How can someone like an exchange track the Bitfinex hacked coins to make sure the hacker cannot exchange them?

Does a service exist to make it easy for the exchange to call an API with the deposit txid and get back an answer if the input coins are tracked to the hack?


I understand that people don't like the idea of tracking bitcoins, but as an exchange if bitcoins associated with the hack are deposited on your platform and allowed to be converted into USD you are potentially liable for facilitating a crime. An exchange needs an easy way to keep track of these coins so at the very least they can put a hold on the user's account while investigating the source of the deposited coins. This happens with USD all the time, so I'm not sure why people would expect bitcoins to be any different. No exchange wants to be a party of criminal actions.

Hopefully now the question is more clear. So does such a service exist or must the exchange write their own code to handle this?


1 Answer 1


This is possible. It also may sound good on paper, but the implications are horrible.

Think of it. 100 thousand bitcoin. 0.5% of all coins will be rejected. This is out of 21 million. Out of the current 15 million, maybe 0.65%. That's hugel

If a hacker also wanted, he could move the coins into multiple mixers and deposit them in and out of Exchanges, as they're off-chain. Hacker could even sell a couple.

  • I know about mixers, but I didn't think any existed that could mix that many coins? The amount of coins are somewhat arbitrary as we have 8 decimal places and can extend that if necessary. I would think the important thing would be to prevent the hacker from actually cashing out. This would be facilitating a crime if an exchange were to allow this. Isn't that important?
    – Brandon
    Aug 24, 2016 at 19:57
  • Decimal places are arbitrary. Yes, we can increase them. But they're integers. It's gonna be hard to try and change thr coin limit from 21 million. Aug 24, 2016 at 20:14
  • The thing is, due to bitcoin's nature, there will always be someone willing to buy dirty coin. Aug 24, 2016 at 20:15
  • What I meant was if obtaining a whole coin becomes too expensive, people will just use fractions of a bitcoin (in response to your comment about "0.5% of all coins will be rejected").
    – Brandon
    Aug 24, 2016 at 20:56
  • Again it just seems obvious to me that an exchange that allows these coins to be sold could be held liable for facilitating a crime. So how would an exchange track these coins to make sure they are not helping the hacker?
    – Brandon
    Aug 24, 2016 at 20:58

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.