At this point, people who use Bitcoin have to know that their money could simply disappear at any moment, right?
The latest example is Evolution, the largest black market website left standing after the Silk Road was taken down by authorities on multiple occasions, whose owners appear to have shut down the service and run off with more than $11.7 million in Bitcoin, Ars Technica reported yesterday.
Former users of the Evolution marketplace are pointing at a Bitcoin wallet that was active earlier this week and holds more than 43,000 Bitcoins, according to Reddit posts quoted at Ars Technica.
One other Reddit user reported that the site had been functioning improperly of late, particularly making it more difficult to withdrawal Bitcoin from the site. That user claimed to have had administrator access "to see parts of the back end," saw the makings of a mass robbery of Evolution users, and even says that the site's creators and chief operators had confirmed that that's what they were doing. It should be noted that these are unverified comments on Reddit, and that the Ars Technica article says the user has yet to respond to requests for additional comment.
Regardless, this kind of scam is almost starting to become common. Mt. Gox, formerly the world's largest Bitcoin exchange that was responsible for 70% of transactions involving the currency, shut down last February, claiming it had been hacked. The company filed for bankruptcy protection toward the end of the month, claiming it could not restore the Bitcoins that had been lost during its three-week outage, which totaled about $473 million. By March, the company suddenly announced that it had found about $116 million worth of Bitcoins in an old wallet, but it has yet to restore any of the remaining money, and its former CEO, Mark Karpeles, refuses to appear in court for charges stemming from the mysterious demise of the site.
This is just kind of how the Bitcoin world works. A study released in 2013 by computer scientists from Southern Methodist University and Carnegie Mellon University found that 18 of 40 Bitcoin exchanges that had opened ended up closing, and only six of those actually reimbursed their users, Wired reported. That doesn't count the Bitcoin sites that fall victim to hacking attacks (here's a great Gizmodo article from last year on the six biggest Bitcoin heists), which become significantly more likely as Bitcoin exchanges grow, according to the report.
Or there are those that get caught by the authorities and shut down, after which the Bitcoin ends up in the hands of the authorities anyway. After the Silk Road's first raid in September 2013, the FBI seized about $127.4 million worth of Bitcoin. Although the FBI later announced that it was going to sell these Bitcoins, the users who originally acquired them on Silk Road would have to spend money just to get theirs back.
Then there are the services like Evolution, which can foster a large community that happens to use Bitcoin for transactions, wait until it's gotten big enough, and then run away with the money that the community had deposited onto it.
For those who decide to launch an online black market like this, there appear to be only two outcomes: get arrested or run away with the money. In either case, the users end up in the same position.