How much stolen bitcoin must a wallet have to be legally recoverable? TLDR: Under what circumstances could one successfully sue to gain control of stolen bitcoin? If it depends on what proportion of an addresses unspent output consists of your stolen bitcoin then what may the limit be? I previously asked here about cryptocurrency and theft, and the answer was that bitcoin, unlike money, is not a negotiable instrument and therefore remains the property of the original owner when a thief sells it to a third party. I asked about managing this issue on bitcoin stackexchange, and the answer said: Regarding the question of ownership of stolen coins, that's really only applicable if your withdrawal is being funded from a UTXO that comes directly from a deposit of the stolen bitcoin. If the exchange previously combined that coin with other &quot;clean&quot; coins into one large UTXO (example transaction), then no one specifically can be pinpointed as having received the stolen bitcoin. For an example of what this looks like, we can see this answer, that talks about the not stolen but famous pizza bitcoins: There is no currently unredeemed output which contains 100% pure pizza coins. All the pizza coins have been diluted somewhat with other coins. The purest remaining are these 100 BTC which are 90.7276% pure pizza coin, and just 11 transactions separated from the pizza transaction. And as an aside, he mentions stolen bitcoin: Edit: I just found these 100% pure allinvain coins - undiluted after 24 hops from when 25k BTC was stolen from his computer. Edit 2: I don't mean to imply that the allinvain coins haven't been thoroughly looted. They have touched 755,796 different addresses since being stolen and are currently sitting in 109,235 different addresses, including 8 from my own personal wallet. The exact same 8 as have pizza coins in them, it turns out. Can we accurately legally say what is the situation regards claiming these &quot;bitcoin&quot;? An example situation would be if Alice had some bitcoin in a wallet, and her computer was hacked and the bitcoin transferred to Anonymous Bobs wallet. He then created a transaction that contained X% of Alice's stolen bitcoin and 100-X% of legally acquired bitcoin and transferred that to Honest Charlie who publishes their wallet address. Is there a value of X that would allow Alice to successfully claim the coins from Charlie? 100%, 99%, 90%, 50%, 1%? Or any other property that would determine if such a case could succeed?
There is no simple answer. Whether stolen bitcoin can be recovered with a court order will depend on the facts, the jurisdiction, and the legal basis for the claim. There is a significant difference between tracing by a civil litigant, and asset forfeiture to the state. I’ll talk about tracing, because it’s based on common law principles that apply in many countries, rather than statutes which are unique to each jurisdiction. The first hurdle in establishing a civil claim against the recipient of stolen bitcoin is the need to show that cryptocurrency is property. It has been suggested that cryptocurrencies might not be property because they are merely information, or because they are not classifiable either as things in possession or things in action. However, the LawTech Delivery Panel published a legal statement on cryptoassets and smart contracts (November 2019) which analysed these arguments and concluded that “cryptoassets are to be treated in principle as property.” This analysis was adopted by the High Court of Justice in England for the purpose of making disclosure and freezing orders against Bitfinex in respect of an account holding ransomware proceeds: AA v Persons Unknown [2019] EWHC 3556 (Comm). The next issue is the application of the nemo dat rule, which is the subject of your previous question. According to this honours thesis published by the University of Otago, until the courts recognise cryptocurrency as “money,” the nemo dat rule will have the effect that “the legal title to stolen cryptocurrency will likely always rest with the original owner” and “an innocent third party having received stolen cryptocurrency will always be liable to a claim from the original owner.” However, the LawTech Delivery Panel legal statement analysed the problem differently and concluded that an on-chain cryptocurrency transaction creates a new asset rather than transferring an existing asset: Although one can describe and conceptualise the process as a transfer … it is not really analogous to the delivery of a tangible object or the assignment of a legal right, where the same thing passes, unchanged, from one person to another. Instead, the transferor typically brings into existence a new cryptoasset, with a new pair of data parameters: a new or modified public parameter and a new private key. According to this analysis, the recovery of stolen bitcoin would involve applying the equitable principles used to trace assets wrongfully transferred into a mixed fund. Such a claim cannot be made against a bona fide purchaser for value without notice. On the other hand, stolen assets can be traced into the hands of a third party who knowingly receives them. Thus, whether the receiver of stolen bitcoin is liable to return them to the original owner is likely to turn more on the receiver’s state of mind than the percentage of stolen bitcoin received.
It isn't necessarily "illegal" (in the sense you are committing a crime) but you may be in violation of a verbal contract (which would fall under tort law). Let's take this a bit further. Perhaps Joe Schmoe gave you his debit card information so that you could make deposits for him and he said you could take $5 out for yourself for the trouble. This is a contract between you and Joe for a service. You can't extend Joe's offer to Jane Doe by saying "here is some debit card information, take $2.50 out for yourself". You have no right to extend your contract with Joe to somebody else. Now specifically for passwords it basically boils down to the same thing. Unless Joe gives you explicit permission to give that to somebody else, you can't just decide to unilaterally give what Joe gave you to somebody else. This may be different if Joe said "here, I'm buying you a subscription to service XYZ because you are a nice guy", this may be construed as a gift which transfers ownership. At that point you have control over what is or isn't done with the account. As another example let's say Joe let you borrow his car. You can't turn around and say to Jane, "here's a car you can use", Joe did not extend the offer to Jane, nor did Joe give you the right to extend the offer to another person. It's a moot point though, in the original context of this question, Netflix does restrict you from sharing your passwords "outside your household". Almost every paid service has some restriction against sharing with others. In the end Netflix may shut off Joe's account and Joe may sue you for damages, but you aren't going to be thrown in jail for this. This would be a civil case (tort) which you may be liable for monetary damages.
A possessor in good faith owns currency Currency is owned by the person who has it provided they came into possession legitimately. Currency is a small category of goods, known as negotiable instruments, where the person who has it, owns it. Unless, they came into possession in an illegitimate way, such as by stealing it or finding it (and not handing it in to the authorities). If they received it in the course of a legitimate transaction - wages, payment for goods or services, etc. - then they own it even if the currency was previously tainted. Contrast this with, say, a car, where the legitimate owner remains the legitimate owner no matter who is in possession. Now, there are usually laws that prohibit the destruction of currency even if you own it, but that doesn’t change the fact that you own it. For comparison, there are laws against dumping your car in the river but it’s still your car.
The short answer is that a few individual trades would be legal (e.g. if you sell some to a friend), but doing so on a regular basis for profit (e.g. offering a sale price and a bid price to all comers) would not unless you get the appropriate licenses and comply with relevant laws. Doing this is onerous. Any kind of "money services business" is subject to federal regulation. The federal definition is a business trading more than $1,000 per day, so in theory as long as you keep below that you wouldn't have to worry about federal law. In practice you might find yourself having to prove to the Feds that you have not exceeded the threshold on any day in the past. There is also a separate licence regime for Virginia which you must also comply with. Finally, if you sell Bitcoins to someone when you have a reason to suspect that they are planning to do something illegal with them then you are breaking the law. Edit: While its not strictly a legal issue, some people who have traded Bitcoins outside of recognised exchanges have had their bank accounts closed because the activity has triggered the bank's money-laundering detectors. Edit 2: All the above applies if you are trading directly with people who you found on something like localbitcoins.com. Trade via an exchange such as BitStamp is legal: all the AML and KYC regulations are their problem not yours. You merely have to provide the necessary identification to open an account.
Theft is universally a crime in virtually every jurisdiction. Insofar as a state has a criminal code and a functioning judiciary, theft will always be a crime. It is also a basic legal principle that theft is a tort as well (in other words, a civil wrong incurring damages to an individual that can be remedied in a court of law). A key part of the problem in failing to make theft a crime, is that in the absence of a substantive penalty in terms of a fine or imprisonment, theft becomes a low-risk, high-reward activity where the maximum penalty is simply the repayment of stolen goods (with relatively minimal loss). This fails to provide an effective deterrent to this socially frowned-upon activity, and rates of crime would skyrocket. It is appropriate, therefore, to make theft a crime (and all jurisdictions do so), as all pillars of criminal justice immediately apply. Edit: As @/JBentley correctly points out, penalties do in fact exist in civil law. That said, the power of incarceration, perhaps in this case the ultimate deterrent, is largely unavailable in civil cases. The ultimate point - that theft is rendered a more sound and legitimate enterprise based largely on gambling - remains the same. Additionally, not all individuals have the time or effort to file small claims and follow cases to the end. Making theft a tort-only offense would cause extraordinary difficulties in enforcement as many would consider the loss of perhaps a small article relatively insignificant compared to filing in small claims court.
Your question assumes that there is a method to find a block of bitcoins with a faster computation than the brute force method used so far. If such a faster calculation method exists, it is proprietary to the mathematics and our superhero has not invented it, he just discovered it and used it. It is not an insider trading case since everybody has the possibility to acquire the same math knowledge for free and use the same super algorithm (and maybe is using it already). Insider trading covers only situations when an insider has an information earlier than the market due his proximity to the information, being e.g. employee of the relevant company whose shares are traded, etc. Insider trading presumes that the insider is an "insider", i.e. has the information earlier only due to his position. On the other hand, having an information earlier due to his math skills which are available to everybody does not constitute insider trading. Using the new discovered super algorithm for shorting the bitcoin price is not illegal since the super algorithm is not illegal either, but proprietary to the mathematics. The assumption that the price will drop may be not true, it is only a valid speculation.
This (as always) depends on jurisdiction, but usually - No, just taking the money is not legal.. In most jurisdictions, if you have a claim (the rent, in your case) against a debtor , and the debtor does not pay, you are not allowed to take any enforcement action (taking property, coercing the debtor) yourself. Instead, you must obtain a court or administrative judgement confirming your claim. Even then, often only a court officer or the police may actually enforce payment of the debt. This is mostly to protect the debtor from unwarranted enforcement action (such as taking more than you are owed, or collecting a disputed debt). For example, in Germany, to enforce a debt the creditor must first obtain what is called a Vollstreckungstitel or just Titel (title) - an official document confirming that there is an outstanding claim. This is on top of any contracts already existing. A Titel is obtained either through a regular court judgment, or through an abbreviated, administrative process called Mahnverfahren (essentially, you ask the court to send the debtor a letter about your claim, and if the debtor does not file an objection, you get the Titel). Once you have a Titel, the creditor can enforce it any time they choose (with a Titel, the statute of limiation is extended from the usual three years to 30 years). However, actual enforcement must be performed by an officer of the court (Gerichtsvollzieher). Only they may do things such as collecting the debtors property, force open doors and even imprison uncooperative debtors. I don't know the exact situation in the USA, but I believe it is roughly similar. For example, the equivalent of a Vollstreckungstitel is a Writ of execution.
It depends on whether one honestly believes that the supermarket would consent to them eating a snack before paying for it. If there is no consent, either explicit or implied, then it is theft as no contract has been performed or fulfilled so ownership hasn't transferred, as follows: Theft is defined by section 1Theft Act 1968 as: (1) A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it; and “thief” and “steal” shall be construed accordingly. The two elements relevant here are &quot;dishonestly&quot; and &quot;intention of permanently depriving&quot;. Section 2 offers three defences to being dishonest, with this being the only one applicable here: (1) A person’s appropriation of property belonging to another is not to be regarded as dishonest— ... (b) if he appropriates the property in the belief that he would have the other’s consent if the other knew of the appropriation and the circumstances of it... The definition of intention to permanently deprive may be found at section 6: (1) A person appropriating property belonging to another without meaning the other permanently to lose the thing itself is nevertheless to be regarded as having the intention of permanently depriving the other of it if his intention is to treat the thing as his own to dispose of regardless of the other’s rights... See this article by News Shopper that explains it in a much better way than I could without me commiting plagiarism: Buying a product at the till is what transfers the ownership from the product belonging to the shopkeeper, to it belonging to you. And only when that sale is complete do you have the legal right to consume or use it. If you eat the chocolate before you legally own it, you are permanently depriving the owner of his right to the product – he can no longer refuse you the sale or take the item off the shelves.