Bitcoin Charity: Its Biggest-Ever Donation Was Stolen Money

Posted: Feb 4 2014, 5:02am CST | by , in News
Updated: Feb 4 2014, 5:05am CST

 

Bitcoin Charity: Its Biggest-Ever Donation Was Stolen Money
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The head of a Bitcoin charity has admitted accepting a large anonymous donation even though he strongly suspected it was stolen during a raid on a cryptocurrency exchange.

Dmitry Murashchik, who goes under the name Rassah, runs Bitcoin 100, which exists to persuade existing charities to accept donations using virtual cash. In January last year, an anonymous donor gave Rassah’s organization a donation worth about 180 BTC.  At the time, this was worth about $2,600, but with the cryptocurrency’s appreciation since then, it is worth approximately $150,000.

With no way of tracking the money or the donor, Rassah had no choice but to accept it to help finance his fledgling non-profit, which offers charities a $1,000 prize if they begin accepting online donations using bitcoin.

“We received a sizable donation of about 180BTC at around the same time as a few exchanges were hacked and robbed,” Rassah said in an email. “I suspect the money was stolen. Since there was nothing I could do to figure out where the money came from, we ended up keeping it.”

The Forbes E-book On Bitcoin Secret Money: Living on Bitcoin in the Real World, by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or legal tender.

Bitcoin 100 was also one of the recipients of a number of small donations made by an anonymous “fraudster” last year.

“Yes, I’m fraudster [sic] and I make money by scamming idiots around the world,” the donor wrote. “So I have decided to share some of my money with you, losers.”

Both these cases paint a startling image of Robin Hood-style Bitcoin thieves, who steal from the rich and give to the poor. But they also cast doubts over the fledgling Bitcoin charity sector, because few non-profits would feel comfortable taking money if there was a risk it had been stolen.

To help guard against this possibility, Bitcoin 100 is extremely open about its transactions, with all donations recorded on the publicly accessible blockchain. (Example here.)

“We are essentially fully and completely transparent, without anyone needing to know who we actually are,” Rassah added. “People can trust us because they see everything about our activities, even if our online nicknames aren’t necessarily tied to our real world identities.”

Rassah suggested that Bitcoin was good for charities because its borderless economy means cash can easily be transmitted across the globe, even to a group working in a country where Paypal, credit cards and other common financial services are unavailable. “Most of the time these are the countries which need the most help,” Rassah pointed out.

Bitcoin transactions allow charities to avoid the risks of chargebacks, which happen when donations are made using stolen credit cards. When these cards are cancelled, charities have to pay back the money as well as an administration fee.

Regardless of the pros and cons of Bitcoin charity, one thing is clear: there is a lot of cash out there to give away.

Due to runaway inflation in the price of the cryptocurrency, many early adopters have seen their wealth grow exceptionally.
“Our problem is we have too much money and not enough charities to give it out to,” added Rassah. “With Bitcoin’s rise in price, our trust value seems to be rising faster than we can give the money away.

“I would love to get rid of all our money.”

Although anonymous charitable donations are commonplace, most countries advise non-profits to be extremely cautious and report any suspicious money. The UK’s charity commission, for instance, advises charities to take steps to work out the source of anonymous payments before accepting them, particularly as the cash may have come from the proceeds of crime.

Connie M. Gallippi, founder and executive director of the BitGive Foundation, pointed out that Bitcoin’s anonymity is no different from real world money.

“Bitcoin can be donated anonymously, so it is possible that donations could come in and the recipient wouldn’t know who they are from,” she said. “This happens quite regularly actually. However, the same happens with cash or fiat currency in a traditional charitable giving scenario. The charity receiving the cash funds doesn’t really have any way of knowing where that money came from.

“Bitcoin operates like cash in that sense. However, if a donor wants to write off the donation from their taxes, then they have to provide some documentation, which would likely deter a Silk Road dealer type from making the donation if they want their identity to remain anonymous.”

Source: Forbes

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