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Sheep Marketplace Scam Revealed, $40 Million Stolen

Sheep Marketplace Scam Revealed, $40 Million Stolen

| On 30, Nov 2013

bitcoins 300x200 Sheep Marketplace Scam Revealed, $40 Million StolenBitcoin and online drug markets seem to fit together perfectly and unfortunately, sometimes they are “too good” to be true. While there are handful of these sites which still appear to be legitimate and not based around a scam, a growing number of illegal drug marketplaces are randomly shutting down and taking millions in Bitcoins with them.

Following the Silk Road shutdown, a new site named Sheep Marketplace became a leading online drug marketplace and quickly grew into a replacement for the Silk Road. Many users continued to use Sheep Marketplace even after a new version of Silk Road was launched earlier this month.

Now, it appears as though the entire site was a scam, resulting in all of the buyers and sellers losing their money. According to users of the site which have been posting primarily on Reddit, Sheep Marketplace appeared to be functioning in an odd way for at least a week. Concerns regarding the legitimacy of the site came into play once the administrators at the marketplace decided to prevent vendors from withdrawing any of their Bitcoins from the site.

With many of these vendors seeing sales in the tens of thousands each month, being unable to withdraw that money was causing people to become worried, especially with how much money was lost after the Silk Road was brought to its knees. As more and more vendors posted about their suspicions, the entire Sheep Marketplace Forum was shutdown.

Even though the events leading up to today seemed to confirm that Sheep Marketplace was scamming its users, the smoking gun appears to have been found. Blockchain (a site which monitors Bitcoin transactions) has been tracking the movement of 39,918 Bitcoins, which is equivalent to $40 million. This is the same amount of money that was expected to be in Sheep Marketplace’s possession and the addresses present on this transaction match those of the website.

This means that more than $40 million worth of Bitcoin was stolen from users of the Sheep Marketplace.

Despite the transaction being just a fraction of the Bitcoins that are in circulation, it does show how risky these online drug marketplaces are. Though they may provide a safe haven for criminals, Sheep Marketplace and any other illegal shop that relies on Bitcoins is almost always going to be a potential scam. Some of the current illegal shops in operation, such as Silk Road 2.0, appear to be “safer” but as we have now seen with the Sheep Marketplace, Bitcoins are the perfect currency for scammers.

UPDATE 12/1/13: Now that vendors are incredibly upset about the Sheep Marketplace scam, the people in charge of the site have shutdown the store leaving a short note to users on the main page. The note suggests that a random vendor from the site was able to find a bug in the system and steal thousands of Bitcoins.

The amount mentioned in the note does not match the transfer amount and despite Sheep Marketplace claiming that users will receive their remaining Bitcoins if they have an emergency Bitcoin address enabled, no one has received anything thus far.

Since the administrators at Sheep Marketplace had lied for more than a week regarding what was happening, it seems unlikely that anyone will see their Bitcoins.

Message from Sheep Marketplace’s admin reads (spelling mistakes included):

We are sorry to say, but we were robbed on Saturday 11/21/2013 by vendor EBOOK101. This vendor found bug in system and stole 5400 BTC – your money, our provisions, all was stolen. We were trying to resolve this problem, but we were not successful. We are sorry for your problems and inconvenience, all of current BTC will be ditributed to users, who have filled correct BTC emergency adress. I would like to thank to all SheepMarketplace moderators by this, who were helping with this problem. I am very sorry for this situation. Thank you all.

  • Marbodius

    Well played. hahaha
    Oh dear this is really funny.

  • http://www.genomicon.com Nick Taylor

    To be fair, cash, not bitcoins is the perfect currency for scammers. You still need to get bitcoins into the fiat economy somehow, and at the moment, that happens through banks which are legally obliged (though HSBC didn’t live up to it) to report money-laundering activity, and attempting to withdraw $40M would raise alarm bells.

    I could be wrong about all that of course. That’s the way it looks to me right now though.

  • solu

    It wouldn’t be hard at all to sell them to other people for cash. Banks aren’t the only way to cash out on bitcoins.

  • Seth Fitzgerald

    It is slightly more difficult to move *large* amounts through individual vendors, however there are tons of people trading cash for Bitcoins so you are right.

  • Eat_Eateator

    Crime dealing can always lead to theft or murder. Nothing new to see here.

  • Steven Yaniz

    Tomorrow these same guys will open another marketplace and do it all over again. Fucking Geniuses

  • IQ? no….

    Wow people got stupid really quick…what kind of idiots would go and try to sell $40 mil in one hit…OBVIOUSLY they would split all the bitcoins into thousands of addresses, then sell small amounts in cash, and wash the coins through many different coin mixers and alt-coin exchanges and slowly sell many small amounts into different currencies…jesus…it really doesn’t take a rocket scientist to realize this…

  • just…dumb….

    Download my email that installs a bomb on your computer… oh wait…. moron :-

  • Heywood Jablueme

    might be until the owners of that site are discovered and found by some of the more brutal that might have used the site…say like the russian mafia. If they are discovered and found they are as good as dead.

  • Marbodius

    Or maybe the owners of this site are one of these “more brutal” factions.
    Im sure it would be no problem for people like the russian mob, to hire the necessary knowhow to setup such a scheme.
    But you’re right, they better made this untracable to not get killed.

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