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Bitcoin Heist: Millions Vanish from Online Black Market

By - Source: Tom's Guide US | B 18 comments
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A secretive online black market was robbed over the weekend, costing its users possibly as much as $100 million in Bitcoins — and some say the thieves were the marketplace owners themselves.

After the FBI shut down the largest online black market, Silk Road, in October, a number of other black market sites filled the vacuum. One was a narcotics bazaar called Sheep Marketplace.

Like Silk Road and most of its ilk, Sheep Marketplace was only accessible via Tor, the anonymizing software designed to protect users' Internet anonymity. Furthermore, all transactions were in Bitcoin, a decentralized online currency that is difficult to trace.

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On Sunday (Dec. 1), Sheep Marketplace abruptly closed down, claiming one of its vendors by the name of EBOOK101 had exploited a security vulnerability to steal $6 million in Bitcoins. Most, if not all, of that money belonged to the site's numerous users, who used it to buy and sell their dubious wares.

"This vendor found bug in system and stole 5,400 BTC [about $5 million]—your money, our provisions, all was stolen," reads the message posted on the now-shuttered site's homepage. "We were trying to resolve this problem, but we were not successful."

Despite the message's promise that "all of current BTC will be distributed to users, who have filled correct BTC emergency address," it doesn't appear that any Sheep Marketplace users have received refunds.

That's all of the theft that can be confirmed. But the story doesn't end there.

Some believe that the thieves were Sheep Marketplace's administrators themselves, and that the whole marketplace was an elaborate scam.

A website called sheepmarketscam.com, set up before Sheep Marketplace's closing, lists what it claims to be evidence suggesting that the theft was an inside job.

Sheep Marketplace users weren't able to withdraw Bitcoins for up to a week before the site's shutdown, according to several Reddit users. Deposits, however, were still possible.

The admins blamed the problem on a technical glitch and said it would be fixed within a few days. They then said the problem was fixed, though on Reddit, former Sheep Marketplace users say that was never the case.

By the time of the site's shutdown on Dec. 1, withdrawals still hadn't been enabled.

Sheepmarketscam.com alleges that many of Sheep Marketplace's higher-ranking administrators and vendors had drastically slashed prices, allegedly to encourage as many people as possible to deposit money.

And a public but anonymous record on a website called Blockchain.info, which tracks Bitcoin transactions, shows a transfer of 39,918 Bitcoins into a wallet associated with Sheep Marketplace at some point over the weekend.

At the current Bitcoin exchange rate, that's more than $43 million — far more than the originally reported 5,400 BTC, or $5 million.

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Finally, a pair of Reddit users say they've been chasing a series of Bitcoin transactions that they claim originate with the Sheep Marketplace theft. The amount involved is more than 96,000 BTC, almost $100 million, and has been moved from wallet to wallet several times over the past several hours.

Meanwhile, other anonymous online markets on the so-called "dark web" are also affected by Sheep Marketplace's closing.

A site called Black Market Reloaded blocked new members, saying on its forums that Tor-based anonymous websites aren't designed to handle large volumes of users, and then announced a shutdownshut down as well, saying the site needed to close for maintenance.

"Sheep went down and BMR can't stand," wrote a Black Market Reloaded admin called Backopy in a forum post dated Dec. 1. In the post, Backopy says that people will be given the opportunity to withdraw their funds before the closing.

"Don't worry, we don't rip [off] anyone and will be back stronger than ever," wrote another administrator called LeContog in the same thread.

Email jscharr@techmedianetwork.com or follow her @JillScharr and Google+. Follow us @TomsGuide, on Facebook and on Google+.

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  • 2 Hide
    house70 , December 4, 2013 4:48 AM
    Can't say I feel particularly sorry for them. Like they say, if you get in the trough you might get eaten by the pigs.
  • 0 Hide
    meowmix44 , December 4, 2013 4:58 AM
    The silk road is back and strong, they waited for the FBI to back off then resumed their usual business.
  • 1 Hide
    palladin9479 , December 4, 2013 5:02 AM
    And this is the downside to using unregulated currency like BTC. It's decentralized and unregulated so governments can't do anything with it, they also can't protect you from the people who will scam you.
  • Display all 18 comments.
  • 1 Hide
    SirGCal , December 4, 2013 7:09 AM
    Protect them? From a narcotics site? Their money was bunk the second it went online. I just don't understand the 'drug' people, feeding off the weakness of others for a buck. Makes me sick. But then to think that the same people stole from their buyers... makes me laugh. That's exactly the same mentality that got everyone to that site to begin with so where's the surprise?!?
  • 4 Hide
    happyballz , December 4, 2013 7:16 AM
    @Palladin
    And how is this any different from government currency? Like they would be able to find your money if stolen from the house, bank or better yet government's vault. "Regulated" has nothing to do with security of your money or them being able to "protect" your cash on-hand. FDIC only can "guarantee" up to $100k which is peanuts in the grand-scheme of things.
    The only difference is bitchoin "banks" if you will... have absolutely no credibility and are not reliable -more to do with the place than the currency.
  • 1 Hide
    Shaun o , December 4, 2013 8:04 AM
    There will always be people ready to con you out of your money be it hard earned, gifted ect, collected.

    Greed, power, corruption, theft follow it
    Any form of money, or currency.
    Welcome to the world of "Computer says no Bitcoin."

    Like all things in life the only faith and trust you have is in just yourself. You just like to think you have it in other people.
  • -1 Hide
    spartanmk2 , December 4, 2013 8:24 AM
    Suckers.
  • 0 Hide
    p05esto , December 4, 2013 8:57 AM
    Yea, can't say I trust bitcoins at all... with that said I WISH I picked up a hundred of them at the low and sold today. Grrr that really sucks. Woulda Coulda Shoulda
  • 2 Hide
    Cazalan , December 4, 2013 9:48 AM
    All currency is virtual at this point. Your local bank and credit cards just have some basic protections built in against theft.

    With any investment you never want to have it all in 1 place.
  • -1 Hide
    Wixman , December 4, 2013 10:10 AM
    Just got ripped off by their drug dealer. Boohoo. Not a surprise... nor should it be. It's so easy to do from behind a computer that people tend to forget that they're, technically, breaking the law. If you have to use an ANONYMIZER to do it, it's pretty damn likely that you shouldn't be.
  • 0 Hide
    Pailin , December 4, 2013 11:21 AM
    I think you are far wrong Wixman, jumping on the media inflated OMG Bad Stuff "sells news papers" POV as your perception of What Is, that point of view is truly shortsighted. Lots of legitimate businesses also operate there.

    Though to your point in meaning of those particular marketplaces within TOR - not used those and could be right in those Particular instances.
    - can also argue that too:
    Even then you have corrupt Govs telling you what you can and cannot do based on laws created by them as Wrong as Nixon wanting to clear away Peace Protestors during the Vietnam War and making cannabis illegal to do so as his administration noticed a high % of them smoked it. (before making cannabis illegal in law he could not legally remove them)
    - people are looking for ways around what Should be Illegal oppression.

    - Yet you appear to stand Beside such acts and happy to be told what you should Think by your corrupt officials?
    I feel sorry for you mate :( 



    The official banks and governments are already ripping us off Big Time for amounts that make this look like pocket change. If You did what they do now, you would be thrown in jail So Fast !!!!!!!!

    - The banks lend FAR more out that they have to lend.
    - Governments print money when they feel like it, UK did this not so long back - raising inflation (same as taking money directly out of your account).

    You or I do those things = Extremely illegal. But that is the way the system works on a day to day basis.

    People are looking for ways to get away from that too. Something like BitCoins could be a freedom from that.

    Wake up and create your future the way it Should be and stop living as pawns to greedy idiots.
  • 0 Hide
    gm0n3y , December 4, 2013 12:03 PM
    Given that no servers are truly safe from hackers, it's hard to imagine putting any sizable amount of money into bitcoins. All it takes it one breach to lose everything. Bitcoins are a great idea, but I just can't see them working in the long term.
  • 0 Hide
    trekker9876 , December 4, 2013 12:48 PM
    bitcoins is nothing but a ripoff anyway, I laugh every time I see this.. it happens every week.
  • 0 Hide
    coolitic , December 4, 2013 1:00 PM
    I dont think people are gonna care about some illegal dudes losing their money.
  • 0 Hide
    husker , December 4, 2013 2:01 PM
    @Pailin
    Yeah, I guess if you don't recognize the authority of established governments, then you can call any business "legitimate". I really have to laugh at your argument that it is somehow oppressive that governments can print money while individuals can't.
  • 2 Hide
    anti-painkilla , December 4, 2013 2:12 PM
    @husker He is pointing out that the governments print money to solve all their problems which using basic economics hurts everyone by lowering the value of each dollar.
  • 0 Hide
    palladin9479 , December 4, 2013 2:17 PM
    Sorry guys but no. FDIC insures your bank deposits up to $250,000 and no matter how you want to paint them, bank executives / owners can't just take your money from the bank and walk away with it. BTC is a currency used for many things not just illegal drugs from shadowy sites, there are many exchanges that don't require anonymous access to get to. Since it's an unregulated currency there is nothing a law enforcement entity can do about thefts like this.

    Also don't whine when you lose a bet. Stock / fund markets are just legalized gambling, your betting that the price is higher when you sell then it is when you buy. Someone is betting that it isn't. Often the high rollers have stacked the odds against you.
  • 0 Hide
    hydac7 , December 4, 2013 5:09 PM
    Never have more coins than you can afford to loose I always do small sums and cash in asap :) 
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