Illegal online marketplace disappears, along with up to $100 million in Bitcoins

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Anyone who goes to the movies knows what happens to those who steal from organized crime. It isn't pretty. (Okay, sometimes they live happily ever after, but that's only because it's a movie.)

But now that familiar script could be happening for real in the dark recesses of the Internet. And the ending is yet to be written. A major underground bazaar, Sheep Marketplace, suddenly closed down Saturday, claiming that hackers stole 5,400 Bitcoins (BTC). At the current (extremely volatile) rate of exchange, that's about six million dollars.

After the FBI shut down Silk Road in October, Sheep Marketplace became the largest seller of illegal drugs and other illicit product on the Internet. Not surprisingly, it did its business in Bitcoins, a peer-to-peer currency not backed by any government. Like cash, Bitcoins leave no record of where they have been or who they belong to. And like cash, that makes them attractive for illegal business.

That six million dollars may be the tip of the iceberg. Various reports claim that more than $40 million, or even as much as $100 million, has been stolen.

The first hint of trouble came Sunday with a Sheep Marketplace announcement on Reddit. "We are sorry to say, but we were robbed on Saturday 11/21/2013 by vendor EBOOK101… We were trying to resolve this problem, but we were not successful. We are sorry for your problems and inconvenience..."

Not surprisingly, the reactions to this notice were not complimentary. "You run a site partially dedicated to thieves and scammers selling their wares, yet somehow wonder how it ends up getting robbed?" asked Twigburst. CrazeeFruito guessed that "if [the thief] is clever he has escaped somewhere nice with a flash drive containing millions," and VulgarTruth wondered if "that guy is going to get assassinated by his drug lords."

That 5400 BTC figure may be low-balling. People who keep a watch on Bitcoin activity have noted the recent movement of 39,918.00816 BTC--about $44 million dollars. And someone known on Reddit as sheeproadreloaded2 thinks that it's much more than that. In a Monday post, he claims to have discovered "96,000 stolen, freshly-laundered bitcoins [sic]." That's about $100 million U.S. dollars.

Spectacular Bitcoin robberies appear to be a new trend. Late last month, the Bitcoin Internet Payment System (BIPS) lost almost 1,300 BTC. And in October, an Australian virtual bank called Inputs.io lost 4,100 BTC. For more on that last robbery, see The Great Bitcoin Bank Robbery.

Like the Inputs.io affair, a lot of people are assuming that the alleged primary victims--the person or people who run the Sheep Marketplace--are actually the perpetrators. And the dark site's recent behavior hasn't exactly made them look innocent. In late November, the site stopped allowing people to withdraw their money, and were offering good deals on bulk drug purchases if people would pay in advance.

That sounds like a very lucrative way to make a living. But not a very safe one.

This story, "Illegal online marketplace disappears, along with up to $100 million in Bitcoins" was originally published by BrandPost.