A Universal History of Bitcoin Infamy

The Liars, Cheats, Hackers, Con Artists, and Scammers of the early days of bitcoin

For Context: Quick History Early Bitcoin

  • Jan 2009 - Genesis Block
  • May 2010 - Bitcoin Pizza - First Commercial Transaction.
  • July 2010 - MtGox founded.
  • July 2010 - First bubble. Up 900% to 8 cents per BTC.
  • July 2011 - Second Bubble. Up to $31.00! And crashed back down to $2!

The GLBSE Era - The First Bitcoin Stock Market

April 2011


April - July 2011

  • Original Marquee 'ICO' on GLBSE
  • LocalBitcoin before LocalBitcoin
  • Turns out it was written by a 14-year-old wunderkind!
  • Until he got bored...

Amount Lost: 1,138 BTC

"The Ubitex scam would not have been possible today. Bitcoin users at the time were enjoying their newly-acquired wealth thanks to significant appreciation. Most 'investors' at the time were extremely naïve." - bitcointalk.org user dree12 November 2014


  • Know who you're doing business with.
  • You need more than a good idea to be successful.

Bitcoin Savings and Trust - PirateAt40

November 2011 - August 2012

The Setup

  • An investment opportunity!
  • Through secret methods known only by the founder!
  • 7% payout per week!
  • Make your money work for you!
  • Various Bitcoiners staked 260,000 BTC!

The Problem?


  • 7% weekly compounding interest.
  • Doubles approximately every 10 weeks.
  • Within one year your investment grows 33 times.
  • His investments of 260,000 bitcoin would somehow make 8.75 million bitcoin, more than existed at the time!
  • Almost an entire year for an obvious Ponzi scheme!

The Shutdown

  • Business abruptly terminated.
  • But all your money is safe, you'll totally get it back.


  • Internet detectives were able to figure out his real name: Trendon Shavers.
  • Arrested by the SEC.
  • Served 1.5 Years in Jail.
  • Ordered to pay 1.23 million dollars in restitution.

ICO scammers beware, the SEC will press charges

The End of GLBSE Era

Abruptly closed October 4, 2012

MyBitcoin - The First Online Bitcoin Wallet

July 2011

  • They held all the keys, unlike modern online wallets.
  • June 2011, operator "Tom Williams" disables site blaming hack.
  • Who is Tom Williams?
  • Is it even a real company?

The Scam

Correction: The Alleged Scam

  • Open a site and get people to put their money there.
  • Announce hack, say all is lost!
  • Announce some coins are saved, you can get 49.5% back.
  • People are happy to get anything back.
  • Keep 50.5%.

Amount Stolen: 78,739 BTC


NONE. "Tom Williams" was never identified. No actual legally incorporated company was ever identifed. Customers were happy to get what they could. There was never a serious investigation to track down the owner of the site or the alleged hacker.

Lessons for Everyone

  • Know who you're dealing with!
  • Own your keys!

Bitomat.pl - A Tale of Incompetence

August 2011

  • Early Exchange based out of Poland.
  • Site Hosted on Amazon EC2.
  • Do you know how the cloud works?
  • They didn't.
  • Rebooting a server destroyed their entire bankroll of 17,000 BTC.

Lessons for everyone

  • You must understand the technology you're working with.
  • You must have backups.
  • If you didn't test your backups, you don't have backups.
  • All hardware will eventually fail.

Butterfly Labs

2012 - 2014

  • One of the first, if not first, vendors of commercial mining hardware.
  • 20,000 Customers.
  • 20-50 million (USD) in preorders.
  • People paid in advance so they could build the hardware.

Where did things go wrong?

Seems like it's going to be a simple case of theft, right?

  • They did actually manufacture hardware.
  • And used it to mine for themselves.
  • They had various reasons why they weren't shipping the hardware out: Delays, Manufacturing problems, burn in times.
  • They even sold more advanced hardware on preorder before delivering the original hardware! And people bought it!

They eventually did deliver

  • But by then the miners were worthless.
  • Bitcoin difficulty had skyrocketed so much that customers couldn't even break even.
  • Would have been better off keeping Bitcoin in cold storage.




  • Offices raided by FTC and US Marshalls in September 2014.
  • After running for 2 years and getting thousands of FTC complaints.
  • Case finally closed in 2016. Company fined $38.6 Million. (The fine was later suspended.)


Sept 2011 - August 2011

  • Bitcoin Exchange with Margins and Options.
  • This one from a 17-year-old wunderkind Zhou Tong.
  • March 2012 - 43,554 Bitcoin stolen from hosting breach.
  • Company re-organizes, Zhou Tong no longer in charge.
  • May 2012 - 38,527 BTC stolen from hot wallet.
  • July 2012 - 40,000 BTC stolen from Mt Gox.
  • TOTAL LOSSES: 122,081 BTC!

Increasingly bizarre stories

  • He's in touch with hackers.
  • He's been blackmailed by a Chinese Billionaire who hunts for Chinese Relics in his free time.
  • ???
  • Was he just trying to save face? Or cover his tracks?


Thanks! Questions?

Grant Olson - Principal Software Engineer - Webkite

Slides available at www.grant-olson.net

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