Bitcoin 'exit scam': deep-web market operators disappear with $12m

The administrators of a top deep-web marketplace have disappeared with over $12m worth of the cryptocurrency Bitcoin, it emerged last night, in what appears to have been an “exit scam”.

On the website Reddit, a user called NSWGreat, who identified him- or herself as a moderator for the site, raised the first red flag in a post to the DarkNetMarkets subreddit marked “EVOLUTION EXIT SCAM”.

The plot thickened as the evening went on. One user who goes by DeepThroat told Verto and Kimble on Reddit that they had 24 hours until he would start giving their identities to other users so that they could take revenge.

DeepThroat posted a screenshot purporting to be from the thieves, offering $5,000 in exchange for silence, which was posted to Reddit

Bitcoin 'exit scam': deep-web market operators disappear with $12m

There are a lot of people super angry about this and with one guy threatening to reveal their identities i wonder how they hope to get away with it? Lets face it some off the people selling on Evolution are probably not the kind of people you would want to mess with and they are the ones who have lost the most.

The reddit mega thread

Scam after scam with BTC. Ugh. Don't trust any of the exchanges. There's also the revelation that it offers no anonymity. I would only use it for small money xfers with really really established exchanges, and hope that when (not if) they go belly up or pull a scam, it's not when I have any BTC's in my wallet.

A Friendly Reminder: Bitcoin Is Not Anonymous
The Silk Road trial is proof positive that bitcoin is not (and has never been) anonymous

a reply to: Blackmarketeer

It was a DarkNet drug website, most of them are scams, especially if you have to store your coins on a wallet held by the server. And the fact that these drug websites use Bitcoin proves that's it's anonymous enough to trade illicit drugs. The trick is preventing anyone from connecting your real world identity to your address, which isn't very hard if you know what you're doing. Bitcoin is as anonymous as you want it to be, depending on how much energy you want to spend on staying anonymous.

It appears that bitcoin has no hope for the future with its reputation for illegal activities, the 650,000 bitcoin theft from the Mt. Gox exchange, and the auctions of 100's of thousands of bitcoins confiscated by the feds. The feds will probably start using civil forfeiture laws to confiscate large coin holdings by people or people trying to convert their holdings to fiat currency because of the coins association with illegal activities.

The only thing bitcoin can do is drop in value. IMO, it will have been reduced to less than 1 USD in a year or two. It may be replaced by another more resilient digital coin.

Many of these exchange hacks where coins are lost are probably thefts by the exchange itself, no doubt. With the anonymity of digital currencies, theft is quite easy and very difficult if not impossible to trace.

a reply to: ChaoticOrder

It wasnt just a drug market, Evolution sold lots of other stuff (most of it illegal). But there were also many legal things sold on there as well.

Third Party Doctrine

originally posted by: ChaoticOrder
The trick is preventing anyone from connecting your real world identity to your address, which isn't very hard if you know what you're doing.

And is much, much harder than advertised if the NSA knows what it's doing (hint: it does).

The fact that they routinely, with the forced cooperation of Internet service providers, collect and retain tons of metadata from all over the Internet makes true anonymity a lot more difficult to achieve than anyone can ever really know.

And that's just the NSA. They are hardly alone in their efforts, and more than a few governments monitor Internet communication even more thoroughly through "national filters", "firewall" loggers, false proxies, compromised Tor nodes and other schemes.

Combine that with the self-journaling characteristics of Bitcoin's blockchains, and what results is a phenomenon that can turn the Internet into the greatest sting operation the world has ever known.

Caveat Eludor.

originally posted by: eManym
It appears that bitcoin has no hope for the future with its reputation for illegal activities, the 650,000 bitcoin theft from the Mt. Gox exchange, and the auctions of 100's of thousands of bitcoins confiscated by the feds. The feds will probably start using civil forfeiture laws to confiscate large coin holdings by people or people trying to convert their holdings to fiat currency because of the coins association with illegal activities..

Well, this issue and similar is nothing new to Bitcoin. Almost what you end up expecting if not careful. Maybe the fights may go after Bitcoins explained, so far they seem to be invested into it in other ways.

The only thing bitcoin can do is drop in value. IMO, it will have been reduced to less than 1 USD in a year or two. It may be replaced by another more resilient digital coin.

Then there would have to be something that can stand up to it, so far there's nothing. Even Litecoin doesn't have the same resilience.

Many of these exchange hacks where coins are lost are probably thefts by the exchange itself, no doubt. With the anonymity of digital currencies, theft is quite easy and very difficult if not impossible to trace.

Actually it can be tracked, buy block chain addresses for example. As it's not as anonymous as it seems. Encryption also attracts being investigated by agencies.

a reply to: PhoenixOD

Are people ever going to wake up and realize that online bit coin type currency was designed to be a scam?

originally posted by: FalcoFan
a reply to: PhoenixOD

Are people ever going to wake up and realize that online bit coin type currency was designed to be a scam?

No, there is always the gullible that lose money in scams like this.

originally posted by: dreamingawake

originally posted by: eManym
Many of these exchange hacks where coins are lost are probably thefts by the exchange itself, no doubt. With the anonymity of digital currencies, theft is quite easy and very difficult if not impossible to trace.

Actually it can be tracked, buy block chain addresses for example. As it's not as anonymous as it seems. Encryption also attracts being investigated by agencies.

With a third party mixing service with servers in an undisclosed location. The coins can be made practically untraceable.

a reply to: dreamingawake

Each bitcoin transaction can be tracked, from what I can understand, however a wallet can be anonymous if someone really knows what they are doing.

After MtGoX, where many blindly trusted a 3rd party with their 'coins', those with interest in Bitcoin should have taken note and improved their security. Most of those who lost coins in this were likely foolish and did not learn the lessons from MtGoX and the Silkroads. No doubt the alphabet is busy trying to find those who use the dark web to turn a profit in this drug war.

The bitcoin is still sitting around $250. We'll see what happens.

originally posted by: FalcoFan
a reply to: PhoenixOD

Are people ever going to wake up and realize that online bit coin type currency was designed to be a scam?

It wasn't designed to be a scam. Its just that certain types of transactions using Btc requires a certain amount of trust from either the buyer or seller. Scammers just take advantage of this trust relationship.

With the evolution site funds would be put into escrow until the buyer received the goods. This protected the buyer and forced the seller to provide a very good service. Unfortunately the people controlling the escrow ran off with the money. Bearer Bonds would suffer from the same drawback if people used them as money.

But there's no Mr Big who invented bitcoin and is scamming people.

a reply to: Majic



I think you give the NSA to much credit.

They cant even stop a bunch of dim witted barbarians running off to join ISIS......

originally posted by: eManym
It appears that bitcoin has no hope for the future with its reputation for illegal activities, the 650,000 bitcoin theft from the Mt. Gox exchange, and the auctions of 100's of thousands of bitcoins confiscated by the feds. The feds will probably start using civil forfeiture laws to confiscate large coin holdings by people or people trying to convert their holdings to fiat currency because of the coins association with illegal activities.

The only thing bitcoin can do is drop in value. IMO, it will have been reduced to less than 1 USD in a year or two. It may be replaced by another more resilient digital coin.

Many of these exchange hacks where coins are lost are probably thefts by the exchange itself, no doubt. With the anonymity of digital currencies, theft is quite easy and very difficult if not impossible to trace.

Drop in value? IMO, it will continue to climb in value.
There are various reasons for this, but chief among
them is venture capital. Coinbase has taken in VC
to the tune of $80 million. $75 in the single largest
venture-capital fundraising by a bitcoin-startup.

Investors included banks and the New York Stock
Exchange, apparently the first time any traditional
financial institutions have taken direct stakes in
a bitcoin enterprise. Therefore, I trust safeguards
are in place, and I keep a few coin in Coinbase.
But I also keep coins on a USB drive running the
Electrum Portable software (which I don't need
to trust), also on some paper wallets (which is
my cold-storage method).

Think of Windows vs Unix.

Bitcoin is like Unix, it will never go away and it
will never be completely mainstream.

The real value of Bitcoin is the blockchain.

Not Stopping Anything

a reply to: crazyewok

I'm sure they're happy to have you believe that, but the role of the NSA is gathering and analyzing information, not law enforcement or military action.

They do, however, work with and provide information to customers and partners who are responsible for taking action, hence my cautionary advice for those who fancy themselves beyond reach.

They are not gods and they don't know everything, but surveillance is their day job, it's what they think about, it's how they spend their entire careers in most cases, doing it better is how they impress their bosses and move up the ladder, they have their fingers in every pie in every country, have resources and budgets so enormous they need to be classified, and it is unwise to underestimate them.

And, lest we forget, the NSA is only one of many intelligence organizations which actively monitor all forms of communication, and every country has their own equivalents -- some of them very capable and well-funded -- so it's not just a matter of outsmarting the NSA, or the CIA, or the FBI, etc.

As for preventing would-be jihadists from joining the Islamic State, I suspect there's less interest in preventing social misfits from heading off to Syria or wherever than killing them once they get there, and very little interest in keeping them around to wage jihad in their home countries. Thus new recruits will keep shipping themselves off to the battlefield, and will keep learning firsthand the grim realities behind the romantic ideals of becoming a Soldier of Allah.

But that's tangential at best to the question of the "Evolution Exit Scam", so I'll leave it at that.

a reply to: wasaka

Therefore, I trust safeguards are in place, and I keep a few coin in Coinbase.

Yeah and i trusted mtgox the worlds largest btc exchange. I lost 1000's, no offense but only a fool keeps btc in an online wallet when you can just keep it on a pen drive and backed up somewhere.

a reply to: PhoenixOD

Its all 'fake' money anyway and doesn't even exist, except in 'virtual world'. The Company could just take themselves offline and any other info relating to them and it would be like they never existed. Anyone who has any documents, well they wouldn't be able to do anything either, even if there is an address for the Company... that Address can easily become something else and the people involved could probably change their ID's or just go off grid with all the cash!

Everything you see on the Internet is an Illusion.

It doesn't exist until you boot up your comp and connect to the net!

If the Net was to go down tmrw, well.... you get the picture!

a reply to: TruthxIsxInxThexMist

Everything you see on the Internet is an Illusion.

It doesn't exist until you boot up your comp and connect to the net!

Just the same with any fiat currency you have in the bank. Theres not a little box somewhere with your name on it with all the cash from your account in it. Its all just numbers on a computer.

a reply to: PhoenixOD

Oh,yes,I'm sure that they are trustworthy.

BitCoin was going up before this scandal. Might be a good time to buy.

What is the typical broker cost per transaction to buy into BC?

Can it be bought and sold like a day trade?

BTW Person to person lending typically yields 10% per annum to big (10s of thousands of dollars) investments. The last article I read said the big banks want in on P2P lending now.

www.forbes.com...