Original Bitcoin Core Developer has BTC Stolen From Wallet – This is What Happened

Core Bitcoin developer Luke Dashjr has revealed that he has lost almost his entire stash of BTC after his PGP (Pretty Good Privacy) key was compromised just before the new year.

In a Sunday tweet, the developer said his PGP key, a common security method that uses two keys to gain access to encrypted information, was somehow compromised by hackers, resulting in the theft of more than 200 BTC coins, worth over $3.5 million.

Looks like some of it is coinjoined to 1YAR6opJCfDjBNdn5bV8b5Mcu84tv92fa

— Luke Dashjr (@LukeDashjr) January 1, 2023

In response to a Twitter user who asked Dashjr if he had any thoughts about how the attackers might have gained access to his key, he said he had “no idea.”

Some in the crypto community pointed to a possible connection with an earlier Twitter post from Dashjr on Nov. 17 that noted that his server had been compromised by “new malware/backdoors on the system.” However, the developer couldn’t verify that either.

Meanwhile, Dashjr advised the Bitcoin community not to download Bitcoin Knots, a combined Bitcoin node and wallet that ensures the bitcoins you receive are both real and really yours, until this issue is resolved. He said:

“DO NOT DOWNLOAD BITCOIN KNOTS AND TRUST IT UNTIL THIS IS RESOLVED. If you already did in the last few months, consider shutting that system down for now.”

(as for Core, it's unlikely that website is compromised too, but at least verify a different signer on it)

— Luke Dashjr (@LukeDashjr) January 2, 2023

According to his LinkedIn profile, Luke Dashjr has been a Bitcoin Core developer since 2011. He also reportedly has over 23 years of programming experience.

In a comment, Binance CEO Changpeng “CZ” Zhao said he is saddened by the incident and offered support. He also mentioned that self-custody comes with certain risks as users need to protect their private keys from theft themselves. He wrote:

“Sorry to see you lose so much. Informed our security team to monitor. If it comes our way, we will freeze it. If there is anything else we can help with, please let us know. We deal with these often, and have Law Enforcement (LE) relationships worldwide.”

Sad to see even an OG #Bitcoin Core Developer lost 200+ BTC ($3.5 million). Self custody have a different set of risks.

We will try to monitor and see where we can help. 🙏 https://t.co/9eGZ7AFgC2

— CZ 🔶 BNB (@cz_binance) January 1, 2023

The incident also once again ignited a debate around self-custody, which became a hot topic after the collapse of FTX last year. Joe Vezzani, the CEO of LunarCrush, a platform that provides social listening analytics for cryptocurrency investors, claimed that the loss is insignificant compared to billions lost to centralized exchanges.

However, the crypto boss mentioned that the majority of self-custody losses are not reported. He added that not all crypto exchanges are FTX and not everyone in crypto is like Sam Bankman-Fried, the disgraced founder of the exchange. He said:

“SBF does not equal to all centralized exchanges. As Madoff does not equal to all Stock Brokers.”