FROM:
http://dcmagnates.com/think-cryptocurrency-is-created-out-of-thin-air-australian-man-exploits-atm-glitch-to-create-500000/#comment-8480 Think cryptocurrency is created out of thin air? Australian man exploits ATM glitch to “create” $500,000
By Leon Pick on August 12, 2014 in News 3
Credit card- ATM
Meet Dan Saunders, the Australian who managed to trick his ATM into creating $500,000 out of thin air. The story has been covered extensively by Australian/New Zealand media.
The Sydney Morning Herald’s sub-headline reads: “Three years after Dan Saunders admitted he stole thousands thanks to an ATM error, he’s still waiting to be arrested.” A New Zealand website writes, “How he stole $500k and got away with it.”
In short, Saunders had been working as a barman making $700 a week. While drinking one night and in need for more cash, he stumbled upon a glitch in his National Australia Bank (NAB) ATM. Initially, he was able to withdraw up to his daily limit even in the absence of sufficient funds by tricking the system into making transfers between his credit card and savings accounts without initially recording a debit at the other end. Banks allow for the transfer of funds between accounts when an ATM is offline so as not to inconvenience customers.
The next day, however, balance is restored with the negative amounts updated. To deal with this, Saunders found that if he did this every night, and transferred more than he spent that day, the computer system will never catch on, thinking he has money in his account.
Dan Saunders
He tried winning back the cash through bets on the punt, but found that he was not very good. As long as he can return to the machine every night, fresh money can be made. It became like a Ponzi scheme, but keeping this up every night took its toll.
When he stopped making transfers for a few days, a $20,000 debit showed up on his savings account. In a panic, he transferred $60,000 from his Mastercard into it. But now the machine wouldn’t let him withdraw cash, likely due to the recent history. Presented with 5 options: savings, chequing, Mastercard, Visa and “Credit Card”, he selected the latter as the source for transfer. Surprisingly, the mystery source worked, despite the system saying “cancelled”. He was essentially able to withdraw unlimited amounts from a non-existent credit card to his other accounts. Saunders says:
“It occurred to me that this was not real money, but simply numbers flying back and forth. Basically, the bank systems thought that there was money in my accounts when there wasn’t. All I had to do was transfer enough funds to cover the funds spent and, as if by magic, the accounts were replenished or freshened each day.”
Though taught from a young age that stealing is wrong, and having kept clean his entire life, one thing led to another. He eventually lived up a life of private jets, limos, escorts, luxury hotels and gambling. He says he could have gone past $500k and the bank still wouldn’t have noticed. Expecting to be arrested any day, he is still waiting.
What does this have to do with virtual currency? It was noted on today’s reddit how millions in counterfeit $100 bills eluded federal investigators for years. The quality of these bills was impeccable. Bitcoin, by definition, does not allow for counterfeiting (unless there’s a 51% attack). We see that despite best efforts, one of traditional fiat’s disadvantages is its susceptibility to occasional creation out of thin air.
Also, one of CFPB’s warnings related to Bitcoin ATMs. We see the enormity of scale for potential fraud even with conventional ATMs.
Finally, one will recall that National Australia Bank sought to close accounts of Bitcoin traders, citing high risk. Bitcoiners will point to this incident as a reminder of where risks lie.
HAHAHAHA why do I don't drink! ;p
Devvie
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Topic: O0 Australian man exploits ATM glitch to “create” $500,000 (Read 2752 times)
