's like, if you're gonna try to have a l-a, you know, a, a veneer of legitimacy to this op return dusting thing to try to, you know, requisition these dormant wallets, I think the last thing you'd wanna do is attach your name to Salomon Brothers. 70 00:11:29.360 --> 00:11:34.910 And what I-- There was a point in your, um, report that I, I picked out here that I thought was really funny. 71 00:11:34.950 --> 00:11:46.530 So the campaign had two phases, quoting directly from the report, trial messages that did not include links or mention Salomon, uh, starting June thirtieth, followed by waves of messages containing links to Salomon's website starting in July and August. 72 00:11:46.870 --> 00:11:50.810 This is kind of funny. They were like, they started doing this, they're like, "Wait a second, we need to make this look more legit. 73 00:11:50.889 --> 00:12:02.970 [laughs] Let's link to a since defunct now, like, um, revived, although scrupulously revived, no one r-really knows if they're actually even doing anything, and you're attaching yourself to their name." 74 00:12:03.030 --> 00:12:07.590 The other question I have with this is why are they using Salomon Brothers for this and not a law firm? 75 00:12:08.070 --> 00:12:18.106 That was confusing to me.Um, I don't know if when-- if Salomon indicated in any of their press releases that they were working with legal counsel. What did you make of that? Yeah. 76 00:12:18.246 --> 00:12:23.506 No, I mean, we, we had similar questions and didn't find any conclusive answer. 77 00:12:23.626 --> 00:12:34.666 Um, but yeah, the way it looks at face value right now is just the, the person sending the messages wanted a reputable or an area that appeared to be reputable, uh, to sort of host the notice. 78 00:12:34.746 --> 00:12:50.366 Like, if they just created their own website real quick, threw these legal notices up, like, it, it looks like it carries a lot less weight than if it's like, "Oh, wait, we have, uh, at least the, the veil of Salomon Brothers branding and, like, their whole website and, and whatever else may, may come with that." 79 00:12:50.986 --> 00:12:59.326 So yeah, it, it's unclear, like, does Salomon Brothers have lawyers that these people are using or not? Um, we didn't find any, like, real hard answers there. 80 00:12:59.746 --> 00:13:06.706 Um, but yeah, it just looks like they're trying to piggyback off the name, the website, and, and whatever other weight, uh, that the Salomon Brothers name carries. 81 00:13:06.766 --> 00:13:19.106 And, like, ostensibly, it kind of seemed to work in a way, in the sense that... I mean, correct me if I'm wrong, the-- that whale, the eighty thousand Bitcoin whale, was the one that sold through Galaxy, right? 82 00:13:19.686 --> 00:13:31.506 That's-- Yeah, that's- And he was dusted. D-was that like... Do you think he got dusted, saw the notice, and was like, "I'm sitting on two billion dollars. I am not taking any chances, even if this is BS. 83 00:13:31.666 --> 00:13:33.346 I'm, I-- we're, we are cashing out." 84 00:13:33.926 --> 00:13:45.126 I'm, uh, I'm just kind of amazed that, like, maybe he was already thinking of selling, and this is just total coincidence, but the fact that, that, that he was dusted and then sold, uh, what, did he get spooked? 85 00:13:45.386 --> 00:13:50.006 Was he already doing it? W-what do you make of that? 'Cause it's kind of a crazy coincidence, right? Yeah. 86 00:13:50.086 --> 00:13:58.196 I mean, I, I don't, I don't know for certain, but kind of looking at other instances of this kind of stuff with these messages, like, we saw people receive messages 87 00:13:59.646 --> 00:14:11.206 a day, a few hours after they had actually moved coins before. Like, it, it's not an unknown thing that whale activity is just super high in general, and these messages targeted these larger addresses. 88 00:14:11.966 --> 00:14:19.846 So it, it-- there, there is evidence that the person sending the messages kind of ga-gathered up a number of addresses, waited, and then sent the messages. 89 00:14:20.066 --> 00:14:24.306 Um, and then in between that time, people actually moved their coins already. 90 00:14:24.566 --> 00:14:31.126 So I think there's just a ton of coincidence going on here with whale activity being high and just the timing of, of these messages coming through. 91 00:14:31.526 --> 00:14:40.666 I also chalk it up as coincidence, but this actually, you know, if we think about, like, the likelihood of the coincidence, it actually might behoove us to get into, like, the scale of the dusting. 92 00:14:40.706 --> 00:14:57.566 You said, um, what, like forty-something addresses, but what blew my mind, I had no idea about this until I read your report, was that, um, the cumulative amount of Bitcoin that was dusted was, like, two-point-something million. 93 00:14:57.606 --> 00:15:07.216 Two-point- Two point three. Two point three million worth of Bitcoin, which is, you know, over a tenth of the Bitcoin network worth of, uh, Bitcoin, uh, was sent these notices. 94 00:15:07.266 --> 00:15:19.546 And this, these were sent to, like, largely dormant ad-- like, legacy old address types. Um, could you kinda expand more on, on this, like, the scale of the, the dusting here? Yeah. 95 00:15:19.586 --> 00:15:36.086 I mean, in the official communications from, from Salomon, they kept stressing, like, "Oh, it was only, like, point five percent of all the Bitcoin addresses that existed," but just completely skipping over the part that, like, okay, small amount of addresses, but massive amount of Bitcoin. 96 00:15:36.186 --> 00:15:49.226 That was, that was the kinda crazy thing is, like, um, one of my thoughts is, so if we're talking, like, two point three million Bitcoin sent these notices, uh, you know, the first thing that comes to mind is Satoshi's got, what, a million Bitcoin. 97 00:15:49.906 --> 00:15:58.276 D-d-- I don't know if you mentioned in your report, but are the addresses which we associate with Satoshi, did it look like those were included in these, like, old untouched Bitcoin addresses? 98 00:15:58.886 --> 00:16:05.566 Um, like, any more insights to, like, these, like, this, this, like, old dormant Bitcoin here? Yeah. 99 00:16:05.626 --> 00:16:11.766 Um, I mean, we didn't particularly look into the Satoshi addresses, though, in hindsight, that actually would've been a great idea. 100 00:16:11.866 --> 00:16:24.826 But I think the, the big takeaway with the older address types is they didn't actually target any of the, like, super OG addresses from, like, two thousand and nine, like the original Bitcoin miners that received, like, some of the first block rewards ever. 101 00:16:24.926 --> 00:16:36.965 Like, if any coins were to be abandoned and actually vulnerable to Quantum, which is their altruistic sort of rationale for doing this in the first place, like, those would've been the first place to, to start. 102 00:16:37.066 --> 00:16:53.246 Um, we, we kind of looked into this ourselves and, um, Will actually, like, constructed a, a transaction manually to prove that, like, you can still actually send Bitcoin to these addresses, even if it wasn't through, like, a decentralized wallet like UniSat or through a, a centralized exchange like Coinbase. 103 00:16:53.826 --> 00:17:00.006 Um, all that is totally deprecated, but you can still build a, a manual transaction and send it to these addresses. 104 00:17:00.306 --> 00:17:14.346 But yeah, that, that's like I think the big takeaway there is, like, they, they claim to be saving the network from this quantum vulnerability or related, but actually totally skipped over [chuckles] the oldest, most vulnerable, and most likely to be abandoned types of addresses in the first place. 105 00:17:14.606 --> 00:17:26.506 And that's, that's interesting 'cause that stated goal, that altruism is belied by the fact that they didn't dust those, to your point, because they know that they can't access those coins, 'cause almost certainly all of those two thousand and nine coins are lost, right? 106 00:17:26.566 --> 00:17:38.006 Like, the, the vast majority of those miners, uh, you know, either s-spent them early or lost them or just stopped caring about Bitcoin before it got big. Th-this kind of leads into my next question, though. 107 00:17:38.346 --> 00:17:44.966 To the best of your knowledge, and I know this is hard because I'm, like, asking you to get into the mind of, you know, I don't even know what to call him. 108 00:17:45.006 --> 00:17:55.226 You can't call him a criminal, but, like, I don't know, cyber vigilante, um, like a, like a cyber Mr. Magoo trying to screw everyone out of their sats. Um, but, uh, 109 00:17:56.366 --> 00:18:05.506 anyway, m- this leads into my question of, like, what, what's the methodology here, do you think? Like, looking at the addresses that were targeted and the patterns, 110 00:18:06.646 --> 00:18:09.946 w-what do you think the methodology for picking out all these addresses were? 111 00:18:10.466 --> 00:18:19.716 I mean, do you think there were parameters that he just plugged in, you know, to, like, a, you know-Uh, a JavaScript program, you know, and then just, like, plucked out the addresses from his node? 112 00:18:19.846 --> 00:18:28.186 What, what do you think was, was, was the kind of, like, guideline for how he managed to get, what was it, forty thousand addresses to send to? Yeah. 113 00:18:28.226 --> 00:18:38.766 No, I mean, the big one was at least three years of dormancy, whether that was the address appearing as an input sending coins or as an output receiving coins, uh, three-year minimum on that. 114 00:18:38.886 --> 00:18:53.686 So essentially, no activity for three years, which coincides with the sort of bottom parameter for a lot of these abandoned property laws, um, which are defined by three years of dormancy. Um, and then also just 115 00:18:54.826 --> 00:18:56.856 n-receiving coins and never actually sending them. 116 00:18:56.876 --> 00:19:06.586 I think it was something like ninety-five to ninety-seven percent of the addresses had received coins and never sent them, which is probably a fair assessment to say, like, "Oh, these people never signed a transaction." 117 00:19:06.656 --> 00:19:11.366 They're more than likely, or they're more likely to be abandoned than an address that is active. 118 00:19:12.066 --> 00:19:21.706 So yeah, it was the, the three years not appearing as an input or an output and, uh, the lack of sending activity, I think, were probably the two top-line parameters. 119 00:19:22.366 --> 00:19:33.346 Um, and then maybe they played around with, like, the size or the balance of the addresses a little bit. But kind of as the campaign progressed, we saw the actual balance of each individual address dwindle. 120 00:19:33.406 --> 00:19:43.806 So I think that became less and less of an important parameter as they kind of were targeting more and more addresses. Um, it was mostly about the dormancy period, um, and the probability of it being sort of abandoned. 121 00:19:44.406 --> 00:19:52.436 Coins that have not moved in three-point-five years. Um, I'll speak for myself and probably speak for Charlie too. I won't speak for you, Zach, 'cause I don't know you as well. But, like- [chuckles]... 122 00:19:52.486 --> 00:19:58.686 I have coins that haven't moved in that long. Yeah. Same. And that's, like, common practice with Bitcoiners. You know, like, the... 123 00:19:58.746 --> 00:20:05.166 You know, it was hammered into a lot of, especially the two thousand and seventeen class and maybe twenty twenty, it's like, "Don't reuse your address." 124 00:20:05.186 --> 00:20:15.646 And so, like, how many Bitcoiners have a hundred thousand, a million sats sitting in multiple addresses in the same wallet just because they're not reusing the same address because they're trying to keep their OpSec, uh, clean? 125 00:20:15.706 --> 00:20:25.446 Like, the, the fact of the matter is, you know, these-- we don't know how many people could have been involved in these, uh, dusting attacks, but, you know, it's definitely not forty-nine or fifty thousand, right? 126 00:20:25.506 --> 00:20:33.426 Like, it could be a vanishingly small number of people. Could actually be, you know, a, a, a, you know, few hundred or a few thousand. Uh, the other thing, 127 00:20:34.646 --> 00:20:43.796 um, too, that I wanted to point out about this is going back to the Cornell Law School definition, where they use the lockbox as an analogy, or rather we're using it here for this. 128 00:20:44.846 --> 00:20:52.886 That analogy for me, at least a hundred, like, you know, like, a hundred percent matched up with, like, the crypto example is a-an exchange probably or a custodian. 129 00:20:53.686 --> 00:20:59.386 Um, and so, like, if you were going to use this argument in that case, I would be interested to see how that works out legally. 130 00:20:59.406 --> 00:21:07.026 But on-chain, that doesn't work because they keep all of this in cold or hot wallets, and it's all mixed together, so you have no way of knowing how long an account has been dormant. 131 00:21:07.546 --> 00:21:17.666 Um, kind of just a sidebar thought of just how incredibly ludicrous this is when you try to think about the actual logistics of, of trying to execute a, a strategy like this. 132 00:21:17.686 --> 00:21:26.986 Well, also the logistics, Colin, you point out, um... So in my, in my prescient comment that I played in the clip earlier, I said it was a fairly cheap attack to do. 133 00:21:27.026 --> 00:21:40.246 But, like, Zach, you and Will put together the numbers, and it looks like it-- they spent, like, point four nine Bitcoin in fees, so basically half a Bitcoin, and then, uh, and in addition to that, spent another, like, point two Bitcoin in the aggregate dust outputs. 134 00:21:40.286 --> 00:21:49.346 So we're ta-we're talking, like, um, eighty, ninety thousand dollars, um, to execute this attack, which, you know, in the grand scheme of things is not that much money. But that's not a cheap, like... 135 00:21:49.826 --> 00:21:59.886 This is not a cheap, uh, dusting strategy. This is, you know, this, this is not a- It's not pocket money. Yeah, it's not pocket money. I know. Like, what are your-- what's your, like, take or interpretation of that? 136 00:21:59.926 --> 00:22:04.186 Like, this is someone who's got a little Bitcoin, a little bit of mo- extra money to throw around at this. Yeah. 137 00:22:04.246 --> 00:22:14.286 I mean, just given the sophistication of the messages themselves, like, this is clearly somebody who understands the Bitcoin protocol to at least a fairly deep level. 138 00:22:15.086 --> 00:22:28.016 Um, and if they're willing to throw around, you know, point six, point seven Bitcoin just to kinda do this, it, it kind of suggests the fact that this is a, a larger actor or somebody that has, uh, at least enough Bitcoin to say, like, "You know what? 139 00:22:28.066 --> 00:22:37.906 I'm willing to go off on a flyer here, and maybe we'll get something to land," um, and if it costs me ninety, a hundred thousand bucks, then that, that was a good, that was a good trade. 140 00:22:38.266 --> 00:22:46.546 [upbeat music] Hey, Will here with Blockspace Media. Did you know that we have individual feeds for all our shows? 141 00:22:46.866 --> 00:22:57.826 If you're watching The Mining Pod, Bitcoin Season 2, or The Court Show, be sure to check out the individual feeds. You can find them on your podcast player of choice, whether that be Spotify, Apple, YouTube, et cetera. 142 00:22:58.346 --> 00:23:04.726 Just type in Blockspace Media, and you'll find all our shows pop up. Or just type in the individual show name, like The Mining Pod or Bitcoin Season 2. 143 00:23:04.986 --> 00:23:11.726 Be sure to hit that subscribe and give us a five-star rating so we can continue to bring you the best content in Bitcoin. 144 00:23:14.986 --> 00:23:28.286 Through your internal, we're gonna call it chain analysis, um, scoping of the, of the dust, uh, you linked it to previous attempts at, uh, dusting, which I thought was the most interesting. 145 00:23:28.366 --> 00:23:40.766 So this was not an isolated incident. This summer's, like, period of dusting, uh, you were able to connect to other events. Uh, can you go into that? Yeah. I mean, the person who did this was experimenting with it for 146 00:23:41.746 --> 00:23:50.646 at least a month or two in advance, like, sending messages to people that just, like, straight up said, like, "I am taking possession of this address," like, "it's mine now." 147 00:23:50.746 --> 00:23:57.066 Um, and then even sending just, like, blatant tests, like saying like, "This is a test op_return message. It must be eighty bytes and precise." 148 00:23:57.786 --> 00:24:04.546 So, like, clearly this person was experimenting with whatever system they had or how Bitcoin op_return actually works. 149 00:24:05.366 --> 00:24:20.562 Um, so yeah, they, they were, they were messing around with this a good bit, and then they actually did, like, a decently scaled, I think it was, like, a, a few hundred addresses test initially without the Solomon branding that just saidOr I mean, it kind of echoed what the Salomon Brothers messages said. 150 00:24:20.602 --> 00:24:25.582 It was just like, "Oh, we believe this is abandoned, like, move these coins or we're gonna take constructive possession." 151 00:24:26.482 --> 00:24:35.542 Um, so, like, they were messing around with this stuff a fair amount, but, um, kind of in gathering all the addresses that sent messages in both these tests, um... 152 00:24:35.822 --> 00:24:51.192 Well, actually, I-- it, it started from looking at the Salomon Brothers messages themselves, and then we built sort of this internal ledger of decoded op return messages, and then just looked at all the addresses that sent the Salomon ones and if they sent any other op return messages either after we wrote the report or before. 153 00:24:51.262 --> 00:24:58.072 And there were two key sort of addresses that linked the initial set that went to a few hundred addresses to the existing one. 154 00:24:58.582 --> 00:25:08.082 So, like, clearly this person was, was messing around with this stuff, trying to figure out how it works, um, did a small one at scale before they entered the full, um, Salomon Brothers branded one. 155 00:25:08.172 --> 00:25:15.962 And the irony of the situation is, the first set of Salomon Brothers messages they sent actually had a typo, and the link didn't work. 156 00:25:16.042 --> 00:25:26.722 So even, like, the, the message that the ADK whale sent, uh, the, the ADK whale received, the link was broken. So, like, technically from our view, there's, like, no actual legal ground there. 157 00:25:26.762 --> 00:25:35.882 Like, if you didn't have the link, then you didn't get the notice that says what you need to do to prove ownership. So it was just kind of hilarious. Bro, this has, this has Craig Wright written all over it. 158 00:25:35.922 --> 00:25:45.352 This is like, I mean, uh, this is the type- Are you making, are you making the call? Are you, are you saying that this- I'm just saying, like, this- This is shenanigans? [laughs] This is, this just... 159 00:25:45.382 --> 00:25:54.622 I mean, there's onl- there's only one, there's only one guy who fits the bill for all this stuff, and it's, it's a Craig Wright type character. Now, I as- I assume there's many Craig Wrights, 160 00:25:55.542 --> 00:25:57.142 Craig Wright folks out there, so... 161 00:25:57.682 --> 00:26:08.962 But you know, like, this is the type of thing that Craig Wright's always done, you know, manufacturing documents in court, um, practice- practicing his Japanese swordm- swordsmanship in really goofy suits and stuff. 162 00:26:09.282 --> 00:26:18.692 Like, um, this is-- He's like a, the Inspector Clouseau, but, you know, it, it always is the, it's the dumbest, like, you know, end to his story. I don't know. 163 00:26:18.782 --> 00:26:23.952 I'm just throwing it out there 'cause I keep thi- every time I see, like, look more into this, I'm like, "This is like a Craig Wright thing." 164 00:26:24.682 --> 00:26:33.672 Um, [clears throat] I don't know, Zach, what's the, what's the internal speculation at, uh, Galaxy who, you know, who this is? What are some of the wilder theories out there? 165 00:26:33.762 --> 00:26:45.922 Maybe you can't put it in a report, maybe this is speculation, but I don't know. Have you l- what are, like, the, the crazy, like, ideas, uh, you guys think might be going on here? Galaxy is a reputable public company. 166 00:26:45.971 --> 00:26:52.922 [laughs] They cannot dabble in the fruits of the grapevine. Ah, no, we, we gotta, we gotta speculate. We gotta gossip. I'm so curious. 167 00:26:52.962 --> 00:27:05.522 Yeah, I mean, we don't really have any conclusive opinion on who the individual might be, but we suspect that just given the amount of effort that went into this whole operation, that there will be some kind of follow-through. 168 00:27:05.722 --> 00:27:13.881 Like, we already hit the first deadline of the first series of messages that came, uh, last Friday on October tenth, and we'll get the second deadline on November fifth. 169 00:27:14.582 --> 00:27:24.062 Um, we're, we're generally of the opinion, just given the sheer amount of input, resources, time, money, effort that went into this, that we'll see some kind of legal follow-through. 170 00:27:24.162 --> 00:27:35.882 Um, I mean, it's kind of questionable where it will come from because the nature of the apparent law that they seem to be prodding at is hyper-jurisdictional. It's not just like this one, one rule fits all. 171 00:27:35.922 --> 00:27:46.762 Like, it's state by state, and if they plan to do this in another country, which there's no indication that they may or may not do that, like, you literally need to go state by state, country by country, 172 00:27:47.922 --> 00:27:50.582 possibly tinier jurisdiction by tinier jurisdiction. 173 00:27:50.842 --> 00:28:03.222 Um, so we, we've been keeping our eye out on, one, follow-up messages from Salomon themselves, um, and two, just docs that may be popping up out of some of these, uh, these local courts. 174 00:28:03.482 --> 00:28:12.462 But yeah, we haven't seen anything just yet. I've been checking the chain for more op return messages, haven't seen anything yet. So we suspect that we'll have to wait for the second deadline here. 175 00:28:13.002 --> 00:28:18.562 So I know you're, I know you're not a lawyer, obviously, um, unless you moonlit as one in a past life. [laughs] Yeah, definitely not a lawyer. 176 00:28:18.902 --> 00:28:28.532 [laughs] In the worst case of passive work, if any lawyers are listening or any listeners know a good lawyer to talk to about this, I would love to have these follow-up questions answered, because these are the things that are popping around in my mind. 177 00:28:28.542 --> 00:28:38.191 You're talking about these deadlines. I assume that's deadlines to prove ownership. Um- Exactly. And it's kind of like a, a, a, a loose ultimatum. It's like, "Prove ownership or we'll do something." 178 00:28:38.202 --> 00:28:42.942 But that question is, is like, what is the something? Because then this necessarily 179 00:28:44.122 --> 00:28:57.142 would, uh, you know, a requisite for this would be chain analysis to dox the holders of the wallets so that you can actually serve legal papers and sue them, right? Or, or take them to court. 180 00:28:57.162 --> 00:29:08.002 If you can't get someone into, in, into the court, then, and you can't identify them, there's no way that this even goes any further than the threats. Then my next question is, what's the legality behind that? 181 00:29:08.622 --> 00:29:17.782 I mean, I don't know if it's illegal. Uh, can you just-- I guess you can, there, you-- people do PIs. But, like, is it these guys can just go to Chainalysis and say, "Hey, here are these addresses. 182 00:29:17.862 --> 00:29:27.182 Get the IP addresses for these, please"? Um, obviously, that would cost a lot of money. Uh, Chainalysis works with governments and some of the most heavily capitalized companies in the industry. 183 00:29:27.682 --> 00:29:38.842 But, um, this is not really a question for you, Will. This is more just me monologuing an open question of like, what-- how do next steps even manifest? How do you even begin to bring this into the realm of the courts? 184 00:29:38.902 --> 00:29:49.782 This is something that you bring up in the, uh, in the, uh, conclusion to the introduction, where you're like, "Okay, like, if you even do get to the court, how are you gonna get the private key?" 185 00:29:49.842 --> 00:29:58.562 Even, like, you know, even i-if the person doesn't wanna comply. I mean, maybe they go to jail, they say they lost it. I don't know. There's just so much open-ended in the legal front here. 186 00:29:58.662 --> 00:30:09.402 I think we might need to do a follow-up episode, Charlie, with a lawyer about, like, h-how theoretically how this could even progress. Yeah. Um, it's-- I, I have no idea. 187 00:30:09.622 --> 00:30:18.762 It, you know, it's, it's funny when we talk about abandoned property, if, and you're talking about, uh, you know, you gotta move your coins every three to five to eight years to prove it's not abandoned. 188 00:30:18.842 --> 00:30:36.818 Now, you have takenHilariously, you've created Peter Todd's demurrage, uh, concept in-- but, but enforced through meat space legal practice, where you have to prove activity and prove liveliness, otherwise your coins get dinged. 189 00:30:36.898 --> 00:30:50.318 So, uh, maybe it's Satoshi himself, Peter Todd, uh, uh, doing this to, uh, sneakily get a- Can I just say what a stupid proposal? Yeah. What a [laughs] well- What an absolutely ridiculous proposal. 190 00:30:50.698 --> 00:31:00.738 [laughs] I know, but- All respect to Peter for a lot of the things that he's done, but sometimes these devs, man, need to get out of their own ways. It's like that in no world does anyone want that. 191 00:31:00.938 --> 00:31:11.478 Dude, I like curve balls though. I like crazy ideas. I like the crazy, zany ideas. Um, so back to you, Zach. Um, you know, we've talked-- we've touched on a few things from the report. 192 00:31:11.558 --> 00:31:19.158 Is there any other, like, little details or, um, idiosyncrasies you discovered that you don't think we covered here, like, yeah. Yeah. 193 00:31:19.218 --> 00:31:26.578 No, I mean, I think the, the inconsistency in the messaging on, on this stuff from Salomon is, is noteworthy. 194 00:31:26.678 --> 00:31:37.758 Like, in the most easily accessible communications, they say, like, "Oh, this is like a very, like, altruistic thing, like we're trying to save the Bitcoin network, and we've identified this massive threat." 195 00:31:38.378 --> 00:31:45.638 Um, but then on the back end, in the links sent in the opportun messages, they were like, "Oh, if you don't move your coins, like we're taking possession of them." 196 00:31:45.698 --> 00:31:53.498 So like, there's just like a lot of sort of contradict-contradictory statements and contradictory tone in the whole thing. 197 00:31:54.058 --> 00:32:05.418 And, and yeah, the other, the other noteworthy thing that we already kind of touched on was they didn't target the most likely to be abandoned, most quantum or technologically vulnerable address types in the P2PK addresses. 198 00:32:06.198 --> 00:32:16.978 So like, tho-those are two kind of like disqualifying things, um, about the entire effort i-in my opinion. Well, I'm gonna make sure the, uh, the full report is linked in the show notes. 199 00:32:17.258 --> 00:32:26.058 Uh, I recommend you guys, you guys go read those. Listeners, check out and make sure to follow Zach and Will and the Galaxy Research team. They put out some of the best reports. 200 00:32:26.798 --> 00:32:33.678 Um, Zach, uh, I'm looking forward to the next, uh, research you guys put out. You guys have been absolutely knocking it out of the park lately. 201 00:32:33.738 --> 00:32:45.218 Any, uh, hints on what, uh, what you guys might be working on or looking at next? Yeah, I mean, I can't speak on, uh, what Will is working on, but, uh, been banging on the Futarchy drum for a while here now. 202 00:32:45.358 --> 00:32:56.038 So, uh, we know we got a bunch of Bitcoin LT's launching. Maybe we could get some, some Futarchies on, on, uh, some of these Bitcoin chains. We'll see what happens. I'm for it. Let poly market run everything. 203 00:32:56.098 --> 00:33:00.498 Let's do it, baby. [clears throat] Okay. Well, thank you so much for listening to, to Bitcoin Season Two. 204 00:33:00.618 --> 00:33:08.438 Make sure to like and subscribe to the show, you know, leave a review, all that jazz, and we'll see you all next week. 205 00:33:08.668 --> 00:33:18.798 [outro music]