Bitcoin-Trader Sudden Shutdown - Essay Example

Bitcoin-Trader.biz used to be a trading platform which has disappeared overnight.

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The only information about the site’s shutdown was provided through a letter that was sent to all their victims.

The letter claimed that all their funds were stolen by a hacker.

Bitcoin-Trader not only closed their official website but also all social media accounts within only a few hours.

While doing all these they hid under the cover pretending to be the victim of a hacker. They also demanded to file for bankruptcy.

The letter that all their former account holders received sounds like a cold story of excuses. The summary of the letter was that they got hacked, will file for bankruptcy and are shutting down suddenly.

The Bitcoin-Trader customers have no other options but to only fend for themselves on different Bitcoin Forums.

Before Bitcoin-Trader disappeared into the air, John Carley of the company sent the message to all account holders. It said heavy regrets that they were announcing the failure and closure of the company.

The letter stated that while the final audit results were being prepared, their bitcoin wallet was hacked and emptied.

This happened just after they exchanged the fiat holdings to bitcoin and transferred all their holdings to the wallet, for the proof of solvency.

Carley wrote in the message that it was known that he was against any proof of solvency but settled to do it anyways for many small and medium investors.

According to what Carley wrote, soon after the hacker took advantage of the firm’s holdings he contacted Carley. The hacker demanded a ransom in exchange for returning the coins.

They agreed to pay 25% of the ransom but apparently never heard from the hacker again.

Carley said that his goal was to set up something based on trust, just like digital currency bitcoin is founded on distributed trust. He admitted in the letter that he had unfortunately failed.

He thought declaring bankruptcy with Panamanian authorities and sending all relevant files and information for investigation is all that was left to do.

The letter obviously was not any consolation to the account holders. Instead it raised many queries. People wondered why any hacker would return 75% of funds and keep only 25%.

Also, it doesn’t fit that the company was so willing to pay the ransom. Many even questioned if it was a HYIP or legitimate.

“Fingertoe11? explained everything that happened clearly on Reddit. Bitcoin-Trader would never reveal their first “proof of solvency” to the public because it would expose them.

The fact that they forced the victims to leave money tied away for months at with the company is one of the easiest signs of HYIP scam.

On the last few days, the returns displayed on the website were below 1% whereas it was 2-3% toward the beginning. These suggest that the shutdown was a scam.