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The Snowden-Inspired, Bitcoin-Operated Online Murder Incorporated

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. (The flash dri­ve includes the anti-fas­cist books avail­able on this site.)

COMMENT: We have exam­ined the tech­no-lib­er­tar­i­an, Lud­wig von Mis­es milieu-affil­i­ated nature of the bit­coin phe­nom­e­non. Quite pos­si­bly devel­oped by ele­ments of Ger­man intel­li­gence and the Under­ground Reich, bit­coins are not only vul­ner­a­ble to “tape-paint­ing,” but can be stolen by hack­ers.

In future posts, we will under­score the extreme vul­ner­a­bil­i­ty of this vir­tu­al cur­ren­cy to theft.

A dis­turb­ing, per­haps pre­dictable devel­op­ment car­ries the Lud­wig von Mises/Hayek/Hoppe/Ron Paul phi­los­o­phy to a new lev­el.

 A benight­ed crea­ture using the name “Kuwa­batake San­juro” has cre­at­ed on online, bit­coin-fund­ed assas­si­na­tion net­work called “Assas­si­na­tion Mar­ket.”

A num­ber of thoughts come to mind in con­nec­tion with this:

  • “San­juro” was inspired to real­ize the project by the “dis­clo­sures” of Edward Snow­den.
  • The largest “bit­coin boun­ty” is on the head of Ben Bernanke, chair­man of the Fed­er­al Reserve, to whom Snow­den referred as a “cock­bag” in the 2009 online post­ing in which he advo­cat­ed the elim­i­na­tion of social secu­rity and a return to the gold stan­dard.
  • “San­juro” also has bit­coin boun­ties on the heads of  Pres­i­dent Oba­ma and Gen­er­al Kei­th Alexan­der, the head of the NSA.
  • “San­juro” sees his online assas­si­na­tion con­sor­tium as a real­iza­tion of lais­sez-faire mar­ket the­o­ry to pol­i­tics.
  • We have not­ed in the past that the the­o­ries of Hans Her­mann-Hoppe (dis­ci­ple of Lud­wig von Mis­es, stu­dent of Juer­gen Haber­mas, idol of bit­coin advo­cate R. Cody Wil­son) explic­it­ly reject democ­ra­cy. So does the Lud­wig von Mis­es Insti­tute, the epi­cen­ter for the eco­nom­ic the­o­ries of Ron Paul and Edward Snow­den. So does Peter Thiel, a bit­coin advo­cate and cap­i­tal­iz­er of Ron Paul’s 2012 polit­i­cal cam­paign. Thiel is also the largest stock­hold­er in Palan­tir, which appears to have devel­oped the PRISM soft­ware at the cen­ter of the Snow­den leaks. (Palan­tir CEO Alex Karp is also a stu­dent of Juer­gen Haber­mas.) “San­juro” takes this benight­ed phi­los­o­phy to its [per­haps inevitable] con­clu­sion.
  • The endgame of lib­er­tar­i­an phi­los­o­phy does indeed appear to be “anar­cho-fas­cism.”
  • The tech­no-lib­er­tar­i­ans war­rant seri­ous con­sid­er­a­tion as the “neue-wan­der­vo­gel.”
  • In an update, we learn that the alleged mas­ter­mind of the bit­coin-fund­ed Silk Road–the Lud­wig von Mises/Ron Paul devo­tee Ross Ulbricht–allegedly sought the con­tract mur­ders of six people–five more than orig­i­nal­ly stat­ed. It is inter­est­ing and rel­e­vant that both Ulbricht and “San­juro” pro­ceed from an anar­cho-lib­er­tar­i­an per­spec­tive, decry­ing slav­ery AND democ­ra­cy, ulti­mate­ly arriv­ing at a lethal advo­ca­cy posi­tion, alleged­ly so in Ulbricht’s case. Again, these peo­ple are indeed the “neue-wan­der­vo­gel.”
  • Inter­est­ing­ly, Ulbricht was appar­ent­ly think­ing of mov­ing to Domini­ca, the island nation tar­get­ed by a Nazi/white suprema­cist inva­sion known as “The Bay­ou of Pigs.” Ulbricht’s 2012 Pres­i­den­tial selectee Ron Paul was appar­ent­ly involved in that gam­bit, along with Paul’s long-time asso­ciates David Duke and Storm­front cre­ator Don Black.
  • As “Pter­rafractyl” informs us: “Whether or not Ulbricht was in a part­ner­ship with Satoshi Nakamo­to, one thing is clear from this arti­cle: Ross Ulbricht had a HUGE per­cent of the total bit­coin sup­ply. At least for an indi­vid­ual. The FBI received 144,336 bit­coins off of just one of Ulbricht’s com­put­ers, and with ~12 mil­lion bit­coins already in sup­ply (a lit­tle over half of the total 21 mil­lion), that means Ulbricht had over 1% of the cur­rent bit­coin sup­ply on that sin­gle com­puter alone. Accord­ing to the researchers, 78% of Ulbrich’s bit­coins are still “buried” and beyond the FBI’s reach. So Ulbricht, alone, may have actu­ally con­trolled clos­er to 5% of the total bit­coin sup­ply. It’s a reminder that bit­coins have an addi­tional built-in defla­tion­ary force: Lost bit­coins that can’t be recov­ered are lost for good, per­ma­nently reduc­ing the sup­ply of trade­able bit­coins while main­tain­ing the over­all sup­ply offi­cially in exis­tence (because a lost bit­coin is indis­tin­guish­able from one that’s sim­ply being saved). The small casu­al users with tiny frac­tions of a bit­coin in their accounts are prob­a­bly the most like­ly source of bit­coin loss­es, but since we have no real idea who the large bit­coin own­ers are at this point you have to won­der how many more hid­den bit­coin barons are going to end up either hand­ing siz­able per­cent­ages of the total bit­coin sup­ply over to law enforce­ment agen­cies or just los­ing them alto­geth­er.
  • In anoth­er update, we learn that the suc­ces­sor to Silk Road–Sheep Marketplace–has van­ished tak­ing vast amounts of its users’ bit­coins with it. The users of Sheep Mar­ket­place, it would seem, have been fleeced!
  • “Pter­rafractyl” informs us of anoth­er aspect of the vul­ner­a­bil­i­ty of Bit­coin: “One of the inter­est­ing aspects about the bit­coin phe­nom­ena is that the more peo­ple that start using bit­coin the greater the defla­tion­ary pres­sure on the val­ue of the bit­coins. That’s because there’s a fixed max­i­mum of 21 mil­lion bit­coins that can ever exist, so the greater the demand for bit­coins the more each bit­coin will cost in oth­er cur­ren­cies. With the Chi­nese mar­ket now warm­ing up to bit­coin, and all those new poten­tial users, we might see a fas­ci­nat­ing exam­ple of a hyper­de­fla­tion­ary vir­tual gold bub­ble.”
  • The per­ils of “Bit­coin­ery” were illus­trat­ed when a Hong Kong Bit­coin mar­ket van­ished, tak­ing $5 mil­lion dol­lars with it! 
  • Fur­ther updat­ing the dis­cus­sion “Pter­rafractyl” informs us: It would be pret­ty hilar­i­ous if Bit­coin, a cur­rency cher­ished by haunt­ed by hyper­in­fla­tion­ary fears, because an object les­son in the dan­gers of defla­tion. But it’s hard to see how this les­son will be avoid­ed if Bit­coin ever real­ly caught on because one of the main fea­tures of the the cur­rency is that it’s capped out at 21 mil­lion coins but you can divide each coin up into small­er and small­er pieces. There­fore, the rea­son­ing goes, Bit­coin has defeat­ed the infla­tion beast while still main­tain­ing the scal­a­bil­ity required to han­dle the vol­ume of trans­ac­tions in vir­tu­ally any sized econ­omy! Rev­o­lu­tion awaits! And this is sort of true of Bit­coins but the vic­tory over infla­tion also comes at the cost of built-in defla­tion cor­re­lated to the growth of the Bit­coin econ­omy (imag­ine if dol­lars grew more expen­sive with the growth of the US econ­omy). So the more Bit­coin grows in pop­u­lar­ity the greater the defla­tion, the greater the pay­out to the ear­li­est bit­coin investors, and the greater the temp­ta­tion to keep hold­ing onto those Bit­coins.
  • Not sur­pris­ing­ly, it turns out that Bit­coin is high­ly vul­ner­a­ble to self­ish “min­ing,” which could per­mit knowl­edge­able and enter­pris­ing male­fac­tors to cor­ner the mar­ket.

“Meet The ‘Assas­si­na­tion Mar­ket’ Cre­ator Who’s Crowd­fund­ing Mur­der With Bit­coins” by Andy Green­berg; Forbes; 11/28/2013.

As Bit­coin becomes an increas­ingly pop­u­lar form of dig­i­tal cash, the cryp­tocur­rency is being accept­ed in exchange for every­thing from socks to sushi to hero­in. If one anar­chist has his way, it’ll soon be used to buy mur­der, too.

Last month I received an encrypt­ed email from some­one call­ing him­self by the pseu­do­nym Kuwa­batake San­juro, who point­ed me towards his recent cre­ation: The web­site Assas­si­na­tion Mar­ket, a crowd­fund­ing ser­vice that lets any­one anony­mously con­tribute bit­coins towards a boun­ty on the head of any gov­ern­ment offi­cial–a kind of Kick­starter for polit­i­cal assas­si­na­tions. Accord­ing to Assas­si­na­tion Market’s rules, if some­one on its hit list is killed–and yes, San­juro hopes that many tar­gets will be–any hit­man who can prove he or she was respon­si­ble receives the col­lected funds.

For now, the site’s rewards are small but not insignif­i­cant. In the four months that Assas­si­na­tion Mar­ket has been online, six tar­gets have been sub­mit­ted by users, and boun­ties have been col­lected rang­ing from ten bit­coins for the mur­der of NSA direc­tor Kei­th Alexan­der and 40 bit­coins for the assas­si­na­tion of Pres­i­dent Barack Oba­ma to 124.14 bitcoins–the largest cur­rent boun­ty on the site–targeting Ben Bernanke, chair­man of the Fed­eral Reserve and pub­lic ene­my num­ber one for many of Bitcoin’s anti-bank­ing-sys­tem users. At Bitcoin’s cur­rent rapid­ly ris­ing exchanges rate, that’s near­ly $75,000 for Bernanke’s would-be killer.

Sanjuro’s gris­ly ambi­tions go beyond rais­ing the funds to bankroll a few polit­i­cal killings. He believes that if Assas­si­na­tion Mar­ket can per­sist and gain enough users, it will even­tu­ally enable the assas­si­na­tions of enough politi­cians that no one would dare to hold office. He says he intends Assas­si­na­tion Mar­ket to destroy “all gov­ern­ments, every­where.”

“I believe it will change the world for the bet­ter,” writes San­juro, who shares his han­dle with the name­less samu­rai pro­tag­o­nist in the Aki­ra Kuro­sawa film “Yojim­bo.” (He tells me he chose it in homage to cre­ator of the online black mar­ket Silk Road, who called him­self the Dread Pirate Roberts, as well Bit­coin inven­tor Satoshi Nakamo­to.) ”Thanks to this sys­tem, a world with­out wars, drag­net panop­ti­con-style sur­veil­lance, nuclear weapons, armies, repres­sion, mon­ey manip­u­la­tion, and lim­its to trade is firm­ly with­in our grasp for but a few bit­coins per per­son. I also believe that as soon as a few politi­cians gets offed and they real­ize they’ve lost the war on pri­vacy, the killings can stop and we can tran­si­tion to a phase of peace, pri­vacy and lais­sez-faire.


Just read­ing about that cold­ly cal­cu­la­tive sys­tem of lethal vio­lence like­ly inspires queasy feel­ings or out­rage. But San­juro says that the public’s abhor­rence won’t pre­vent the sys­tem from work­ing. And as a mat­ter of ethics, he notes that he’ll accept only user-sug­gest­ed tar­gets “who have ini­ti­ated force against oth­er humans. More specif­i­cally, only peo­ple who are out­side the reach of the law because it has been sub­verted and cor­rupted, and whose vic­tims have no oth­er way to take revenge than to do so anony­mous­ly.”

Even set­ting aside the immoral­ity of killing, doesn’t the notion of enabling small minori­ties of angry Bit­coin donors to assas­si­nate elect­ed offi­cials sound like an attempt to crip­ple democ­racy? “Of course, lim­it­ing democ­racy is why we even have a con­sti­tu­tion,” San­juro responds. “Major­ity sup­port does not make a leader legit­i­mate any more than it made slav­ery legit­i­mate. With this mar­ket the great equal­is­ing forces of cap­i­tal­ism have the oppor­tu­nity to work in pol­i­tics too. One bit­coin paid is one vote clos­er to a veto of what­ever leg­is­la­tion you dis­like.”

San­juro didn’t actu­ally invent the con­cept of an anony­mous crowd­funded assas­si­na­tion mar­ket. The idea dates back to the cypher­punk move­ment of the mid-1990s, whose adher­ents dreamt of using encryp­tion tools to weak­en the gov­ern­ment and empow­er indi­vid­u­als. For­mer Intel engi­neer and Cypher­punk Mail­ing List founder Tim May argued that uncrack­able secret mes­sages and untrace­able dig­i­tal cur­rency would lead to assas­si­na­tion mar­kets in his “Cryptoanarchist’s Man­i­festo” writ­ten in 1992.

A few years lat­er, anoth­er for­mer Intel engi­neer named Jim Bell pro­posed a sys­tem of fund­ing assas­si­na­tions through encrypt­ed, anony­mous dona­tions in an essay he called “ Assas­si­na­tion Pol­i­tics.” The sys­tem he described close­ly match­es Sanjuro’s scheme, though anonymi­ty tools like Tor and Bit­coin were most­ly the­o­ret­i­cal at the time. As Bell wrote then:

If only 0.1% of the pop­u­la­tion, or one per­son in a thou­sand, was will­ing to pay $1 to see some gov­ern­ment slime­ball dead, that would be, in effect, a $250,000 boun­ty on his head. Fur­ther, imag­ine that any­one con­sid­er­ing col­lect­ing that boun­ty could do so with the math­e­mat­i­cal cer­tainty that he could not be iden­ti­fied, and could col­lect the reward with­out meet­ing, or even talk­ing to, any­body who could lat­er iden­tify him. Per­fect anonymi­ty, per­fect secre­cy, and per­fect secu­rity. And that, com­bined with the ease and secu­rity with which these con­tri­bu­tions could be col­lected, would make being an abu­sive gov­ern­ment employ­ee an extreme­ly risky propo­si­tion. Chances are good that nobody above the lev­el of coun­ty com­mis­sioner would even risk stay­ing in office.

Bell would lat­er serve years in prison for tax eva­sion and stalk­ing a fed­eral agent, and was only released in March of 2012. When I con­tacted him by email, he denied any involve­ment in Sanjuro’s Assas­si­na­tion Mar­ket and declined to com­ment on it.

San­juro tells me he’s long been aware of Bell’s idea. But he only decid­ed to enact it after the past summer’s rev­e­la­tions of mass sur­veil­lance by the NSA exposed in a series of leaks by agency con­trac­tor Edward Snow­den. “Being forced to alter my every hap­py mem­ory dur­ing inter­net activ­ity, every inti­mate moment over the phone with my loved ones, to also include some of the peo­ple I hate the most lis­ten­ing in, analysing the con­ver­sa­tion, was the inspi­ra­tion I need­ed to embark on this task,” he writes. “After about a week of mut­ter­ing ‘they must all die’ under my breath every time I opened a news­pa­per or turned on the tele­vi­sion, I decid­ed some­thing had to be done. This is my con­tri­bu­tion to the cause.”

Assas­si­na­tion Mar­ket isn’t the first web­site to sug­gest fund­ing mur­der with bit­coins. Oth­ers Tor-hid­den web­sites with names like Quick Kill, Con­tract Killer and C’thulhu have all claimed to offer mur­ders in exchange for bit­coin pay­ments. But none of them respond­ed to my attempts to con­tact their admin­is­tra­tors, and all required advanced pay­ments for their ser­vices, so they may be scams.


If the sys­tem does prove to work, the launch of Assas­si­na­tion Mar­ket may be ill-timed for San­juro, giv­en law enforcement’s recent crack­down on the dark web. In August, the FBI used an exploit in Tor to take down the web host­ing firm Free­dom Host­ing and arrest its founder Eric Eoin Mar­ques, who is accused of offer­ing his ser­vices to child pornog­ra­phy sites. And just last month, the FBI also seized the pop­u­lar Bit­coin– and Tor-based black mar­ket for drugs known as Silk Road and arrest­ed its alleged cre­ator, Ross Ulbricht.

San­juro coun­ters that in addi­tion to Tor, Bit­coin, and the usu­al encryp­tion tools, he has “mea­sures in place to pre­vent the effec­tive­ness of such an arrest. Nat­u­rally these will have to be kept secret.”

He adds that, like an ear­lier gen­er­a­tion of cypher­punks, he puts his faith in the math­e­mat­i­cal promise of cryp­tog­ra­phy to trump the government’s pow­er to stop him. “With cryp­tog­ra­phy, the state, or any pro­tec­tion firm, is large­ly obsolete…all activ­ity that can be reduced to infor­ma­tion trans­fer will be com­pletely out of the government’s, or anyone’s, hands, oth­er than the par­ties involved,” he says.

“I am a cryp­to-anar­chist,” San­juro con­cludes. “We have a bright future ahead of us.”

“Alleged Silk Road Boss Ross Ulbricht Now Accused of Six Mur­ders-for-Hire, Denied Bail” by Andy Green­berg; Forbes; 11/21/2013.

EXCERPT: A New York judge denied bail to alleged Silk Road cre­ator Ross Ulbricht Thurs­day, based in part on fresh accu­sa­tions of vio­lence: That the 29-year-old alleged­ly com­mis­sioned the mur­ders of a total of six peo­ple through would-be hit­men he con­tacted online, four more than the two attempt­ed killings described in pros­e­cu­tors’ orig­i­nal crim­i­nal com­plaint.

Judge Nathaniel Fox said that the risk that Ulbricht might flee or present a dan­ger to the com­mu­nity over­whelmed argu­ments that he be released on bail, cit­ing “pow­er­ful evi­dence pre­sented to us that the defen­dant has attempt­ed to secure the mur­ders of a num­ber of peo­ple.”

Pros­e­cu­tor Ser­rin Turn­er laid out that evi­dence in a state­ment to the court, say­ing that much of it was gath­ered from a Silk Road serv­er locat­ed by the FBI as well as Ulbricht’s seized com­puter after he was arrest­ed in Octo­ber and accused of run­ning the Silk Road’s mas­sive anony­mous online drug sales oper­a­tion under the pseu­do­nym the Dread Pirate Roberts. Ser­rin said that Ulbricht had not only sent mes­sages to two would-be hitmen–an under­cover agent on one of those two occa­sions–ask­ing to have a wit­ness and a black­mailer killedbut had fol­lowed up by order­ing the killing of the blackmailer’s asso­ciate and three peo­ple who lived with him.

Mys­te­ri­ously, Turn­er said that in none of the cas­es were actu­al vic­tims found; In the first, FBI agents say they faked the death of alleged for­mer Silk Road employ­ee Cur­tis Greento con­vince Ulbricht the mur­der had tak­en place. But the out­come of the oth­er five mur­ders remains unex­plained. Nonethe­less, Turn­er argued, “the evi­dence is crys­tal clear that the defen­dant intend­ed these mur­ders to hap­pen.”

Crim­i­nal com­plaints against Ulbricht pre­vi­ously accused him of order­ing the killing of for­mer Silk Road employ­ee Cur­tis Green in Jan­u­ary of 2013 for $80,000 and then pay­ing a user known as “redand­white” $150,000 in the cryp­tocur­rency Bit­coin to kill a Silk Road user iden­ti­fied as “Friend­ly­Chemist,” who claimed to have hacked anoth­er Silk Road ven­dor and threat­ened to release Silk Road cus­tomers’ iden­ti­fy­ing infor­ma­tion if he wasn’t paid $500,000.

In court Thurs­day, Turn­er added four more attempt­ed mur­ders, say­ing that Friend­ly­Chemist had impli­cated anoth­er Silk Road user known as “tony76.” And when redand­white had told Ulbricht that tony76 lived with three oth­er peo­ple who would have to be killed if they were to obtain the mon­ey and pos­ses­sions in his home, Ulbricht alleged­ly agreed to have all four killed for $500,000 in bit­coins. “Based on the say-so of [an online assas­sin,] he was will­ing to kill three oth­ers just liv­ing with him,” said Turn­er.

Turn­er also described evi­dence on Ulbricht’s com­puter that includ­ed a log he kept of his activ­i­ties that he said includ­ed the line “com­mis­sioned hit on black­mail­ers with angels,” imply­ing that redand­white may have been a mem­ber of the Hell’s Angel motor­cy­cle gang, giv­en its asso­ci­a­tion with the col­ors red and white. Anoth­er line alleged­ly read “sent pay­ment to angels for hit on tony76 and his 3 asso­ciates.”

In fact, Turn­er enu­mer­ated evi­dence found on Ulbricht’s seized machine that went far fur­ther in tying him to his alleged Dread Pirate Roberts iden­tity. When Ulbricht was arrest­ed in the Glen Park library in San Fran­cisco, Turn­er said he was logged into the Silk Road under his Dread Pirate Roberts account and was look­ing at an admin­is­tra­tor con­trol page for the site as well as anoth­er page called “Mas­ter­mind” that showed Silk Road sales num­bers. Turn­er added that he was also logged into a chat pro­gram under the han­dle “dread,” and his Mac­book had the user­name “Frosty,” which he said was linked to Ulbricht’s email address in a post he’d made to a cod­ing forum.

Remark­ably, Turn­er also described a jour­nal tak­en from Ulbricht’s hard dri­ve that recounts the sto­ry of Silk Road’s cre­ation. He list­ed details like the fact that Ulbricht had ini­tially called the Silk Road “Under­ground Bro­kers,” but had lat­er decid­ed to change the name. The pros­e­cu­tors’ let­ter to the court includes this pas­sage:

I began work­ing on a project that had been in my mind for over a year. I was call­ing it Under­ground Bro­kers, but even­tu­ally set­tled on Silk Road. The idea was to cre­ate a web­site where peo­ple could buy any­thing anony­mously, with no trail what­so­ever that could lead back to them.

At anoth­er point, he wrote that in 2011, he would be “cre­at­ing a year of pros­per­ity and pow­er beyond what I have ever expe­ri­enced before,” and added that “Silk Road is going to become a phe­nom­e­non and at least one per­son will tell me about it, unknow­ing that I was its cre­ator.”

The jour­nal, accord­ing to Turner’s account, also details how Ulbricht grew sev­eral kilos of psy­che­delic mush­rooms in a lab in an “off-the-grid” cab­in to have an ini­tial prod­uct to sell on the Silk Road. In a spread­sheet found on Ulbricht’s com­puter, Turn­er said Ulbricht’s expens­es and income were list­ed, includ­ing a line for “sr inc.” that he said list­ed its val­ue at $104 mil­lion.

To sup­port the prosecution’s argu­ment Ulbricht rep­re­sented a flight risk, he not­ed that Ulbricht had tak­en steps towards apply­ing for cit­i­zen­ship in the island nation of Domini­ca, and had dis­cussed mov­ing there with friends on Face­book.


“Anony­mous Online Mar­ket­place that Replaced Silk Road Van­ish­es . . . Tak­ing $100 Mil­lion of Users’ Mon­ey With It” by Joshua Gard­ner; Dai­ly Mail [UK]; 12/2/2013.

EXCERPT: A shady online mar­ket­place that anony­mous­ly sold drugs and guns has vir­tu­al­ly dis­ap­peared, leav­ing ille­gal ven­dors believ­ing they’ve been scammed out of as much as $100 mil­lion.

Sheep Mar­ket­place emerged as the go-to replace­ment to Silk Road, a sim­i­lar bazaar shut­tered by the FBI in Octo­ber.

Now users of the site, which oper­at­ed out­side the law to begin with and dealt only in anony­mous Bit­coins, fear it was a scam all along.

Shield­ed from author­i­ties and using spe­cial soft­ware to access the so-called ‘Deep Web’ site, buy­ers could find drugs, guns, and even hit men.
Buy­ers would put their Bit­coins into the mar­ket­place, where sell­ers would with­draw them, with all the trans­ac­tions mod­er­at­ed by the web­site.
Which is where the issue first arose.

In the days before the site shut down, ven­dors sud­den­ly found them­selves unable to access the Bit­coins tied up in the site’s wal­let.
As they com­plained, reports RT, they found their com­ments sud­den­ly yanked from the site’s forums.

Buy­ers also began to see sus­pi­cious things in the time lead­ing up to this pos­si­ble scam. Some ven­dors, though not all, began to list their drugs and oth­er goods at prices far low­er than ever before.

Now, many believe they were being bilked out of as many of their Bitcoins—a dif­fi­cult to trace form of online cur­ren­cy cur­rent­ly worth over $1,000 a piece—as pos­si­ble before tak­ing the mon­ey and run­ning.

On Sun­day, vis­i­tors to the site found a note in place of the home­page that claimed a ven­dor called EBOOK101 had stolen from the site’s cache of Bit­coins.

‘This ven­dor found bug in sys­tem and stole 5400 BTC,’ reads the brief note. ‘Your mon­ey, our pro­vi­sions, all was stolen.’
How­ev­er, accord­ing to a post on Hack­er News, a wal­let of far more Bit­coins has been traced back to the site.

Val­ued at $45 mil­lion, 39,918 in Bit­coins could now be in the hands of a those behind the site after scam­ming untold num­bers of hope­ful drug users and gun tot­ers out of their hard earned vir­tu­al cash.

Or per­haps even more.

Accord­ing to the Dai­ly Dot, one Red­di­tor claims to have engaged in a vir­tu­al chase with Czech com­put­er pro­gram­mer Tomáš Jiřikovsky, who user sheeproadreloaded2 claims is behind the site and has abscond­ed with 96,000 bit­coins, or about $95 mil­lion dol­lars. . . . .

“Bit­coins Climb to Record, on Wider Accep­tance, Chi­na Trade” by Olga Kharif; Bloomberg News; 11/6/2013.

EXCERPT: Bitcoin’s price hit a record at $265 on the Bit­Stamp online exchange, dri­ven by wider accep­tance of the vir­tual cur­ren­cy.

The dig­i­tal mon­ey, which can be used to pay for goods and ser­vices on the Inter­net, has risen 20-fold so far this year, as trad­ing activ­ity has increased. Bit­coins were trad­ing at $251.36 apiece at 6:30 p.m. in New York on Bit­Stamp, one of the more active Web-based exchanges where Bit­coins are trad­ed for dol­lars, euros and oth­er cur­ren­cies.

The ral­ly comes a month after the clos­ing of the “Silk Road Hid­den Web­site,” where peo­ple could obtain drugs, guns and oth­er illic­it goods using Bit­coins. The vir­tual cur­rency lost a third of its val­ue in the days after the web­site was shut down. Bit­coins are becom­ing increas­ingly pop­u­lar, par­tic­u­larly in Chi­na, said Ugo Egbunike, direc­tor of busi­ness devel­op­ment at Index­U­ni­verse, an index-fund researcher.

“I thought Silk Road is going to do some dam­age to the price,” Egbunike said. “But with BTC Chi­na buy­ing this up — they seem to have picked up the slack.”

BTC Chi­na is now the world’s largest Bit­coin exchange, Nicholas Colas, a Con­vergEx Group ana­lyst, wrote in a Nov. 5 report.

The vir­tual cur­rency exists as soft­ware that’s designed to be untrace­able, mak­ing it an attrac­tive ten­der for those seek­ing to trade anony­mously via the Web. There are about 30 trans­ac­tions per minute, at an aver­age amount of 16 Bit­coins, accord­ing to a report today by the Fed­eral Reserve Bank of Chica­go. . . .

“If You Believe in Bit­coin, You Should Nev­er Buy Any­thing in Bit­coin” by Jon Weisen­thal; Business Insid­er; 11/10/2013.

EXCERPT: Many Bit­coin believ­ers think that the dig­i­tal cur­rency will one day become the pre-emi­nent cur­rency of the inter­net. They basi­cally see it becom­ing the internet’s ver­sion of gold in that it’s nat­u­rally scarce, inde­pen­dent, vir­tu­ally impos­si­ble to manip­u­late, and cru­cially suit­ed for a dig­i­tal world when mon­ey ought to be able to be moved seam­lessly and at no cost.

Well here’s a tip: If you think that this is true, then nev­er use Bit­coin in a trans­ac­tion.

As more peo­ple have got­ten into Bit­coin, the price has gone way up.

Vir­tu­ally every­one who has ever bought any­thing in Bit­coin has been a huge los­er, who would have been bet­ter suit­ed just hold­ing onto the Bit­coins instead.

Remem­ber the piz­za that was pur­chased for $25 in Bit­coins years back? Had the per­son not bought that piz­za, it would be worth near­ly $3 mil­lion. That pur­chase was a cat­a­strophic deci­sion, as that was prob­a­bly the most expen­sive piz­za of all time.

Of course this presents a Catch-22. How can Bit­coin become a real cur­rency if it’s not used in trans­ac­tions? And why would any­one use it in trans­ac­tions if becom­ing a real cur­rency offers so much more price appre­ci­a­tion? This con­tra­dic­tion is a core prob­lem, and it’s a rea­son why it’s prob­a­bly doomed to fail (real cur­ren­cies don’t have this issue, since cen­tral banks pre­vent rapid price appre­ci­a­tion, and they man­date that the cur­rency be used). . . .

Hong Kong Bit­coin Trad­ing Plat­form Van­ishes with Mil­lions” by Liu Jiayi; ZDNet; 11/12/2013.

EXCERPT: When ardent Chi­nese Bit­coin investors found that they could no longer access the web­site of Glob­al Bond Lim­ited (GBL) in the ear­ly morn­ing of Octo­ber 26, it was already too late.

One investor under the pseu­do­nym of South Amer­i­can Vicu­na orga­nized an online group for the los­ing traders and told IT Times on Mon­day that more than 30 mil­lion yuan from 500 investors, many of whom sold homes to get in the vir­tual cur­rency trade, could nev­er be retrieved.

Accord­ing to the Vicu­na, after the GBL’s web­site shut­down, it left only one mes­sage, say­ing that the site was com­pro­mised and investors who want to get back their invest­ment data shall trans­fer mon­ey to a des­ig­nated account. Now all con­tacts are not respond­ing, and the com­pany office in Hong Kong is as emp­ty as the traders’ pock­ets.

GBL self-pro­claimed that the local gov­ern­ment had approved vir­tual cur­rency exchange back on June 8, and lured buy­ers in with high lever­age rate and high yield. How­ever, the too-obvi­ous-to-ignore trad­ing loop­hole in its trad­ing sys­tem raised con­cerns, but the “always-win­ning” traders were too obsessed to get out, accord­ing to Vicu­na. . . .

“Bit­coin Vul­ner­a­bil­ity Could Allow Mali­cious Min­ers to Seize Con­trol”; MIT Tech­nol­o­gy Review; 11/8/2013.

EXCERPT: One of Bitcoin’s big advan­tages is that it is decen­tralised with nobody in over­all con­trol. But now a sim­ple strat­egy has emerged that could allow almost any group to take over, say com­puter secu­rity ana­lysts.

The dig­i­tal cur­rency Bit­coin is one of the zeit­geist phe­nom­ena of our time. Since 2009, it has grown from a dig­i­tal curios­ity to an online phe­nom­e­non. There are now some 11.5 mil­lion Bit­coins in cir­cu­la­tion and each one is worth over $300.

The Bit­coin sys­tem is specif­i­cally designed to over­come one of the seri­ous flaws of pre­vi­ous dig­i­tal currencies—the pos­si­bil­ity of dou­ble spend­ing; that two peo­ple could spend two copies of the same cur­rency at the same time. It is also decen­tralised so that no sin­gle organ­i­sa­tion or organ­ised group of indi­vid­u­als can con­trol the cur­rency and pre­vent cer­tain types of trans­ac­tions.

But Bit­coin may not be quite as secure as every­body thought. Today, Ittay Eyal and Emin Gun Sir­er at Cor­nell Uni­ver­sity in Itha­ca say they’ve dis­cov­ered a flaw that allows any organ­ised group of Bit­coin min­ers to take over the cur­rency. And they say that some groups today are already big enough to do the job.

First some back­ground. Per­haps Bitcoin’s biggest advan­tage is its unique approach to pre­vent­ing dou­ble spend­ing. It does this by record­ing every trans­ac­tion in a sin­gle log known as a blockchain. An indi­vid­ual account can only spend a Bit­coin if the blockchain records that it owns the Bit­coin in the first place.

This log is pro­tected by cryp­top­uz­zles that can only be solved by large scale num­ber crunch­ing. When any­body solves such a puz­zle, they can record new trans­ac­tions and are reward­ed with a fee in the form of new Bit­coins.

Hence the emer­gence of Bit­coin min­ers. These are peo­ple who devote com­put­ing pow­er to solve cryp­top­uz­zles and are paid for their work in Bit­coins.

If you’re think­ing of a career as a Bit­coin min­er, you’ll imme­di­ately run into a prob­lem. The cryp­top­uz­zles are so dif­fi­cult that the chances of solv­ing one by your­self is tiny. So Bit­coin min­ers work togeth­er in groups so that they can solve the prob­lems more quick­ly. If any one of them solves a puz­zle, they all share the pro­ceeds.

There are lots of groups to join and there’s no advan­tage in join­ing one over anoth­er. The received wis­dom is that this keeps the min­ing decen­tralised.

But now Eyal and Sir­er say that’s not true and have worked out how a self­ish group of min­ers could take over the cur­rency. “We show that the con­ven­tional wis­dom is wrong,” they say.

The trick is to mine for Bit­coins but to keep the results secret. This cre­ates a fork in the blockchain so that one half of the fork is pub­lic and the oth­er half is secret.

The Bit­coin sys­tem has a way of resolv­ing these kinds of forks, which occur by acci­dent from time to time. It requires min­ers to join the longest fork. The trans­ac­tions in the oth­er fork are then resub­mit­ted for res­o­lu­tion.

If the self­ish min­ers make their fork longer than the pub­lic one, it becomes the cho­sen chain.

The prob­lem is that the num­ber crunch­ing done on the fork that is aban­doned is wast­ed. So the self­ish min­ers end up get­ting more than their fair share of Bit­coins. This “enables pools of col­lud­ing min­ers that adopt it to earn rev­enues in excess of their min­ing pow­er,” say Eyal and Sir­er.

Hav­ing skewed the sys­tem in favour of self­ish min­ers, oth­er min­ers see that they can make more Bit­coins by join­ing this group. The result is a tip­ping point in which the Bit­coin min­ing sys­tem sud­denly becomes dom­i­nated by a sin­gle group. And this group can exer­cise what­ever con­trol it likes over how trans­ac­tions are record­ed.

Of course, self­ish min­ing only reach­es a tip­ping point if the self­ish group con­sists of a cer­tain frac­tion of Bit­coin min­ers. Groups that are small­er than this can­not force the sys­tem to tip.

The key result that Eyal and Sir­er have cal­cu­lated is that the tip­ping thresh­old is close to zero zero. So almost any group could adopt the self­ish min­ing strat­egy and end up con­trol­ling the sys­tem.

Eyal and Sir­er have a solu­tion of sorts. This involves a chang­ing the sys­tem so that it choos­es one fork over anoth­er at ran­dom (rather than choos­ing the lon­er one). When this choice is ran­dom, then it is hard­er for the self­ish min­ers to take con­trol.

But not that much hard­er. Eyal and Sir­er cal­cu­late that this rais­es the tip­ping thresh­old to groups that con­trol around 25 per cent of all Bit­coin min­ing. “Even with our pro­posed fix that rais­es the thresh­old to 25 per cent, the out­look is bleak: there already exist pools whose min­ing pow­er exceeds the 25%,” they point out. . . . .

“In the Murky World of Bit­coin, Fraud is Quick­er than the  Law” by Nathaniel Pop­per; The New York Times; 12/05/2013.


It was an invi­ta­tion to a pen­ny stock-style pump-and-dump scheme — only this one involved Bit­coin, the soar­ing, slight­ly scary vir­tu­al cur­ren­cy that has beck­oned and bewil­dered peo­ple around the world.

While such bid ’em up, sell ’em off scams are shut down in the finan­cial mar­kets all the time, this one and oth­er frauds involv­ing dig­i­tal mon­ey have gone unchecked. The rea­son, in no small part: Gov­ern­ment author­i­ties do not agree on which laws apply to Bit­coin — or even on what Bit­coin is.

The per­son behind the recent scheme, a trad­er known on Twit­ter as Fontas, said in a secure Inter­net chat that he oper­at­ed with lit­tle fear of a crack­down.

“For now, the lack of reg­u­la­tions allows every­thing to hap­pen,” Fontas said in the chat, where he ver­i­fied his con­trol of the Twit­ter account, which has thou­sands of fol­low­ers, but did not give his iden­ti­ty. He added that Bit­coin and its users would ben­e­fit when some­one steps in to police this finan­cial wild west, and would stop his schemes when they do.

Chi­nese author­i­ties drew atten­tion to the issue on Thurs­day when they announced that they were bar­ring Chi­nese banks from mak­ing Bit­coin trans­ac­tions. The same day, the Bank of France issued its own warn­ing about the poten­tial risks. The news sent the price of Bit­coin tum­bling, but it quick­ly bounced back to near its all-time high of around $1,200. . . .



One comment for “The Snowden-Inspired, Bitcoin-Operated Online Murder Incorporated”

  1. @Dave
    It is pret­ty darn unfor­tu­nate how the world con­tin­ues to evolve 50 years after the assas­si­na­tion of Pres­i­dent Kennedy. Hope­ful­ly the sub­ject of this impor­tant post fails to lead direct­ly to a future pres­i­den­tial assas­si­na­tion. Dave, in regards to your life’s work, for the times I thought to myself, that you were exag­ger­at­ing, or that they would­n’t do that, I’m sor­ry. Time has proven you to be ahead of the curve, right and stead­fast in the face of adver­si­ty of the forces.

    Posted by GK | November 21, 2013, 8:47 pm

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