Bitcoin

Freedom Convoy bitcoin donations frozen and seized

Freedom Convoy bitcoin donations frozen and seized

Freedom Convoy bitcoin donations frozen and seized

As Canadian protests against vaccination mandates became a cause celebre, millions of dollars in donations flowed to a Christian crowdfunding site. But that site was hacked and also had to freeze millions of dollars earmarked for the so-called “freedom convoy”, after the government enacted the Emergency Measures Act to cut off protesters from the financial system.

At that time, Bitcoin entered the arena hoping to be the main savior for protesters against financial troubles, with Bitcoin fundraiser organizers HonkHonkHodl raising over $1 million in crypto -change. It was a great moment for Bitcoin and the ideals its proponents see in cryptocurrency, such as censorship-resistant money. “I still can’t believe this is the protest that would prove every bitcoin crank is a prophet,” David Heinemeier Hansson, co-founder of Basecamp and longtime anti-Bitcoiner, write in a blog titled “I was wrong, we need crypto,” at the time. “And for me to have to slice a humble piece of pie and admit I was wrong about the fundamental necessity of crypto in Western democracies.”

“Disabling your money is incredibly harmful. A trucker I met ran a business and didn’t know when he would be able to pay his next 10 drivers,” a senior HonkHonkHodl organizer under the pseudonym told Motherboard. “NobodyCaribou.” “Incredibly messed up.”

But an eerily familiar fate has befallen Bitcoin donations: many truckers can no longer cash in their donated bitcoins due to financial penalties, with some of the bitcoins being seized from NobodyCaribou by authorities. Major protesters and fundraiser organizers now face a class action who wants to give away all the bitcoins donated to Ottawa citizens who were near the protests.

JW Weatherman, a pseudonymous Bitcoin lead donor whom NobodyCaribou asked for help, brainstormed a plan of action via a 25-page public post. google docand eventually a coder volunteered to help split 14.6 Bitcoins into 100 separate Bitcoin wallets to distribute to truckers.

But in order for the truckers to access the funds, NobodyCaribou had to approach them individually and hand them a painstakingly detailed explanation of how to claim the Bitcoin along with the necessary codes, all neatly placed in envelopes.

“I tricked a lot of truckers into giving them 8,000 reasons to inquire,” NobodyCaribou told Motherboard. “10% of truckers refused the donation for fear of fraud or because [of] complexity,” he said.

A trucker, who goes by the name “UOttowaScotty” on YouTube, was live from his cab on Feb. 16 when NobodyCaribou approached him and handed him an envelope containing “$8,000 worth of Bitcoin,” along with instructions on how to to claim this. “This is insane, man,” the trucker said, “definitely one of the craziest things to happen in the last two weeks.”

According to a web page for tracking fund movements in the distributed wallets, half of the truckers’ wallets have been consulted so far.

But this whole radically transparent approach – intended for the peace of mind of donors like Weatherman, who threatened HonkHonkHodl with a lawsuit if they didn’t distribute Bitcoin to truckers before being enlisted to help – this is also what derailed the plans. Bitcoin is a public ledger system, so all transactions on the network are visible to everyone. This includes, of course, the authorities who want to hunt them down.

The Ontario Provincial Police and the Royal Canadian Mounted Police have ordered banks and crypto exchanges to block all transactions from crypto wallets linked to truckers. In response to a question about whether his crypto exchange would also ban addresses, Kraken CEO Jesse Powell, who donated $43,000 himself, noted, “100% yes, it will happen and 100% yes, we will be forced to comply. If you are concerned about this, do not hold your funds with a centralized/regulated depository. We cannot protect you. Get your coins/cash and only trade p2p.

“By tracking bitcoin on the public ledger, it appears that some end users were able to cash out bitcoin before it could be frozen,” Monique Jilesen, a partner at law firm Lenczner Slaght, told Motherboard. Lenczner Slaght is acting for Champ & Associates, the law firm representing Ottawa residents in the lawsuit against Freedom Convoy organizers, including NobodyCaribou.

NobodyCaribou distributed the wallets on February 16, a day before freeze order— known as the Mareva injunction in Canada — was issued. The order targeted people connected to the protests “such as any banks, financial institutions, money services businesses, fundraising platforms or websites, cryptocurrency exchanges or platforms, or custodians of any cryptocurrency wallets.” .

The order specified cryptocurrency addresses controlled by NobodyCaribou and other organizers, and included any tokens owned by NobodyCaribou that “have been transferred to other digital wallets, as identified via the public ledger,” tracked from a list of 123 addresses.

Although 14.6 bitcoins, worth approximately $630,000 at the time, were distributed to truckers at the time, police came to NobodyCaribou’s home on February 28 and took 0.28 bitcoin (worth about $15,000), stored in a wallet that NobodyCaribou co-controlled with Tamara Lich and Chris Barber, members of a nonprofit organization affiliated with truckers who have already been arrested. According to court documentsNobodyCaribou claimed he was about to transfer the funds to a trustee when police forced him to hand over his wallet under a search warrant.

Entering a censorship-resistant digital asset might seem odd at first, but all it refers to is a 12-word string known as a seed phrase. While not held on a centralized crypto exchange like Coinbase, Bitcoin is self-custodial by design, which means that one can only access their Bitcoin if they type these 12 words in one order exact. According to NobodyCaribouthe police coerced him into revealing his seed sentence.

Control of the seized bitcoin has now passed to a court-appointed trustee, Jilesen told Motherboard. The escrow agent will retain custody of the bitcoin until the trial renders a verdict on the fate of the cryptocurrency.

“I wanted to give Bitcoin to truckers. A court order was issued for the Bitcoin that had not yet been distributed, so whatever I “want” I’m not going to break the law and get arrested,” NobodyCaribou told Motherboard. “The base of the claim on these funds shall be determined by the courts.Until then, they are safely in escrow.

In the fallout from a bitcoin experiment that could have gone better but was nonetheless a proof of concept for the bitcoin community, there are a few key lessons. “Centralized coordination is fine, centralized custody is the problem,” NobodyCaribou told Motherboard.

“Personal note: never be a trusted third party again”, he tweeted on March 10.

Now, the bitcoins seized, and the rest of the bitcoins that may still be seized from truckers, could end up in public coffers. “I can’t speak for the province, but they have a variety of options, including compensating Ottawa residents who were subjected to the conduct of the defendants,” Jilesen told Motherboard.

Spokespersons for the Ontario Ministry of the Attorney General declined to comment “as this relates to a matter that is before the courts.”

Bitcoin was not meant to end up in a legal quagmire like this – the cryptocurrency was designed and touted to be used as an apolitical force of liberation during times of brutal government interventions, good or bad. purposes. And yet, the realities of the cryptocurrency market, ranging from regulated entities to liquidity limitations, mean there is still a long way to go before Bitcoin can realize its potential as a censorship-resistant monetary technology. .