Idea: Consensus update to retrieve 79,956 BTC lost in MtGox

I just put up a pull request on Bitcoin Core to talk about a one-time consensus update that could let us recover the roughly 79,956 BTC that were stolen in the MtGox hack back in 2011 and return them to the creditors. Pull request: bitcoin/bitcoin#34695 Background For anyone who wasn't around or needs a bit of a reminder: in June 2011, MtGox got hacked, and about 79,956 BTC ended up being sent to this address: 1FeexV6bAHb8ybZjqQMjJrcCrHGW9sb6uF. Those coins have been sitting there for over 15 years now. The UTXO is still there, with tons of tiny transactions people have sent to it over the years. MtGox is now in civil rehabilitation under Japanese law. The trustee, Nobuaki Kobayashi, has been paying out recovered funds to creditors, but those 79,956 BTC are stuck no creditor has the private key, and the hacker hasn't touched them in over a decade and a half. What the idea involves This patch introduces a new script verification flag that, when turned on, allows outputs going to the theft address to be spent using a signature from a specific recovery address. It's set to trigger at an activation height that right now is INT_MAX (which means it won't do anything until the community agrees on a real activation height). It’s about 50 lines of code and only impacts one specific P2PKH address no other consensus rules are affected. Why I think it’s worth a chat I get that the first thing many might think is "this goes against immutability" or "where would this stop." Those are valid worries, and I’m not brushing them off. But honestly, this situation has some unique factors that make it stand out.

You've got to be kidding me!

Just trying to open a discussion here. We've seen something similar with ethereum before (with the DAO thing) which caused a fork, but in the end consensus regrouped around the "right thing" which is letting people who were hurt be saved. I know this is not going to be an easy proposal, but I do believe there is strong arguments toward doing it. There are arguments against too, so I'm hoping to see what everyone thinks and weigh the pro/cons.

Bitcoin isn't ethereum, no way this is getting accepted. No way!

Ok, but what's the argument here, besides 'it's not Ethereum'?

Some others will suggest that dormant addresses belong to Satoshi can be added to the pool of recovered bitcoin. Then later, each time a hack incident will happe, someone will call for another new consensus rule to recover stolen funds. This will destroy the bitcoin concept in full. No way this will be accepted except for MYgox victims who are few people considering that time when the incident happen.

What would be your strongest argument against? Those bitcoins have been sitting these for 15 years now, everyone knows these are from the MtGox hack, yet some people have tried to use underhanded methods to claim these using courts/etc. Allowing these to be returned to the MtGox customers would make a lot more sense, have a minimum cost and, I believe, would be the right thing to do.

No. Create your own fork if you want this.

This case is quite unique for multiple reasons. The bitcoins haven't moved, can be directly linked to the theft (those do not belong to Satoshi but to the mtgox hack itself). The coins have been tagged, and the hacker clearly knows moving these would trigger news worldwide instantly. There aren't many events that affected so many Bitcoin users as MtGox (arguably most bitcoin users had an account on MTGox in 2014), where we both know which bitcoins are the stolen bitcoins and have a legal process that would allow distribution of said coins back to creditors.

Then just do that. You will have just yet another altcoin. Why do you need to get Core's approval? All existing nodes will reject your hard-fork anyway, even if Core would release a new version with your changes. None. Activation mechanisms are for soft-forks. For hard-forks, you just release a new version, and you are good to go. Welcome to the altcoin world! It will be rejected by all existing nodes, so nobody cares. You can do whatever you want. It doesn't matter if you allow moving coins without valid signatures, or if you double the supply. Hard-fork will kick you to the altcoin world anyway. Seems like some people are celebrating 1st of April one month earlier.

- Try BIP 9 miner signaling and see how many mining pools would run the activation client. If enough pools participate, it could become another airdrop for everyone not just Mt. Gox customers. - The recovery window should be unlimited.

The day this becomes possible, I am out. Good thing that it is never going to happen. No matter how moral of a reason, Bitcoin is not and should never be something that can get taken away out of a wallet or recycled because it has been considered "lost", "stolen" or "dust". This will give leeway to misuse and corruption. That kind of thing goes too far. Not your keys, not your coins.

You're underestimating how many people have skin in the game here

Oh no shit! Let's first assume you are indeed the one you claim to be! We have a liar, a fraud, a convict, a man who managed to destroy the reputation of the Bitcoin Foundation and then bring ruin to thousands with his incompetence, coming with a proposal that would destroy the very foundation of Bitcoin! I repeat myself, are you fucking kidding me right now? Moving forward with this, don't even bother with anything else because this is the most important thing - What would happen with the recovered BTC and how much of it you want to stuff in your pockets?

You have already covered all the strong arguments against it in your op. To put it in the simplest way possible, it goes against what BTC is and this will be rejected by all full node operators. It is not even recovery, it is theft. More exchanges than anyone can count have been hacked and lost customer funds since the MtGox incident, those are also 'unambiguous theft', if i can take that line from your op, so why not recover all of that too. What of retail investors losses? Whoever controls the keys in the BTC network spends the coins and that's that.

I beg to differ. Yes I have been found guilty of hiding the massively lacking bitcoins. That is under Japan's legal regime where 99% of charges pressed lead to a guilty verdict. The Bitcoin Foundation didn't need help to go down (and I wasn't involved there anyway). I deeply regret what went on and trying to do everything I can to make creditors whole. This is one of the things I can do. Will it yield to something? Only way to know is to do it. Hate me all you want. Recovered BTC would be under supervision of the court and the trustee until distributed to creditors. I would get exactly wero of these.

Can you point to any unambiguous theft proceeds still on chain on a single easily recovered address?

And what would you have to do about other Bitcoin hacks that happened after then? I'm not sure if Mt gox was the first exchange to be a victim of hack, last year alone Bybit was hacked roughly $1B+ and nothing was done, those are literally users funds, the exchange is still on debt as they have to borrow Bitcoin from other institutions to cover up the loss; this is just one I can remembered for now. If I'm a victim of hack, I will be so pained too but Bitcoin doesn't know what is wrong and what's right, only human are judgmental about what's wrong and right which is subjective, you don't get to decide what's right and what's wrong when it comes to Bitcoin, if you own it, prove it. With this proposal, only the community can decide on what happen next but deep down you know the outcome, it's going to be rejected. This is you? Another food for knots community, they told you to run knots on the comment section.

How are you sure that that address really belongs to hacker? It's a great probability but still not 100% sure about this. Maybe time will tell. The hacker can use mixers or even create his own mixer to bury all logs and run away with clean bitcoins. Nothing can stop him from doing so if the address really belong to him, or maybe he is waiting for an exact date. All scenarios are possible. There might be events in the future that will affect so many bitcoin usersmore than MTgox incident. Should we then suggest a new consensus rule to recover them as well?

Good luck. If someone will make a hard-fork, then people will just sell coins they don't want to, and buy the coins they want. If it is a hard-fork, then it is handled in the same way as every other altcoin. It is just repeated 2017 with BCH, and all of that. Which means, that you don't need any activation, any signalling, nothing. You release a version, that would be hard-rejected by all existing infrastructure anyway, no matter who will release a new version. So, what do you want to signal by BIP-9 or anything else into existing nodes? The fact, that you are making a chain, which old nodes will never accept? All altcoins could send the same signal, and it wouldn't bring any value.