What's the history of banks robbing themselves? Cryptocurrency "hackers" or inside job?

In My Humble Opinion
1

So yet another crypto currency exchange ‘got hacked’. I am using scare quotes because while it is entirely possible it was outside hackers, it has occurred to me that in the lawless world of cryptocurrency, it’s a very straightforward crime to rob ‘yourself’ of customer money.

Basically, the crime is simple and straightforward.

  1. Open a bank and collect deposits. Offer really low fees and high interest rates to attract lots of depositers

  2. Leave a tiny hole in your security that no realistic outsider can find.

  3. Inform a team of robbers of the security hole

  4. Robbers rob your bank

  5. Split the loot.

The difference between the crypto-world and the real world here is that in the real world, most of a bank’s money is not in cash, so robbers can’t actually steal all X billion dollars a typical bank has. Only a teensy amount of the money is cash. Also, the robbery is going to trigger a major Federal investigation because the Federal government is on the hook for most of the money that was stolen. (actually, are they? If someone takes bank of America for 1 million dollars, it would make perfect sense for the FDIC to not give BoA the money they lost but to make them eat the loss, only stepping in when the robbery losses are so large the bank can’t pay them)

In the crypto world, by contrast, 100% of the money is in a form that can be irrevocably transferred. So you can actually rob a bank of all it’s assets. In addition, when you split the loot, the bank executives who get half or more can leave the money in anonymous numbered crypto accounts and not spend any of it for a decade. It is impossible to prove that someone has cryptocurrency. Yeah, in a decade, when they go to withdraw, if they don’t use a bitcoin ATM, there’s a trail.

Seem plausible?

2

Update : FDIC insurance does *not *cover theft, whether due to fraud in your account, identity theft, or bank robbery. However, most banks insure against robbery.

This makes total sense, otherwise banks would not bother with vaults or guards or hidden alarm buttons or any of the rest.

3

Businesses that handle money have a long history of ripping people off if there’s not some authority to keep them in line. Today it’s mostly formal government regulation, in the past it might have been organized crime, a local community, or general reputation. Cryptocurrencies tend to attract anti-government types (like Libertarians and anarcho capitalists) who are opposed to government regulation and ignorant (often willfully) of what happens with lack of regulation in general. It’s pretty obvious that semi-illegal, mostly anonymous cryptocurrency exchanges are rife for a variety of rip-offs and crimes, but the biggest fans of them are either attempting a rip-off or subscribe to a belief that says rip-offs won’t happen.

4

William Black has made a career of studying such ‘control fraud’. Here’s one of his overview papers.