The history of Bitcoin and other cryptocurrencies, despite their young age, is very rich in events and incidents - like any one associated with big money that can very easily change owners. This new technology, which is gaining more and more popularity every day, attracts not only respectable and law-abiding citizens. It is possible that the “dark side” of the cryptocurrency economy is in fact the underwater part of the iceberg, which is several times greater than the visible activity on exchanges, exchangers and numerous stores that accept Bitcoin for payment.
As you know, one of the main distinguishing features of cryptocurrencies in relation to fiat currencies is maximum anonymity. And it attracts not only hackers, but also "ordinary" scammers and swindlers who prefer to remain in the shadows when making doubtful legal transactions. It was the emergence of Bitcoin that made possible the emergence of black Tumbler trading illegal goods online, 24 hours a day, around the world. But, as it turned out, law enforcement agencies were well prepared for the new challenge. After several high-profile arrests of the owners and clients of these resources, most of the most famous black Tumbler were closed. Another reason for the high criminal activity around cryptocurrencies is the poorly developed security infrastructure and the carelessness of the majority of users. It is psychologically difficult for people to get used to the fact that money can be stored not in a bank account (even with online access), but in ordinary files on the disk of a home computer.
In the four years that have passed since Bitcoin became known to the general public, the amount of funds lost in the world of cryptocurrencies due to various kinds of illegal activities has long exceeded a billion dollars. Tens of thousands of people said goodbye to their savings, “rewarding” scammers and crackers who attacked various exchanges, online wallets and other resources that use cryptocurrencies. Others bought non-existent hardware or cloud mining contracts or were unable to get mined coins from closed pools. Still others invested in stock exchanges and funds, which turned out to be financial pyramids. Many have lost their bitcoins at online casinos that are banned in their country. There are probably tons of unrecorded cases of fraud, as well as information about scams that is extremely difficult to prove or verify. Therefore, all these numbers are most likely just the lower bound. In reality, the size of the losses in the cryptocurrency community can be much higher.
The "dark" side of cryptocurrencies
Cryptocurrencies, mainly Bitcoin, are very popular on various services of the "dark network" - DarkNet - and are the main way of making payments there. This is due to the fact that users of such sites primarily need anonymity and uncontrollability. It is quite obvious that some of the first to start using bitcoin seriously were the sellers of weapons, drugs and other "delights" of the black market. A distinctive feature of such sites is that they cannot be accessed in the usual way - using a traditional browser. To be able to plunge into the depths of the darknet, you need to install special software - for example, Tor. With the development of cryptocurrencies, black Tumbler have received a new breath. The method of transferring money anonymously, and the very idea of a decentralized currency, has greatly reduced the possibilities of control by governments and special services.
"Silk Road" of the darknet
The most revealing story was the story of the Silk Road online market, which everyone who deals with cryptocurrencies knows about. The main feature of the site was the use of Bitcoin, which for most people was then a "dark horse", and the ability to pay for purchases through the anonymous Tor network. Silk Road Silk Road gained real popularity precisely due to the opportunity to buy various "substances", and in addition to them, pirated software, stolen goods and a huge number of other illegal goods were sold.
But the US intelligence services also turned out to be not a bastard - after almost two years of investigation, in October 2013, the owner and administrator of Silk Road, William Ross Ulbricht, was arrested, and later several of his employees and dealers. The creator of the "Silk Road" observed a certain code of ethics - in particular, he prohibited the sale of weapons and the services of killers. But this did not help him to mitigate the sentence - he received two life sentences and several decades in addition.
Silk Road Followers Such a tidbit as illegal trade could not remain intact. First, Silk Road 2.0 took over the baton, and then several other similar sites. However, the reincarnation of Silk Road turned out to be a trap for the secret services. One of the confidants of the creator of the site, Blake Bentall, who worked from the very beginning, turned out to be an FBI agent. So they wanted to catch the main dealers, and they did it. Another follower of Ulbricht's idea was the Evolution black market. But he did not live long either. In March 2015, the administrator of this resource suddenly disappeared, taking with him about $ 12 million. He argued this with some "technical problems", and a few days later the site simply went offline along with the money of sellers and buyers. This event caused panic in the black market, but information that the secret services had a hand in the closure did not receive confirmation.
An interesting point is that among the many illegal Tumbler on the DarkNet, it was Evolution that enjoyed the reputation of being the most reliable. Here, a three-way signature was used for each payment - the transaction had to be confirmed by both the buyer and the dealer, and the administration of the forum. Another "trick" of this market is that it essentially lacked a moral framework when it came to the type of product. On Evolution, one could purchase a much wider range of goods and services, including compromising evidence. The next closed online marketplace Sheep Marketplace. They say that this happened due to a hack, which is very doubtful, since the withdrawal of funds from the resource was stopped a week before it. The amount stolen is also impressive - more than 150,000 BTC for a total of about $ 40 million. In addition to the resources listed above, the online marketplace Agora can be distinguished. It is now the largest market for drugs on the DarkNet and is rapidly growing in popularity. There are also "specialized" black Tumbler that are entirely devoted to one type of illegal trade. For example, the Darkleaks website uses its own blockchain to transfer various private and confidential information. It was the black market Darkleaks that became one of the first to practice using the blockchain, similar to the Bitcoin blockchain, for other needs not related to financial transactions.
Stock scams and robberies
Back in 2011, Bitcoinica and Tradehill, the largest exchanges at that time, fell the first victims of hackers, but the details were almost not preserved - then Bitcoin was little known and these incidents were hardly covered in the media. In 2012, a successful attack on BTC-e codes was carried out, which paid the losses out of its own pocket. The first Bitcoin price crash is associated with the June 2011 MtGox hack. But compared to the final crash of this exchange, it seems like a minor episode. The bankruptcy of MtGox in early 2014 can rightfully be called the “crime of the century”, and not only in the narrow world of cryptocurrencies. 650,000 BTC - about $ 480 million as of February 2014, and now $ 130 million - disappeared without a trace, and after a year and a half no success was achieved in solving the case. Who should be responsible to tens of thousands of clients? Mark Karpeles, darknet sharks behind his name, or an unusually clever group of hackers? So far, this is the same rhetorical question as, for example, "who killed Kennedy?" But many smaller hacks also happened - at the beginning of this year, as a result of a hacker attack on the largest exchange Bitstamp, nearly 20,000 BTC were stolen, which then amounted to more than $ 5 million, after which the exchange temporarily suspended operations to audit the security system.
Already this year, Bter, a major altcoin exchange, has been screwed twice. First, about 50 million NXT was stolen, which was equivalent to about $ 1.65 million. However, soon the exchange administration managed to "negotiate" with the hacker, and almost the entire amount, with the exception of 8 million NXT, was returned. The second blow was fatal - more than 7,000 BTC were stolen from an insufficiently "cold" wallet. As a result, the exchange was forced to close, distributing balances of assets to clients. Until that time, the Chinese Bter maintained a reputation as one of the most reliable altcoin exchanges, and keeping funds in "cold wallets" was considered quite secure and reliable. Information about thefts from cryptocurrency exchanges is often received, but in fact it is very difficult to verify whether this is really the result of hacker attacks. Perhaps the unscrupulous creators of the exchanges themselves conceived a scam and brought it to life, “comforting” the investors with the fact that a hack had been committed. Or maybe some of the hacking news is just an attempt to denigrate competitors and a way to get attention? However, the fact remains that money from cryptocurrency exchanges disappears from time to time, and their clients need to be careful.
Not only exchanges can be hacked, but also pools. Once one of the five largest pool, 50BTC.com was considered reliable, but on October 18, 2013, it stopped paying rewards to miners. For some time, the administration talked about technical problems, and then announced a hack, as a result of which about 1,500 BTC were stolen. The pool lost almost all miners and closed after a while. Whether there was actually a break-in - no one knows. In June 2013, on a large Litecoin mining pool - ltcmine.ru - as a result of the owner's negligence, after an incorrect wallet update, amounts exceeding the real ones by hundreds of times were credited to clients' balances. The first lucky ones, seeing the money “fell from the sky”, immediately took it out, leaving everyone else at the bottom of the trough. In total, up to 13,000 LTC was lost. However, there are other versions of this case.
Pyramid builders and air sellers
Cryptocurrencies, like any other complex and incomprehensible technology, are surrounded by a host of the most excellent myths. Poorly informed people often refer to Bitcoin as a pyramid scheme.