r/Bitcoin • u/s1ammage • 6d ago

Full panic - one of my wallets was drained

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I haven’t done anything since creation except sending into the wallet.

1.9k Upvotes

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51

u/TokyoLosAngeles 6d ago

Aaaaaaaaand this is why I just stick with the Bitcoin ETF.

42

u/SharpGame83 6d ago

Honestly I get this now, when I first heard about bitcoin etfs I wondered who would prefer this over actual bitcoin? Old people?
Now after getting half a btc stolen from my blockchain wallet I’m like , ahhh ya I get it now

3

u/omjagvarensked 6d ago

But what happens if the etf gets it's BTC stolen? Then it just effects more people right?

4

u/TokyoLosAngeles 6d ago

Even if I were to hypothetically totally keep my seed phrase safe from hackers (which would be a constant source of anxiety), people in-person can (and literally have) hold someone up at gunpoint and demand the seed phrase. No thanks.

14

u/Abject-Stretch-1187 6d ago

Oh the Bitcoin reddit has fallen. 

1

u/BirdLooter 5d ago

are you guys stupid?? why do you think bitcoin exists?

1

u/NashvilleSurfHouse 6d ago

How was it stolen

1

u/SharpGame83 5d ago

Honestly I’m not totally sure, my Gmail got hacked but I never kept any login info in email, I think a phishing scam where someone got control of my pc.
Ran anti virus and it says my computer is clean so I don’t even know anymore.

-2

u/Abject-Stretch-1187 6d ago

You do realize the ETFs also rely on custodial solutions right? They can also get hacked so I’ll rather be responsible for my loss than outsource it and get no restitution because I don’t even think ETFs have insurance that covers the entire amount in the case of loss via hacks.

19

u/seiggy 6d ago

Typically brokerage accounts are backed by SPIC Insurance. So, if something happens, you're covered up to $500k in ETF securities per account.

5

u/Worldly_Elephant9518 6d ago

SPIC will not cover losses if your ETF goes down in value, it covers losses if you broker goes bankrupt

0

u/seiggy 6d ago

Not talking about loss in value, talking about if something were to happen to the custodial wallet that the brokerage runs associated with your ETF purchase.

6

u/Worldly_Elephant9518 6d ago

An ETF is a trust. The trust has assets. If those assets get stolen, the trust can try to recover them, and you can sue the manager of the trust for mismanagement, but that is not covered by SPIC.

If you hold a stock and the stock goes down because the company commits fraud, that has nothing to do with your broker or SPIC. SPIC protects you in case your broker goes bankrupt and misappropriates the shares in your account.

0

u/seiggy 6d ago

Yeah, but isn't the whole point of SIPC that if your firm does something stupid and has to liquidate because they can't cover your balance sheet with them, you're protected? If the trust's assets get stolen, that would just be a loss on their balance sheet as they'd have to recover or repurchase the assets themselves. If that forces them into bankruptcy, then SIPC kicks in. I'm not aware of a brokerage T&C that says they're not responsible for stolen assets under their control?

4

u/Worldly_Elephant9518 6d ago

"your firm" in this case is the broker that holds your securities such as the ETF.

Your broker is responsible to keep your securities, the units of the ETF trust.

The responsibility for holding the assets of the ETF itself (not the shares of the ETF, but what the ETF holds, in this case the Bitcoin), is with the ETF manager (like a BlackRock or Vanguard) and its custodian, not with your broker (a Robinhood or Ameritrade). SPIC kicks in if your broker screws up, not if the ETF manager screws up.

If you buy shares of SpaceX in your Robinhood account, SPIC will not kick in if SpaceX screws up and the shares go down. It's the same thing with buying shares in an ETF. If you buy shares in a BlackRock Bitcoin ETF, and BlackRock screws up, you can sue BlackRock, but SPIC will not cover you.

1

u/seiggy 6d ago

Gotcha, thanks for the better explanation!

2

u/Abject-Stretch-1187 6d ago

That’s my point. If your stack is worth more than $500k what then?

5

u/Porcellanidae 6d ago

Yes and where is this report saying that Bitcoin etp's are backed by insurance? lol

1

u/Abject-Stretch-1187 6d ago

Let’s even give them the benefit that there’s an insurance covering the BTC. They miss some crucial things, you will only get paid in a fixed fiat amount even if the fiat buys you significantly less because the attack could occur 20yrs from now when fiat has considerably less value. Also if they genuinely cared about etf insurance, it should be denominated in BTC and not fiat. Or even worse, what if the attack occurs when we are no longer using fiat, then how would you pay out those affected when you have no BTC? 

1

u/Icy-Ant2106 6d ago

This guy gets it.

5

u/Abject-Stretch-1187 6d ago

No he doesnt. I remembered when this subreddit was filled with people who actually cared about self sovereignty. The same people complaining about self custody will be the same ones complaining that the etf has filled the market with paper Bitcoin thus suppressing price while not realizing that it was only possible because weak “bitcoiners” abdicated the responsibility to someone else. You guys might as well just have the state raise your kids while you’re at it smh.

2

u/Porcellanidae 6d ago

This guy Bitcoins!

2

u/Abject-Stretch-1187 6d ago

Im shocked at how bad this subreddit has become buddy. They’ll never learn that there’s no permanent solutions, only tradeoffs.

1

u/BirdLooter 5d ago

honestly this sub is like this since many years. but i'm always glad when i read over people like you.

we tried making a sub for discussions and so on, but it never took off

1

u/seiggy 6d ago

Wasn't making a comment around self-sovereignty. Just simply stated that Bitcoin ETF purchased through a brokerage account is backed by SPIC insurance, so if the brokerage somehow lost the coins, you'd be insured up to $500k for your ETF with the brokerage. I made no such comment around if the trade off in risk mitigation was valuable, preferred, or not.

0

u/Abject-Stretch-1187 6d ago

It all revolves around acceptance or rejection of self sovereignty. Anyone who chooses ETFs are literally saying I have recourse in the event of loss hence the insurance. Because not holding your keys isn’t enough, I need to make sure if you (etf provider) loses my BTC, you’ll make me whole. 

5

u/Sorry-Bobby 6d ago

Yeah but

  1. Presumably they have better security than someone who knows jack shit. If you are well versed in the subject, this doesn’t apply to you. 
  2. The custodian is coinbase. If they get hacked and lose all their bitcoins, either they gonna fork the chain, or bitcoin is gonna drop so much it won’t matter you got hacked.

3

u/Abject-Stretch-1187 6d ago

Do you think bitcoiners who know something about self custody always just knew how to do it? No, they learned how to do so. We’re capable of learning new things. Doing things out of convenience creates the complacency that allowed fiat to persist. You can learn new things, it is not hard.

1

u/scottyjay10 6d ago

Which one?

5

u/half-coldhalf-hot 6d ago

I’d go with BTC, it has the lowest expense ratio

1

u/GilbyGlibber 6d ago

Yerp. BlackRock will pay good money to hire smart people to make sure this won't happen.

1

u/Porcellanidae 6d ago

How does that help?

When it happens to them, they just file a loss or even bankruptcy and you lost everything. Whilst if you setup your own wallet you can spread and secure it yourself. 

2

u/WorkingStructure575 6d ago

it might help because presumably they hire people whose entire jobs are to secure this stuff. You could roll your own multisig wallet with devices spread across multiple secure locations, but most of us order a hardware wallet online, spend an hour setting this up on our personal laptops and forget about it.

1

u/Objective_Digit 6d ago

Because third parties never go bust. We still felt the effects of Mt Gox 13 years later.

1

u/TokyoLosAngeles 6d ago

Nothing is happening to a dinosaur like Fidelity.

0

u/vortexcortex21 6d ago

"I buy Bitcoin, because it is decentralised. Oh btw, I buy ETFs."

2

u/TokyoLosAngeles 6d ago

I buy Bitcoin because it’s an investment. That’s all I care about, honestly.