Anonymous website disappears with $100M in Bitcoin

Anonymous website disappears with $100M in Bitcoin

Summary: Illegal goods trading platform, Sheep Marketplace, shuts down with a Bitcoin haul estimated to be as large as US$100 million. It is unclear if hackers or the site owner absconded with the money, but signs point to a scam.

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A website selling contraband goods has disappeared with a Bitcoin haul that some estimate could be worth as much as US$100 million. 

Sheep Marketplace, which emerged after the Silk Road website was taken down, shut down over the weekend claiming to be victims of a thief who took off with its cache of 96,000 Bitcoin, worth about US$107.8 million today, or about 1 percent of the world's Bitcoin pool.

The administrators of Sheep Marketplace on Sunday had posted a note on its site, stating: "We are sorry to say, but we were robbed on Saturday 11/21/2013 by vendor EBOOK101. This vendor found bug in system and stole 5400 BTC – your money, our provisions, all was stolen. We were trying to resolve this problem, but we were not successful. We are sorry for your problems and inconvenience, all of current BTC will be ditributed to users, who have filled correct BTC emergency adress. I would like to thank to all SheepMarketplace moderators by this, who were helping with this problem. I am very sorry for this situation. Thank you all."

There are doubts, however, that it was actually theft. In the days leading up to the site shutdown, vendors were unable to access Bitcoins contained in the site's wallet, while others began slashing the prices of their drugs and good. This led to suspicions the website was a scam and complaints were posted on Reddit, where most communications took place, before the site eventually shut down on Sunday.   

Sheep Marketplace said it would refund the money to Bitcoin users' emergency addresses, but no one on Reddit's SheepMarketplace indicated they received any money back.

According to a report by Business Insider, two Reddit users "SheepReloaded2" and "NodManOut"--in a subreddit detailing the theft--said they were tracking the person they believed to be responsible for the heist, and who was trying to offload a Bitcoin wallet--which, at one point, contained US$220 million. 

SheepReloaded2 said he had identified 96,000 Bitcoins being exchanged by the robber--through their blockchain--and was tagging all new wallets the thief was trying to create to rid his loot. Every Bitcoin generates a log, called "blockchain", which shows the history of all transactions associated with it. 

It would be difficult for the thief to offload a huge haul without revealing his identity, as major Bitcoin exchanges require proof of identity--implemented specifically to avoid money laundering instances. SheepReloaded2 said: "He has 1 percent of the world's Bitcoins. It's hard to clean and sell more than 4 or 5 BTC at a time."

It would also be difficult for Sheep Marketplace victims to regain their lost money. Commenting in the subreddit, Reddit user "kyerussell" rebuked anyone for thinking they could get their money back. "It seems that this subreddit is full of people that don't understand the fundamentals of bitcoin and somehow think that this'll result in people getting their money back. It won't. That's the point of bitcoin... You aren't going to get anything back. None of you are going to get anything back, and it's by design. This is EXACTLY how Bitcoin is supposed to work. Bitcoin would be fundamentally broken if you somehow got your money back."

Probably referencing the shady business and people a website like Sheep Marketplace would be associated with, SheepReloaded2 warned: "I won't find this guy. Somebody else will. I assume he'll be jailed, blackmailed, tortured or killed."

Topics: Security, Tech Industry

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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46 comments
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  • Looking more like Bitcoin is simply not a good currency.

    "Bitcoin would be fundamentally broken if you somehow got your money back."

    If that's true, it's looking more like Bitcoin is simply not a good currency. Without the ability to implement even basic protections, why should anybody use Bitcoin?

    Sadly, this is likely the future of Bitcoin. Because it's an easy thing for crooks to do, and there is no recourse.
    CobraA1
    • bitcoin theft

      Really, I would say it is exactly like black market cash.
      hayneiii@...
    • You're confusing currency with accounts.

      An account may have protections, insurance, etc. Currency has no such guarantee. Someone steals your US dollars, Euros, gold, etc... what protections are associated? Even if you find the thief, how do you prove the currency he has is yours? Even if you recorded the serial numbers, nothing says you didn't spend those exact bills (and, so, lost custody) between the recording and the theft.
      dh1760
      • Real banks have real insurance for real government backed currency

        Without a government backing them, with its central bank, depositd insurance provisions, hordes of bank inspectors and criminal investigators, courts and prisons, Bitcoins will never be a real currency.
        jjk308
        • It's not a bank!

          Um, it was a retail marketplace. If you give government and bank backed currency to a scam artist, what are your chances of ever getting it back?

          Please, please understand the difference between actual currency and the POSSESSION of said currency.
          aep528
      • This is more like a bank heist than a wallet theft.

        "Someone steals your US dollars, Euros, gold, etc... what protections are associated? "

        Most of my money is in a bank with insurance and various types of protections. I don't really carry very much physical money on my person.

        And with the scale of this Bitcoin heist, this is more like a heist of a large bank than theft of somebody's personal wallet.

        Large heists of banks are probably investigated, the crooks caught, and the money returned to the bank. I don't imagine a bank just blows off the loss if somebody were to grab most of their vault's worth of cash.
        CobraA1
    • Bitcoins not a good currency!?

      No better then any other form of cash. I take the cash out of your wallet. There is no way you are getting that cash back, must mean cash is not a good currency. In regards of who ever has it in there possession, owns it, it's exactly like cash.
      Guadalupe Sandoval
    • Criminals stealing from criminals...

      buying or selling contraband and illegal drugs is not something those users should expect law enforcement protection from! Interesting story, but "thief steals from criminals" seems business as usual.
      randysmith@...
  • Huh

    Guess that's what happens when your money isn't actually money.
    blarelli
    • money?

      Your right, it is more like gold, once it is stolen how can you tell whose gold it was?
      hayneiii@...
    • no such thing as money anymore

      yeah kinda like dollars and euros......not real money.....currency yes....money no
      Jimmy Petrick Sr.
  • Anonymous website disappears with $100M in Bitcoin

    I don't trust bitcoin yet. It may improve in time but for right now it seems there have been several cases of where someone takes the money and runs. Starting to look like Ken Hess was right about it.
    Loverock.Davidson
  • China banned Bitcoin

    Bitcoin, the virtual currency that has everyone’s attention this year, seems to have been dealt a major blow by the People’s Bank of China. The Chinese central bank has reportedly banned financial institutions in the world’s second-largest economy from handling Bitcoin transactions.http://bit.ly/1aCBaYZ
    Robertbrad
  • A Rebel currency, Fake names, The Internet, WHAT COULD POSSIBLY GO WRONG?

    LOL all the way to my real bank. Where I keep my real money.

    There is no disagreement, I'm sure, that it would be wonderful if human nature was dependable such that Utopian ideas like Bitcoin could actually flourish. But it isn't, and it won't ever be.
    Look at human history... Look at the news every day. We're not getting better, we're the same, lol. "There is nothing new under the sun"... Because of this, Bitcoin is, was, and will remain forever a quaint chuckle-worthy part of internet history.
    lujohnson
    • Better get back to your REAL cave with your REAL calf skin...

      ...so you can survive the winter.

      Everybody else is using FAKE money (Credit Cards, L/C, Treasury bonds, etc.) It's called "fiat currency" whose value is set by the general public via exchange rates amongst other "fiat currencies".

      And yes, we haven't change, on some things, but on others we are still human beings capables of failure.

      So know, go troll to a REAL medium like the telephone, the telegraph or the morning paper, while others here use new technologies to modern day problems.
      cosuna
      • BTW.

        Meant to say

        "And yes, we haven't change, on some things, but on others we have although we are still human beings capables of failure."
        cosuna
  • Correction

    There was no loss of $100 million. There was a loss of $0! Maybe those who feel they lost something here should go complain to the government agency that regulates black market trading in play money.
    Sir Name
    • Oh, there was a real money loss alright

      It takes real money or real goods to exchange for bitcoins.
      "You can get bitcoins by accepting them as a payment for goods and services or by buying them from a friend or someone near you. You can also buy them directly from an exchange with your bank account."

      The cost of fraud falls on the customers, not the businesses, unless the businesses are also customers.
      "Any business that accepts credit cards or PayPal knows the problem of payments that are later reversed. Chargeback frauds result in limited market reach and increased prices, which in turn penalizes customers. Bitcoin payments are irreversible and secure, meaning that the cost of fraud is no longer pushed onto the shoulders of the merchants."
      Dr_Zinj
      • re:

        A fool and his money are soon parted. These fools used real money to buy into a fake money Ponzi scheme that promised they would be able to buy illegal goods and services and illegally not pay taxes. They got exactly what they should have expected: no illegal goods or services delivered to their door and the loss of the real money they stupidly exchanged for fake money. If they ever do try to report a loss to any actual constituted authority, they should be laughed out of the building.

        People created governments to provide what they couldn't provide individually including an enforced system of rules to protect them from bad actors who would steal or do violence to them in the absence of any collective protections. If you hate the very thought of government, don't whine when someone even shadier than you takes your money.
        Sir Name
    • It's not play money anymore.... my friend...

      NT.
      cosuna