Slashdot Mirror

← Back to Stories (view on slashdot.org)

How Silk Road Bounced Back From Its Multimillion-Dollar Hack

Posted by Soulskill on from the easy-come-easy-go dept.

Daniel_Stuckey writes: "Silk Road, the online marketplace notable for selling drugs and attempting to operate over Tor, was shut down last October. Its successor, Silk Road 2.0 survived for a few months before suffering a security breach. In total, an estimated $2.7 million worth of Bitcoin belonging to users and staff of the site was stolen. Some in the Silk Road community suspected that the hack might have involved staff members of the site itself, echoing scams on other sites. Project Black Flag closed down after its owner scampered with all of their customers' Bitcoin, and after that users of Sheep Marketplace had their funds stolen, in an incident that has never been conclusively proven as an inside job or otherwise. Many site owners would probably have given up at this point, and perhaps attempted to join another site, or start up a new one under a different alias. Why would you bother to pay back millions of dollars when you could just disappear into the digital ether? But Silk Road appears to be trying to rebuild, and to repay users' lost Bitcoins."

27 of 50 comments (clear)

  1. better than FDIC by deodiaus2 · · Score: 2

    The FDIC will only pay back the first $250K and can take up to 10 years.

    1. Re:better than FDIC by AlphaWolf_HK · · Score: 4, Insightful

      Having money in US banks is risky anyways. If you can't account for a large sum of money, government organizations are known for just outright taking the whole damn thing. Not even taxing, it, just fucking outright taking ALL of it away. I even know people who had the police confiscate cash (in one case, $5,000) and just flat out keep it if they can't provide receipts showing where it came from. I honestly don't blame the super rich for hiding money in offshore accounts; you never know what the government will suddenly and irrevocably decide is "theirs," and public opinion will never be on your side either if you ever made an issue of it (popular opinion seems to be that the wealthy are only wealthy if they steal or inherit, in spite of some 70% of the forbes 400 not having wealthy parents.)

      --
      Careful with names containing L slashdot.org/~AiphaWolf_HK slashdot.org/~AlphaWoif_HK slashdot.org/~AiphaWoif_HK
    2. Re:better than FDIC by Unkl_Shvelven · · Score: 3, Insightful
      The ten years part is a myth, see Snopes.

      From the relevant primary source (Spring 2006 FDIC Consumer News newsletter):

      If a bank fails, the FDIC could take up to 99 years to pay depositors for their insured accounts.

      This is a completely false notion that many bank customers have told us they heard from someone attempting to sell them another kind of financial product.

      The truth is that federal law requires the FDIC to pay the insured deposits "as soon as possible" after an insured bank fails.

      Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day. In most cases, the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to each depositor.

      --
      regular man whom love computer (Also, fuck beta).
    3. Re:better than FDIC by Gryle · · Score: 4, Insightful

      Paraphrasing an observation I once heard, the US has a funny way of looking at wealth. If I'm wealthy I made my money fair and square through hard-work, determination, and maybe a pinch of luck, and I deserve to keep my hard-won earnings.. If you're wealthy you're a lying, thieving bastard who exploited someone else and don't really deserve your earnings.

      --
      Only two things are infinite, the universe and human stupidity, and I'm not entirely sure about the universe - Einstein
    4. Re:better than FDIC by deadweight · · Score: 1

      I had a bank robber come in line behind me. I deposited my paycheck and left. He robbed the teller and made off with my check. ME: Where is my paycheck? BANK: We got robbed and the robber took it. ME" Who is "we"? YOU got robbed, you have insurance. I saw the FDIC sticker on the door. BANK: The funds will be in your account tomorrow. ME: Thanks

    5. Re:better than FDIC by Ellie+K · · Score: 1

      FDIC is insurance. They repay you if the bank goes out of business. They don't take your money!
      Comparing $5000 confiscated by police, and suggesting that it is the motivation for the 100's of millions of dollars kept offshore by Forbes 400 billionaires is illogical.

      --
      tempus fugit
  2. Why they're rebuilding. by ddt · · Score: 4, Insightful

    Their customer base includes hit men?

    1. Re:Why they're rebuilding. by erichill · · Score: 2

      Indeed, reading this one wonders how long before something bad happens to those who at least apparently have run off with the money. Part of the usual overhead for playing in a black market, after all.

      --
      Credo sim. - I think I am.
    2. Re:Why they're rebuilding. by codebonobo · · Score: 1

      Their customer base includes hit men?

      Like the taxpayer supported hitmen that most pay for? Silk road at least never allowed for assassins to be hired and bid upon; the same cannot be said for other organizations.

  3. A fool and their money... by iroll · · Score: 2, Insightful

    These losses illustrate perfectly the stupidity of giving some pseudoanonymous sociopath on the internet your money to "hold" for you. WHY? WHY? WHY?

    Nobody would ever think, "Hey! I've got $500 in my pocket, better give it to the first creep that I find in an alley!"

    Using a shady, tor-based business to broker a transaction is risky, but it only risks the single transaction (or the consequences for making transactions in contraband). Putting your funds on deposit with a shady, tor-based business (or a Japanese trading card exchange) is dumb in ways that must boggle even the Princes of Nigeria.

    --
    Repetition does not transform a lie into the truth. - FDR
    1. Re:A fool and their money... by Anonymous Coward · · Score: 2, Insightful

      These losses illustrate perfectly the stupidity of giving some pseudoanonymous sociopath on the internet your money to "hold" for you. WHY? WHY? WHY?

      There was nothing else before this. Silk Road 1.0 was so succesful, it heralded an era that no one ever saw before and only those that were around during it's time can understand what a free society truely looks like (except for those that have been to Burning Man). Silk Road 2.0 is an attempt to provide that same experience, except it's not. Nothing like the original days when DPR2 was in charge. With MultiSig, decentralized escrow coming into play, we are ready to enter that new era. Beyond the black market of Silk Road, decentralized exchanges and cryptocoin as an IPO vehicle, we shall either experience a shift in wealth ownership to the more libertian-minded (c/o 2012 and beyond) or further explotation by the 1%.

      TL;DR: you may have seen dogecoins on reddit, as well as bitcoin, karmacoin and potcoins. Don't discount the worth of these tools, we are at the crossroads of a change of power. Hated the way the world has progressed in the previous 50 years? As proven with SilkRoad, cryptocurrency has the clout to change that.

    2. Re:A fool and their money... by Redmancometh · · Score: 1

      The entire reason they are succesful is BECAUSE the deposits. It enables them to create an escrow system which makes things much more comfortable.

      Also you can depisit on a per-transaction basis...there is no minimum.

    3. Re:A fool and their money... by iroll · · Score: 2

      TL;DR: you didn't read what I wrote, and responded to something you made up.

      With a broker or an exchange, you only have risk associated with the transaction. You put money in, bitcoins come out. You put bitcoins in, money comes out. Or, alternatively, you put bitcoins in, special brownies come out. The risk is all associated with that transaction.

      With a deposit, you're basically putting money in and crossing your fingers.

      In the above-ground market, there are lots of rules to try and mitigate the risk, which is why the vast majority of us will go our whole lives without losing a deposit in a normal financial institution. When you put your money on deposit with DogeBank, you have none of that mitigation.

      --
      Repetition does not transform a lie into the truth. - FDR
    4. Re:A fool and their money... by iroll · · Score: 1

      If you deposit on a per-transaction basis, you can only lose as much money as you can lose if all of your transactions fail.

      If you leave your money on deposit, or "store" your bitcoins there because you don't know how to drop a wallet into dropbox, you are basically dangling a carrot for somebody to steal (MtGox). I mean, think about PayPal for goodness sakes. After the whole minecraft incident, what sane person would just "let it ride" in a paypal account? PayPal is great for facilitating transactions, but there's no reason to trust them with massive deposits.

      --
      Repetition does not transform a lie into the truth. - FDR
    5. Re:A fool and their money... by BasilBrush · · Score: 1

      understand what a free society truely looks like (except for those that have been to Burning Man).

      Burning man is a festival and a holiday. It's not a free society.

      The reality of this free-as-in-libre currency Bitcon appears to be that people are ripping other people off left right and centre.

    6. Re:A fool and their money... by iroll · · Score: 1

      Another amazing act of mental acrobatics and insane projection. Where dark corner of your pathetic psyche are you dredging up these things from? What am I distancing myself from? Or am I not distancing myself, I can't keep it straight.

      In everything I've written in this thread, I've not made a single value judgment about illegal drugs, you raving lunatic. And by the way, you know a helluva lot less than you think you do. It is an undisputed fact of economics that contraband (guns, drugs, porn, forbidden politics, outlaw jedi) will command a premium proportional to the risk required to deliver it.

      Maybe you should smoke a little less crack so that it's not so obvious to everyone what an insufferable idiot you are.

      --
      Repetition does not transform a lie into the truth. - FDR
    7. Re:A fool and their money... by AmiMoJo · · Score: 1

      People addicted to drugs tend not to think too clearly about the potential risks involved in obtaining them.

      --
      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
  4. LOL by Anonymous Coward · · Score: 1

    "an estimated $2.7 million worth of Bitcoin belonging to users and staff of the site was stolen"

    LOL

    Bitcoin, the online money.

  5. Trustworthy is the name of the game by Anonymous Coward · · Score: 1

    Why would you bother to pay back millions of dollars when you could just disappear into the digital ether?

    Because TRUST is a vital ingredient in trade. In order for other to trust you, you need to prove yourself to be trustworthy.

    In that sense, the people behind Silk Road has more trustworthiness than that guy sitting inside the Oval Office.

    1. Re:Trustworthy is the name of the game by BasilBrush · · Score: 1

      That guy sitting in the oval office is Barack Obama. We know quite a lot about him. We even have his birth cert!

      Now who is that person trading as "The Silk Road"? And where is he?

  6. multisig, man, multisig. by Anonymous Coward · · Score: 1

    "With a broker or an exchange, you only have risk associated with the transaction. You put money in, bitcoins come out. You put bitcoins in, money comes out. Or, alternatively, you put bitcoins in, special brownies come out. The risk is all associated with that transaction."

    Yes, and the GP explained to you how new approaches (multisig) moves silk-market like operations too into that space, by making deposits with a third party unnecessary. You need to trust that the broker and the dealer aren't conspiring against you, but as long as ONE of the two is trustworthy and they aren't in cahoots, multisig solves that problem.

    Of course, there's still the risk with the transaction itself, and that's considerable when it's in an illegal market.

  7. I'm really sorry for them by badkarmadayaccount · · Score: 1

    It's not like they wanted to hurt anyone, just make money. So depressing. I feel sort of crappy myself. I wish I had more time to rest. It feels like I'm waiting for the mortician. Sorry for all this, I needed to vent.

    --
    I know tobacco is bad for you, so I smoke weed with crack.
  8. Why Rebuild and pay back $2.7m? by Anonymous Coward · · Score: 1

    If you feel the brand is worth more than $2.7m I guess - how much profit did the site make per annum?

  9. Hmm, I wonder... by namgge · · Score: 1

    Why would you bother to pay back millions of dollars when you could just disappear into the digital ether?

    I'm just guessing, but I'd have thought that ripping off certain users of Silk Road could be extremely bad for your health.

  10. Decentralized Black Markets by codebonobo · · Score: 1

    Decentralized Black Markets are being created and working proof of concepts are available.

    https://github.com/darkwallet/darkmarket

    All of these old darkmarkets mentioned in the OP are obsolete. Theft from the market owners will no longer be possible. Theft from sellers, while rare in past, will become even more rare with escrow mutisig authentications. Theft from governments shutting it down and stealing everyone's bitcoins like in SR1 will now become impossible.

    http://www.coindesk.com/airbitz-wins-toronto-bitcoin-expo-hackathon-darkmarket

    DarkMarket: A decentralized peer-to-peer marketplace, which cannot be shut down. Anyone can start a node and join the network, buying and selling with their peers. With identity, reputation, seller pages, multi-signature escrow, private messages and privacy features.

  11. Bounced back? No, trying to bounce back by BitZtream · · Score: 1

    First off, they haven't 'bounced back' ... someone is trying to, but at this point its not really shit to brag about. Second, in order for them to 'bounce back', their going to have to rob someone else.

    The first morons who let these guys hold their money were idiots. Who the fuck lets their drug dealer hold their money? NO ONE WITH A CLUE.

    Then, when the drug dealer runs off with your money ... what moron gives them more to hold on to? Not even strung out junkies are that stupid in general.

    --
    Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
  12. Re:A fool and his bitcoins are soon parted. by david_thornley · · Score: 1

    Yup. That's why I don't make large transactions in cash. Or in bitcoins.

    --
    "When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes