BitCoin Related Site Shut Down

[Number Six]

This one is called "Silk Road": http://www.nytimes.com/2013/10/03/nyreg ... .html?_r=0

Like they weren't warned?

[Burzmali]

This one is called "Silk Road": http://www.nytimes.com/2013/10/03/nyreg ... .html?_r=0

Like they weren't warned?

The interesting bit in this story was the first step, how did the authorities locate a machine hosting a tor hidden service? Depending on the answer, this court case could validate a lot that has been coming out of Snowden's releases.

[AndyK]

It's not necessary to use sophisticated eletronic means to track down an Internet-based drug vendor.

- There could have been a rat for whatever reason.

- Drug shipments have to come from somewhere and be shipped somehow. There are some pretty smart dogs patrolling airports, post offices, etc sniffing for explosives and drugs.

- Someone could have started spending a lot of money which had no reasonable source.

- Bank accounts might not have tied in with legitimate Social Security numbers.

[littleroundman]

This one is called "Silk Road": http://www.nytimes.com/2013/10/03/nyreg ... .html?_r=0

Like they weren't warned?

The interesting bit in this story was the first step, how did the authorities locate a machine hosting a tor hidden service? Depending on the answer, this court case could validate a lot that has been coming out of Snowden's releases.

There's no need for any Burzmali-esque conspiracy theories here.

All it took was a couple of years worth of patience and perseverance:

http://motherboard.vice.com/blog/everyt ... get-caught

[The Observer]

Another article on the Silk Road affair.

[fortinbras]

Bitcoin is also being used as the currency demanded by a particularly nasty bit of malware called CryptoLocker. Evidently it infects computers (Windows, not Apple) primarily by pretending to be a file in an email message. Once in, it quickly encrypts all the files so they are unreadable, and then announces on that computer that unless something like $300 in bitcoin is posted to an account within 3 days the user will never be given the key to open his files.

It appears that the people behind this did an appallingly good job with malware programming; so far no one has come up with cure. Estimates are that more than a quarter million computers have fallen victim and that the evil genius[es] behind CryptoLocker have scooped up many millions of dollars. Their whereabouts is unknown but a guess is Eastern Europe or Russia.

http://www.zdnet.com/cryptolockers-crim ... &ttag=e539

As Bitcoin is their chosen medium of exchange, govts might go to the trouble of squeezing the Bitcoin operation to follow the money.

[Jeffrey]

In case ya'll hadn't heard, the successor to Silk Road's moderator has already been arrested.

http://www.wired.co.uk/news/archive/201 ... m=facebook

[notorial dissent]

It was reported today that Mt Gox, reputedly Bitcoin's most important business has gone poof, along with about $375M(740,000 bitcoin) in value, about 6% of bitcoin. Value has reportedly dropped about 22% as a result.

[Pottapaug1938]

I seem to recall Harvester telling us what a great thing bitcoin was....

[notorial dissent]

Yeah, along with his not having to pay taxes and how wonderful his life was, didn't believe any of that either.

In fairness, this doesn't seem to be against bitcoin so much as just a plain old fashioned case of embezzlement?? maybe, but still points out large and bold one of the inherent weaknesses of all that is bitcoin.

Yet, if I really understand the system, which I don't pretend to, the "missing" bitcoin should still exist out there, just in the thief's pocket, so the aggregate value shouldn't have changed, except for the people who got taken, so I really don't understand the value drop, unless it reflects confidence in the medium????

[Jeffrey]

ND is missing the point, it's not the missing bitcoins that matter, it's the missing cash.

[notorial dissent]

Jeffrey, I would suggest you reread what I have written, I think "gone poof, $375M, in the thief's pocket, embezzlement", pretty well sums up what I do get.

What I don't understand, is why if bitcoin is such a "secure" currency, a theft like this would affect it since in theory the "money" is still there. Unless, of course, it isn't all it is cracked up to be???

[Jeffrey]

The best analogy is to think of it as a bank not an exchange. People deposited coins and had accounts for either withdrawing cash or coins at some point. Essentially they lied both about how many coins they actually had availabe and how much cash they had to cover the deposits.

The currency itself is secure as you point out, the problem is when you try to convert it to cash.

[Lambkin]

Why is this thread in the MLM forum? BitCoin is not an MLM scam. I don't think BitCoin is properly called a scam at all, although it's probably a good way to get scammed.

[Jeffrey]

http://www.youtube.com/watch?v=SAtzCgGDqYE

I think the meta structure of the Bitcoin scheme ended up being functionally a MLM / Ponzi scheme as revealed by the MTGox debacle; it should remain as MLM at least as tongue in cheek.

[Jeffrey]

http://www.reuters.com/article/2014/02/ ... 8820140227

(Reuters) - Manhattan U.S. Attorney Preet Bharara has sent subpoenas to Mt. Gox, other bitcoin exchanges, and businesses that deal in bitcoin to seek information on how they handled recent cyber attacks, a source familiar with the probe said on Wednesday.

http://www.reuters.com/article/2014/02/ ... 7U20140227

What can you do if you deposited bitcoins at Mt. Gox, which shuttered on Tuesday with little explanation? Probably not much.

It'll be interesting to see if any arrests come of this. Reuters seems to give credence to the theory that MTGox lost it's deposits due to hackers. I'm siding with the cynics on this one, the hacking claim doesn't seem technically plausible and the companies behavior strongly points to a snatch and run.

[notorial dissent]

I would say it is a case of a great deal too little way too late at this point. My understanding was that MtGox was operating out of Japan, so I don't see how the US Attorney thinks he is going to get anything out of any of them. I wasn't aware of any of the bitcoin exchanges operating within US jurisdiction to begin with, so this does raise a number of questions to me.

This is the first I have heard of the "hacker" scenario, and I have a hard time with that for a variety of reasons, not the least of which, is that this looks ever so much more like a good old fashioned embezzlement by someone on the inside.

[Gregg]

What can you do if you deposited bitcoins at Mt. Gox, which shuttered on Tuesday with little explanation?

You can brag about how great it is that BTC is outside of any governmental control!

[notorial dissent]

Cry a lot and kiss it buh bye!!!!

[GlimDropper]

Another Bitcoin "Bank" gets robbed:

Bitcoin bank Flexcoin shuts down after massive theft

Flexcoin, a site that described itself as the “world’s first bitcoin bank,” has closed after it got hacked and all of the bitcoins it had placed in online storage were stolen, the site recently announced.

Flexcoin was attacked and robbed March 2 of all coins in its “hot wallet”—a term that refers to bitcoin online storage—the site said in an announcement posted to its homepage. The attacker made off with 896 bitcoins, which at current prices across several exchanges would amount to roughly $600,000.

<Snip>

Flexcoin directs affected users to its terms of service. According to that document, Flexcoin transactions were carried out using HTTPS encryption but the company “is not responsible for insuring any bitcoins stored in the Flexcoin system.”

That last statement sorta jumps out at you. I mean would you deposit real money in a bank that refused to be responsible for returning that money to you?

And now the CEO of another bitcoin exchange was found dead.

And (yet another) of Harvester's dreams may be crumbling. Japan is preparing to regulate and tax bitcoin transactions.