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The Cryptocurrency, Bitcoin Scam

I imagine that some of our readers are preppers. Others are involved in the bitcoin, or the cryptocurrency “market.” Unfortunately, this concoction has every indication of being a fraudulent setup for looting and grand theft. Don’t you find it curious that the TPTB have largely stood by doing nothing as this instrument has spread?

We have the story of JP Morgan’s Jamie Dimon foreshadowing and warning about cryptocurrency skullduggery, and then we learn JPM is involved in the “market.” What the wags didn’t mention is that a trading derivative futures market, such as the one JPM would be involved with, can short sell cryptos. Short selling is a bet the price will go down. This is hardly an endorsement.

See JP Morgan reportedly getting into bitcoin futures trading even though Dimon believes it is a fraud, from CNBC.

In Japan — the ultimate lemming, fall-guy and bubble nation — bitcoin is a legal currency. That may in turn explain — at least in part — the speculative price lifts. The present mania started off in countries where wild gambling is part of the culture. Very large volumes started to be traded in the Philippines in April 2016, followed closely thereafter by Malaysia and Indonesia. China didn’t start to trade bitcoins in meaningful quantities until Feb. 18, 2017 when they jumped from near zip to over 60 million yuan in a single day.

On May 18, 2021 China banned financial institutions and payment companies from providing services related to cryptocurrency transactions, and warned investors against speculative crypto trading. Many Bitcoin mines in Southwest China’s Sichuan Province – one of China’s crypto mining bases were closed in June.

CNBC looked into Coinbase:

  • CNBC interviewed Coinbase users across the country and found thousands of customer complaints against the company.
  • The interviews and complaints revealed a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from the company.
  • Coinbase’s customer service has been primarily via email, and many customers say it is hard to reach representatives and that they have not been made whole for their losses.

The logic of using bitcoin for prepping against an economic meltdown or disaster is dicey to say the least. What if there was no electricity, Internet or exchanges? Do holders take such things for granted? What happens to the misplaced confidence when the first computer goes offline? The coins would then vanish without leaving a trace. Former owners would have no chance to pursue the pilferers and bring them to justice. It’s the perfect crime.

On its face, as the software gets larger and more complex, it becomes exponentially more difficult to make sure your software is secure. Ergo, the higher the stakes, the higher the motivation, the higher the hacking probability .

This looks like a perfect heist for the Crime Syndicate. They have massive parallel processing power and plenty of electric power. They probably don’t even need to hack them in the first place, because they have access to the code through the backdoor and are already in. Avoiding this heist requires being off the grid as much as possible, with the store of value in hand, not in cyber space.

It looks like a Ponzi scheme, and I won’t even venture into who’s behind it. But imagine a (likely) situation in which there is more than one claim to a token? Does anybody know who put out the cash value that all the cryptos represent and who has it now? Where would the money come from if there is a run on bitcoin?

The bottom line is that there have been thousands of cryptos created over the past few years. Anyone can create them. There are no rules. They are a medium of transaction, not a store of value that is backed by anything tangible. What they do signify is just how many people live in a dream world of unreality. Hundreds of cryptos have already become worthless. People have lost a lot of money on them, but the lugenpresse and even the alt media doesn’t talk much about that do they?

Cumulative amount of nearly USD $2.58 Billion has been stolen from crypto exchanges since 2012. Since 2012, at least 46 Bitcoin exchanges have lost funds through a major cyber security breach.

For those still living in the dream world, here is a list courtesy of Wolf Street of the major crypto hacks to date. It starts with a message like this:

Yesterday, we discovered that funds were improperly removed from the Tether treasury wallet through malicious action by an external attacker. Tether integrators must take immediate action, as discussed below, to prevent further ecosystem disruption.

Disappeared: $31 million in tether tokens. This was reported Monday night by Tether, the company behind the cryptocurrency “tether,” with a market capitalization of $673 million, according to CoinMarketCap. The value of a tether, which is “tethered” to the U.S. dollar, continued to hover around $1.

The hack had taken place on Nov. 19, Tether said. The tokens were sent to an “unauthorized Bitcoin address.” The company said it’s trying to prevent the stolen tokens from being converted into dollars or enter “the broader ecosystem.”

Bitcoin plunged 5% and then recovered. Tether is used as a medium to transfer cryptocurrencies to other exchanges in other countries without using the dollar and without using banks. Note that the same people that own Bitfinex (discussed below) set up Tether, also in the British Virgin Islands, a fact that became known via the leaked “Paradise Papers.”

Here are some of the earlier major cryptocurrency hacks

2021, August 19

Liquid

Obtained access to hot wallet

$97 million

2021, April 29

Hotbit

Obtained access to hot wallet

Nil

2020, December 23

Livecoin

Compromised system/servers

Unknown

2020, December 21

EXMO

Obtained access to hot wallet

$4 million

2020, December 1

BTC Markets

Internal staff error/mistake

270,000 user’s private details

2020, September 25

KuCoin

Data leak

$275 million

2020, July 11

Cashaa

Malware

$3.1 million

2020, June 29

Balancer

Vulnerability in protocol

$500,000

2020, April 19

Lendf.me

Bugs and Re-entrancy attack

$24.5 million

2020, April 19

Uniswap

Bugs and Re-entrancy attack

$500,000

2020, February 5

Altsbit

Obtained access to hot wallet

$70,000

2019, December 19

Youbit

Obtained access to hot wallet

Unknown

2019, November 26

Upbit

Obtained access to hot wallet

$49 million

2019, November 5

Vindax

Unknown

$500,000

2019, July 11

Bitpoint

Compromised system/servers

$32 million

June, 2019 Bithumb: $30 Million- hacked and $30 million in tokens stolen, according to Coin Telegraph. The attack focused on Bithumb’s hot wallet, a storage mechanism less secure than a cold wallet system.

June, 2019 Coinrail. The rival South Korean exchange was hacked just over a week before Bithumb. Thieves took about $37.2 million worth of digital currency.

February, 2019 Italian exchange BitGrail was hacked in early February, with team members suggesting that $195 million in the token nano was stolen.

February, 2018  Coincheck suffered an attack in 2018 which cost it 523 million NEM coins valued at about $534 million. Again, a hot wallet was the culprit in the theft.

August 2017 Enigma ICO (Initial Coin Offering) was hacked and 1,500 Ether ($500,000) stolen. Store of Value writes:

The hacker was able to break into Enigma’s website, Slack group, and mailing list and sent fraudulent messages to the project’s community asking for money. This allowed the hacker to gather almost 1,500 Ether (about $500,000). This is despite a previous warning by Enigma that it would not collect money in this way until its ICO in September.

July 2017 Veritaseum’s Ether wallet was hacked and about $8 million stolen after its ICO on May 26. Store of Value writes:

[O]n July 23rd, Middleton [founder Reggie Middleton of the Boom Bust Blog] claimed in Veritaseum’s Slack group that hackers stole 36,000 VERI tokens out of a wallet held by the company. This is how Middleton described the hack: “The hackers thwarted 2FA, on two different accounts, and finagled 3rd parties security among several other things. They went through quite a bit of effort, alas going through that much effort caused them to leave a bread crumb trail as well. I hate thieves.”

July 2017 Parity Multisig Wallet was hacked, according to ParityTech. “A vulnerability in the Parity Wallet library contract of the standard multi-sig contract has been found,” the company said. Via this vulnerability, hackers drained 153,037 Ether ($32 million) from three multi-signature contracts that were used to store funds from prior ICOs (Swarm City, Edgeless Casino, and æternity).

July 2017 Bithumb, the world’s fourth largest bitcoin exchange and largest ether exchange, was hacked, according to Hacker News. Claims “started to surface” that “billions of won” disappeared from compromised accounts at the Korean exchange. At the time, actual loss data remained unclear.

July 2017 (a busy month for cryptocurrency thefts) CoinDash ICO was hacked and 37,000 ether ($7 million) were stolen. Store of Value writes:

CoinDash is an Israeli startup that conducted an ICO in July of this year to raise funds. However, just 13 minutes into the crowdsale, a hacker was able to change the Ethereum address posted on the ICO’s website. This address is where interested investors should send their ether to in order to receive CoinDash tokens in return.

October 2016 Bitcurex, a bitcoin trading platform in Poland, was suddenly shut down. A few days later, it posted a notice on the otherwise dead site that an update had gone awry and asked customers to be patient. January 2017 the owner of the exchange “disappears,” as the exchange remained shut down and its 2,300 bitcoins ($2.6 million) are gone. Polish authorities started investigating.

August 2016 Bitfinex, which doesn’t even disclose where it is located (it’s incorporated in the British Virgin Islands at a mailbox address and files some paperwork in Hong Kong), was hacked again after its May 2015 hack. This time 119,756 bitcoins were stolen ($72 million) — at the time the second largest heist after Mt. Gox. The exchange is the world’s largest dollar-based bitcoin exchange. The same people that own Bitfinex set up Tether, also in the British Virgin Islands, a fact that became known via the leaked “Paradise Papers.”

July 2016 social media blockchain Steemit was hacked, 260 accounts compromised and $85,000 in Steem and steem dollars stolen.

June 2016 Ethereum project Decentralized Autonomous Organization (DAO) was hacked, “more than 3,600,000 ether” ($72 million at the time) were stolen. Hackers had exploited a known vulnerability. CoinDesk explains:

Unfortunately, while programmers were working on fixing this and other problems, an unknown attacker began using this approach to start draining The DAO of ether collected from the sale of its tokens.

May 2016 Gatecoin, a Hong Kong-based exchange, was hacked. It claimed a loss of 250 bitcoins and 185,000 ether, about $2.14 million at the time.

March 2016 Canada-based Cointrader was shut down after an audit showed “a deficiency of bitcoin.”

March 2016 ShapeShift, which on its site claims to be “the safest, fastest asset exchange on Earth,” was hacked three times in a two-week period. Each time, the hot wallets were cleaned out. Disappeared: 469 bitcoins, 5,800 ether, 1,900 litecoins ($230,000 in total).

January 2016 Cryptsy claimed it had been hacked and shut down. Disappeared: about $6 million in bitcoin and litecoin. In August 2016 CoindDesk reported:

Cryptsy CEO Paul Vernon may have stolen as much as $3.3 million from the now-defunct digital currency exchange and destroyed evidence of his illicit actions. That’s according to new court documents from the ongoing class action lawsuit filed against the troubled industry exec.

May 2015 Bitfinex announced that it was hacked and its “hot wallet might have been compromised.” Turns out, 1,500 bitcoin (at the time $350,000) were stolen.

January 2015 Bitstamp was hacked after a phishing expedition that targeted employees, as was later revealed. In total, 18,866 bitcoins ($4.3 million at the time) were stolen.

January 2015 BTer in China was hacked, 7,170 bitcoins ($1.8 million at the time) were stolen.

January 2015 KipCoin in China was hacked and about 3,000 bitcoins were stolen ($800,000 at the time).

And there is more

Going deeper into history, here are some more cryptocurrency hacks, via Bitcoin Exchange Guide:

July 2014 3,700 bitcoins ($2 million) stolen on Mintpal.

July 2014 5,000 bitcoins ($1.8 million) stolen on Bitpay.

March 2014 150 bitcoins ($101,000) stolen on Bitcoin.

March 2014 896 bitcoins ($572,000) stolen on Flexcoin.

February 2014 650,000 bitcoins stolen on Mt.Gox, largest heist so far (see above).

November 2013 1,296 bitcoins ($1.46 million) stolen on BIPS.

November 2013 4,100 bitcoins ($5.6 million) stolen on Inputs.

November 2013 6,000 bitcoins ($6.7 million) stolen on PicoStocks.

November 2012 263,024 bitcoin ($3.4 million) stolen on ironically named Bitcoin Saving & Trust. That would amount to $2 billion at today’s price.

September 2012 24,000 bitcoins ($250,000) stolen on Bitfloor.

March 2012 46,703 bitcoins ($6 million) stolen on Bitcoinica.

June 2011 25,000 bitcoins ($775,000) stolen by a user known as “ALLINVAIN.”

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24 Comments on The Cryptocurrency, Bitcoin Scam

  1. It seemed obvious to me from the start that bitcoin was nothing reliable, and certainly not a genuinely revolutionary, grassroots ‘break from the system’. I’ve been surprised to see so many otherwise well-educated dissidents embrace and promote bitcoin, even to this day.

  2. And what if we make a similar list with fiat currency theft over the same time period? Are you suggesting we are safer with stock bubbles, housing bubbles, peak debt…? Yeah, a little bit of crypto is good diversification. Enjoy the bank free transactions… 🙂

  3. Yes we are always being scammed with fake ‘populist’ stuff, and bitcoin has had all the signs of being as much of an internet scam run by CIA-NSA as their Wikipedia run by a partying-with-Israeli-presidents ex-pornography-salesman, & the paedophile’s favourite tool, the US-gov-produced fake-‘anonymous’ Tor browser

    Interesting angle from the many who point out how much huuuge electrical power from the world grid is sucked up by bitcoin usage & bitcoin mining, given the enormous amount of processing needed in even the simplest bitcoin purchase, due to the laboriously-long ‘blockchain’ which ‘authenticates’ your bitcoinage, it is endless gigabytes & terabytes

    Bitcoin is already using up more electrical power than most countries in Africa … time for an ‘environmental tax’ on all bitcoins

  4. US 90% uncirculated silver dollars look good here, and some key dates are being well bid.

    I’ve never seen a counterfeit vintage US mint silver coin, my guess is they’re so damn cheap why incur the wrath of the secret service?

  5. Many thanks for posting all these cypto thefts. I almost got into this but your work and too much enthusiasm on the part of others ( Clif High) made me think long and hard about it. I understand Max Keiser lost money in it as well, probably through one of the hacks you mentioned. The MSM tauting it as the new prepper currency is pretty much the final nail in the coffin. I’m expecting a massive siphoning next year, probably before March. Also appreciate Brabantian’s pointing out how much electricity these exchanges drain. No way that’s going to last, although taxing it I’m sure is making some eyes twinkle.

  6. “A special thanks to Meni Rosenfeld, Yudi Levi, Amatzia Benartzi, Ron Gross, Assaf Bahat, Sefi Golan, Joshua Alliance, Brian Singerman, Adi Scope, Dory Asher, Tal Keinan, Wings.ai,TheFloor, Arie Ben-David from the Israel Monetary Change Movement, Scott Morris of Ithacashand the Bancor team, Ilana, Asaf, Or, Omry, Itay and Mat”

  7. IMO, the reason bitcoin remains and so many others have spawned is that it’s the preferred currency for global money laundering, illegal donations/contributions and the illicit drug industry, including marijuana.

  8. when you think of BTC think Neologism: “The term neologism has a broader meaning which also includes “a word which has gained a new meaning”

    https://en.wikipedia.org/wiki/Neologism

    i.e. making a noun a verb.-The Greeks used to do this with prefixes and suffixes

    In the case of BTC its all about cryptoing the money world…

    Facebook and Google have their products…they are permissioned, BTC is permissionless (not viable in a legal sense)

    BTC has a fixed amount…Do you know how many pennies are lost yearly to couches and carwash vacuums? Or stale Starbucks gift cards???

    That fixed number goes to zero eventually

    https://money.howstuffworks.com/how-much-money-accidentally-throw-away.htm

      • It just doesn’t work…it doesn’t…it can’t. How do you, “SHOW ME THE BLOCKCHAIN?”

        How? It does not even work for the script of a film and most of those are written with crayons. How do you show me the blockchain:

        Certainly the “ultra secretive” creator of Bitcoin cannot show it to me; I mean after all he is “ultra secretive” and does not go out in public.

  9. Crypto is an obvious scam and we will be correct in the end, BUT unfortunately TPTB are going to use the masses to force us into being wrong.

    First off the very mythos of how it all started is a stupid vague story with just enough Asian eastern element to appeal to geeks, big coincidence this just happens to be the initial target customer base.

    MIT/CIA level coding is used to create this and you expect me to believe some benevolent guy named Satoshi gifted this to the world out of the goodness of his heart….yeah right. Doesn’t happen. If you believe this then let me tell you about the great benevolent Sam Walton that swore he would never make a dime until his 10,000th store would be open and let me sell you a beautiful piece of land i have….

    No, what crypto really is, unfortunately, is a nation killer. The more people that turn in their nations FIAT in exchange for globo nothingCoin it weakens your home nation. It weakens their buying power on their FIAT system on the world stage.

    We are staring at a giant global Gold Confiscation Act of 1933 in slow motion. People are exchanging tangible assets for nothing.

    Yes FIAT isnt the greatest system but it is very fungible and only gets out of control when the people allow it to get out of control.

  10. There’s no such thing as a crypto currency it’s literally a ledger of your financial transactions.

    Also people think that it’s untraceable because of blockchain coding. Except that it can only be used on a computer, built by a giant corporation, using their operating system.

  11. Okay, Simple is as Simple does…

    and Forrest’s mother was a whore, but that is beside the point. = )

    If you thought is DRM (digital rights management) was a huge scam because your EULA (end user licensing agreement, the thing 99% of us generally skip reading) permits the “Sellor” to go into your account and remove any file that they are no longer paying the rights for to the “Creator”, then YOU GONNA LOVE YOU SOME BLOCKCHAIN.

    The issuing entity (corporation, government and / or bank since they all work together) will be able to remove your “CRYPTO” (sounds like cryptic doesn’t it?) under various contractual situations that most people will never pay attention to, since a large portion of them will not read the documents (paper or digital).

    Then there is the fun and games that they can play with transparency when it comes to valuation and parity discovery.

    And lest we forget, what happens when a squirrel shuts down a power grid or some “enemy” (since we make these “enemies” fresh daily) use the EMP on us and wipes out the entire system? Then whata-we-do?

    Biggest corporate scam since:

    “This is the information superhighway (instead of a “web” that “ensnares prey”) and it is all free for you to use.”
    “Using the dark web will allow you to avoid government spying…”

    And / or

    “Edward Snowden is a freedom fighter!”

    Nope all of it is just one giant scam after another. Oh yeah, and Forrest’s mother was a whore.

    All kidding aside, I really like this thread and think it is almost more timely than its original inception point; thanks for bringing it back. Also, everyone stay well and healthy.

    All my best,
    Simple Citizen

  12. Yes I use the internet to do research, sell or give away my novels at my omegabooknet.com website, watch free movies 50 or so years old (since we have no TV anymore or satellite service and I’m glad about that), and a few other things such as email (and since I have no cell phone…). But the fact is I do NOT TRUST TECH or any “smart” devices or IoTs…and I’d rather deal with “old school” if you know what I mean.

    I have two issues with alternative media: one, most of them are controlled opposition and they always leave out some truth that they can’t reveal just because; two, they promote BitCoin and Etherium or whatever, which as someone said above–if one can’t hold it one doesn’t own it. That’s my only serious issue with James Corbett–his promotion of “blockchain” nonsense! Saw his 2015 or so video promoting BitCoin…hopefully he’s “learned his lesson” by now!

    The only true assets are gold, silver, land/property, things of actual value…and the means to defend them!

    Thanks again, Russ, for your truthful post!

  13. Words matter:

    Crypto
    Blockchain
    Bitcoin
    Chainlink
    Ethereum

    Now this list is not comprehensive by a long shot; however, please just read each of these words fast, then go slower and close your eyes with each word to contemplate what it reminds you of as you see the word in your mind.

    You and I browse a “web” on a “net”. Words are not used in these cases by accident. They are chosen to blatantly tell you what the object is designed to do, and then the marketing that follows, obscures your perception of what you are being both told and sold.

    When the term “web” scares everyone (and it truly did scare many folks in the 1990s), then you get the marketing “information superhighway”.

    Crypto sounds like cryptic.

    Blockchain sounds like a device to fasten a slave to.

    Bitcoin may sound like a technological coin or a sliver of actual currency that is never worth the values of the whole.

    Chainlink sounds like prison and a chain gang

    Ethereum sounds like something that could be lost up in the ether (such as your wealth if this is what you sink yourself into).

    There is no accident in the choice of words and titling. Apple Computers Incorporated in not Apple Inc., as one made computers (originally in Cupertino, CA) and the other is a slave organization that will do anything to make a profit and is “down to clown” with big daddy government. Apple Computers dabbled with government, but never really fit in, Apple, Inc, had big daddy gov. contracts that replaced Blackberry. Apple Inc.’s current figurehead is a “true believer” and “black shirt” to the core.

    So my friends, I would humbly submit to you to consider the words, before making any decision. If the name or title does not feel right, then follow your gut instinct and steer clear. I am pleased to see how many folks here are already doing this.

    Please be well.

    Best,
    SC

  14. The issue about cryptos only being available if one has internet access is a valid concern that pretty much everyone who’s into crypto would be aware of. The thinking goes, though, that if a crypto owner does somehow still have access to the net, then they’d be in a beter position than someone who has their money in the bank (including an electronic account) which they could be banned from very easily, and probably will be fairly soon. As far as things go, however, I think that’s about the only supposed benefit of crypto, seeing as 1. the likelihood of an unvaccinated, unemployed and unemployable person having ready access to the net in the near future is low; 2. whatever other valid criticisms of crypto exist.

    In terms of tangibles like gold or food stores, they do seem to be the best options, despite the fact that they’re not exactly fool proof themselves, given that others can also take them away; and yet I don’t think we’re shooting for perfection here, but merely looking at the balance of probablities.

    That said, I’m personally sceptical of even gold, for it’s ultimately only worth anything if people agree it has value. As far as I can see, there’s no guarantee that when things get bad, a bar or a coin of precious metal is going to mean much to anyone – but this, in a sense, is just stating the obvious. It wouldn’t surprise me, then, if some good argument existed for why gold will always be worth something to people.

    • Not too much time at the moment, but I wanted to say a great post with very interesting observations, especially the aspect of connectivity, which I think a lot of us do not consider much these days.

      (I just recycled the EMP idea as it has been bandied about since the 1970s or 80s – EMP / EMPs used in an attack by the USSR that goes from Chicago down to the Mississippi River and cuts off communications between the two coasts is an old one, but your point is more timely).

      Best,
      SC

  15. I have heard that Coinbase “censors” freedom speakers from their accounts basically shutting them down and stealing their money. Nick Fuentes mentioned this as part of the silencing of his voice. If they don’t like what you’re saying, poof your money is gone. Thank you Russ – appreciate your work.

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