A person who allegedly robbed the web site Sheep Marketplace of 300 Bitcoins — about $5 million at current prices — is attempting to hide the heist by breaking up the massive online currency cache and repeatedly trading it through various “tumblers,” which mix up and (supposedly) launder old Bitcoins for new.
It’s not clear exactly how big this Bitcoin theft is, but it is shaping up to be one of the biggest. The Darknet Marketplace was an anonymous site for drug dealers that became prominent when Silk Road was closed down. In the last couple of days, a person got access to the site in such a way that users’ accounts were drained even though their balances continued to show the money was still there. The robbery was discovered in late November and Darknet Marketplace promptly shut down.
The thief’s problem is that the angry Bitcoin account holders whose money has gone are following the thief through the tumbler, by sending him small amounts of cash that are appended to the larger amount as it is split up and moved on. Each Bitcoin transaction generates a “blockchain” record showing its history, and the appended loose change thus identifies where the bulk of the money is going. The theft victims are hoping that eventually the thief will be prevented from cashing out his accounts because doing so would lead to him being identified in real life.
So far, users found out that BitcoinMixer.ru got used to clean and tumble the stolen Bitcoin.
He was desperately creating new wallet addresses and moving his 49 retirement wallets through them, but having to wait for 3 or 4 confirmations each time before moving them again. Each time I caught up, I “666”ed him – sent 0.00666 bitcoins to mess up his lovely round numbers like 4,000. Then,all of a sudden, decimal places started appearing, and fractions of bitcoins were jumping from wallet to wallet like grasshoppers on a hotplate without stopping for confirmations.
He was tumbling our stolen bitcoins a second time, and a tumbler is unbeatable….
Unless you guess which one it is, nearly all the coins belong to the person you’re tracking, jump in with him, and get jumbled up through the same wallets using the same algorithm. I was hopping from foot to foot shouting “come on!” at my laptop, waiting an age for 6 blockchain confirmations to get 0.5 btc into “bitcoin fog”. My half a bitcoin got sliced and diced through loads of wallets and I followed the biggest chunk with blockchain.info – along with 96,000 stolen ones!
The last transaction was just a few minutes ago. The thief appears to have split the 300 coins into packets of ~1,0 each, sending each one on a different route.
Unfortunately for those who have been ripped off, the chances of them getting any money back are slim: Once a Bitcoin transaction has been made, it cannot be reversed without the consent of the recipient. The thief therefore must find a way to cash out his Bitcoins without revealing his true identity, according to The New Statesman:
Selling those bitcoins and turning them into cash is going to be extremely difficult, as the major Bitcoin exchanges all demand proof of identity (specifically to avoid charges that they’re involved in money laundering), and if they’re broken down into smaller quantities to sell via a site like localbitcoins.com a paper trail will still be generated. As soon as it’s possible to link one real-life bank account or identity to any bitcoins from that stash, it will be possible to work out their real-life identity.
Those observing Users seem to believe that the thief will either eventually get away with it, or the money will be “lost” by becoming irretrievable:
You aren’t going to get anything back. None of you are going to get anything back, and it’s by design. This is EXACTLY how Bitcoin is supposed to work. Bitcoin would be fundamentally broken if you somehow got your money back. And the Bitcoin Mixer did his work making the coins untracable.