Mercado Bitcoin: Difference between revisions
(30 minutes. Reworded the about section to improve readability. Lots of research and incorporation of information from the BitcoinTalk thread. Expanding the wiki sections and removing placeholders.) |
(30 minutes. Adjusted country from Germany to Brazil. Improved wording of article. Fixed launch data from March 10th to October 3rd. Kyle Gibson information incorporated. Sorting through and expanding the loss information. Reviewed more on BitcoinTalk thread and added English version of thread.) |
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{{Case Study Under Construction}}{{Unattributed Sources}} | {{Case Study Under Construction}}{{Unattributed Sources}} | ||
[[File:Mercadobitcoin.jpg|thumb|Mercado Bitcoin Logo/Homepage]]Mercado Bitcoin was a dominant exchange . | [[File:Mercadobitcoin.jpg|thumb|Mercado Bitcoin Logo/Homepage]]Mercado Bitcoin was a dominant exchange based in Brazil. | ||
I could go into more detail of allegations; however let’s just say the Mercado Bitcoin exchange was long suspected to not be fully backed to begin with, and was of course not stored properly with any sort of multi-signature cold storage wallet. | I could go into more detail of allegations; however let’s just say the Mercado Bitcoin exchange was long suspected to not be fully backed to begin with, and was of course not stored properly with any sort of multi-signature cold storage wallet. | ||
This exchange or platform is based in Germany, or the incident targeted people primarily in Germany. | This exchange or platform is based in Germany, or the incident targeted people primarily in Germany.<ref name=":1">[https://bitcointalk.org/index.php?topic=179992.0 Semelhanças entre Leandro Mercado Bitcoin e Pirateat40 - BitcoinTalk] (Feb 27, 2024)</ref><ref name=":2">[https://bitcointalk.org/index.php?topic=160150.0 Problema do Mercado Bitcoin - BitcoinTalk] (Feb 27, 2024)</ref> | ||
== About Mercado == | == About Mercado Bitcoin == | ||
The Mercado Bitcoin (Portuguese for Bitcoin Market) claimed to be the best place to buy and sell bitcoins in Brazil<ref name=":3">[https://web.archive.org/web/20130310031854/http://www.mercadobitcoin.com.br/ Mercado Bitcoin Homepage Archive March 9th, 2013 8:18:54 PM MST] (Accessed Mar 12, 2024)</ref>. In addition to bitcoin trading, the homepage acted as a source for the latest Bitcoin news, promising to help investors make informed decisions in the cryptocurrency market<ref name=":3">[https://web.archive.org/web/20130310031854/http://www.mercadobitcoin.com.br/ Mercado Bitcoin Homepage Archive March 9th, 2013 8:18:54 PM MST] (Accessed Mar 12, 2024)</ref>. | The Mercado Bitcoin (Portuguese for Bitcoin Market) claimed to be the best place to buy and sell bitcoins in Brazil<ref name=":3">[https://web.archive.org/web/20130310031854/http://www.mercadobitcoin.com.br/ Mercado Bitcoin Homepage Archive March 9th, 2013 8:18:54 PM MST] (Accessed Mar 12, 2024)</ref>. In addition to bitcoin trading, the homepage acted as a source for the latest Bitcoin news, promising to help investors make informed decisions in the cryptocurrency market<ref name=":3">[https://web.archive.org/web/20130310031854/http://www.mercadobitcoin.com.br/ Mercado Bitcoin Homepage Archive March 9th, 2013 8:18:54 PM MST] (Accessed Mar 12, 2024)</ref>. | ||
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== The Reality == | == The Reality == | ||
The | The platform had an issue where a user could generate a balance in their account without properly completing a deposit, which could be exploited to steal funds. | ||
Some users have claimed that Bitcoin Rain was a ponzi scheme operated by Leandro, the administrator of Mercado Bitcoin<ref name=":1" />. | |||
== What Happened == | == What Happened == | ||
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!Description | !Description | ||
|- | |- | ||
| | |October 3rd, 2011 | ||
|Bitcoin Rain Launch | |Bitcoin Rain Launch Date | ||
|The | |The start date of the Bitcoin Rain scheme which is listed on BitcoinTalk<ref name="bitcointalklistold-20" />. | ||
|- | |- | ||
|March 28th, 2013 8:32:18 AM MDT | |March 28th, 2013 8:32:18 AM MDT | ||
| Line 34: | Line 36: | ||
|March 28th, 2013 | |March 28th, 2013 | ||
|Bitcoin Rain Defaulted | |Bitcoin Rain Defaulted | ||
|The ponzi scheme Bitcoin Rain defaults<ref name="bitcointalklistold-20" />. | |The ponzi scheme Bitcoin Rain defaults<ref name="kylegibson-86" /><ref name="bitcointalklistold-20" />. | ||
|- | |- | ||
|March 29th, 2013 | |March 29th, 2013 | ||
| Line 50: | Line 52: | ||
|April 18th, 2013 3:47:29 PM MDT | |April 18th, 2013 3:47:29 PM MDT | ||
|BitcoinTalk Thread Claiming Ponzi | |BitcoinTalk Thread Claiming Ponzi | ||
|A BitcoinTalk thread in Portuguese compares Mercado Bitcoin / Bitcoin Rain to the ponzi scheme run by Trendon Shavers<ref name=":1" />. | |A BitcoinTalk thread started by user Erectus in Portuguese compares Mercado Bitcoin / Bitcoin Rain to the ponzi scheme run by Trendon Shavers<ref name=":1" />. | ||
|- | |- | ||
|April 18th, 2013 5:25:34 PM MDT | |April 18th, 2013 5:25:34 PM MDT | ||
|Mercado Bitcoin Back Online | |Mercado Bitcoin Back Online | ||
|The Mercado Bitcoin exchange is reportedly brought back online in an announcement on BitcoinTalk<ref name=":2" />. The original thread about the security breach is updated to announce the relaunch<ref name=":2" />. | |The Mercado Bitcoin exchange is reportedly brought back online in an announcement on BitcoinTalk<ref name=":2" />. The original thread about the security breach is updated to announce the relaunch<ref name=":2" />. | ||
|- | |||
|July 26th, 2013 9:38:21 PM MDT | |||
|BitcoinTalk Thread In English | |||
|A copy of the BitcoinTalk accusations is posted in English. However, this thread appears to receive only a single reply and very limited engagement<ref>[https://bitcointalk.org/index.php?topic=263231.0 New pirateat40 in Brasil! Leandro César owner of MercadoBitcoin.com.br - BitcoinTalk] (Accessed Apr 2, 2024)</ref>. | |||
|} | |} | ||
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As Bitcoin Rain's funds were stored there, investors in Bitcoin Rain as well as account holders on Mercado Bitcoin lost money. Some money was reportedly paid back, but the vast majority is still outstanding.” | As Bitcoin Rain's funds were stored there, investors in Bitcoin Rain as well as account holders on Mercado Bitcoin lost money. Some money was reportedly paid back, but the vast majority is still outstanding.” | ||
A BitcoinTalk list prepared by dree12 has estimated the amount lost as 4,000 bitcoin<ref name="bitcointalklist-87" /><ref name="bitcointalklistold-20" />, which was taken from an average of known Bitcoin Rain and Mercado Bitcoin victims, as well as a donation address<ref name="bitcointalklist-87" /><ref name="bitcointalklistold-20" /><ref name=":0" />. According to the provided spreadsheet, there were 2734.821192 bitcoin reported missing, and a donation address was able to generate 5075.181457 bitcoin in total, with an average of 3905.001325 bitcoin which was rounded to 4000<ref name=":0" />. | |||
BitcoinTalk user dree12 gave a further estimate of the equivalent value of 2,150 bitcoin in 2013<ref name="bitcointalklistold-20" />. This was reported as the amount of the loss by Kyle Gibson<ref name="kylegibson-86" />. The value was later estimated to be equivalent to 284 bitcoin in January 2014, or $231,440 USD<ref name="bitcointalklist-87" />. | |||
=== Victims of Bitcoin Rain === | === Victims of Bitcoin Rain === | ||
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== Ultimate Outcome == | == Ultimate Outcome == | ||
=== Accusations of Bitcoin Rain Ponzi === | |||
Accusations were levied against Leandro by a user named Erectus<ref name=":1" />. The discussion on the BitcoinTalk forum, in Portuguese, revolves around similarities between Leandro Mercado Bitcoin and Pirateat40, focusing on potential fraudulent activities<ref name=":1" />. Participants highlight resemblances in the way Leandro managed Bitcoin Rain and Mercado Bitcoin, drawing parallels to [[Bitcoin Savings and Trust|the Ponzi scheme orchestrated by Pirateat40]]<ref name=":1" />. Accusations include Leandro mixing funds from different entities, failure to provide clear explanations regarding alleged theft, and suspicions arising from the sudden shutdown of Bitcoin Rain after critical posts<ref name=":1" />. Erectus claims that Bitcoin Rain was a ponzi scheme and pointed to evidence that bitcoins involved in Bitcoin Rain had not been moved during the theft period<ref name=":1" />. While some express concerns and demand transparency from Leandro, others defend him or call for further investigation. Overall, the discussion reflects a mix of skepticism, frustration, and uncertainty among forum members regarding the legitimacy of Leandro's operations<ref name=":1" />. | |||
=== Reimbursements Announced === | === Reimbursements Announced === | ||
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== Total Amount Recovered == | == Total Amount Recovered == | ||
Leandro announced that customers of the exchange would be refunded. | |||
According to BitcoinTalk, some funds were reportedly paid back, however the vast majority remained outstanding<ref name="bitcointalklistold-20" />. | |||
A donation address set up by Leandro César received a reported 5075.181457 bitcoin<ref name=":0" />. There was suspicion that Leandro César was donating to this address himself<ref name=":0" />. | A donation address set up by Leandro César received a reported 5075.181457 bitcoin<ref name=":0" />. There was suspicion that Leandro César was donating to this address himself<ref name=":0" />. | ||
Revision as of 11:27, 2 April 2024
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Mercado Bitcoin was a dominant exchange based in Brazil.
I could go into more detail of allegations; however let’s just say the Mercado Bitcoin exchange was long suspected to not be fully backed to begin with, and was of course not stored properly with any sort of multi-signature cold storage wallet.
This exchange or platform is based in Germany, or the incident targeted people primarily in Germany.[1][2]
About Mercado Bitcoin
The Mercado Bitcoin (Portuguese for Bitcoin Market) claimed to be the best place to buy and sell bitcoins in Brazil[3]. In addition to bitcoin trading, the homepage acted as a source for the latest Bitcoin news, promising to help investors make informed decisions in the cryptocurrency market[3].
In statistics gathered on March 9th, 2013, the platform boasted 2218 users, 78 open orders, and 92 bitcoins for sale, with 479 operations in the last 30 days[3]. The market showed steady activity, with fluctuations in value against the Brazilian Real[3].
The Reality
The platform had an issue where a user could generate a balance in their account without properly completing a deposit, which could be exploited to steal funds.
Some users have claimed that Bitcoin Rain was a ponzi scheme operated by Leandro, the administrator of Mercado Bitcoin[1].
What Happened
Over a few days prior to March 28th, 2013, hackers profited by exploiting a vulnerability in the Mercado Bitcoin platform.
| Date | Event | Description |
|---|---|---|
| October 3rd, 2011 | Bitcoin Rain Launch Date | The start date of the Bitcoin Rain scheme which is listed on BitcoinTalk[4]. |
| March 28th, 2013 8:32:18 AM MDT | BitcoinTalk Thread Announces Breach | A BitcoinTalk thread announces a security breach of the Mercado Bitcoin marketplace[4][2]. The breach reportedly had happened over the course of the past few days. |
| March 28th, 2013 | Bitcoin Rain Defaulted | The ponzi scheme Bitcoin Rain defaults[5][4]. |
| March 29th, 2013 | Update Provided To Users | Leandro pro |
| April 1st, 2013 | Withdrawals Completed | Leandro announces that all withdrawals have been completed except for 2 which reported the wrong account number[2]. |
| April 11th, 2013 | Deposits Repaid | Leandro announces that all deposits which have been identified have now been repaid[2]. |
| April 18th, 2013 3:47:29 PM MDT | BitcoinTalk Thread Claiming Ponzi | A BitcoinTalk thread started by user Erectus in Portuguese compares Mercado Bitcoin / Bitcoin Rain to the ponzi scheme run by Trendon Shavers[1]. |
| April 18th, 2013 5:25:34 PM MDT | Mercado Bitcoin Back Online | The Mercado Bitcoin exchange is reportedly brought back online in an announcement on BitcoinTalk[2]. The original thread about the security breach is updated to announce the relaunch[2]. |
| July 26th, 2013 9:38:21 PM MDT | BitcoinTalk Thread In English | A copy of the BitcoinTalk accusations is posted in English. However, this thread appears to receive only a single reply and very limited engagement[6]. |
Technical Details
There are limited details available about the breach. Known information:
- The breach lasted a few days, starting a few days prior to March 28th[2].
The Bitcoin Market suffered an attack, which unfortunately was successful, in its implementation of a network code. Due to a coding error, it was possible for the attacker to generate new credit codes, without the amount being duly debited in his final balance. Getting it like this, generate a false amount of bitcoins within the system and redeem it in a timely manner during the night.
Total Amount Lost
As Bitcoin Rain's funds were stored there, investors in Bitcoin Rain as well as account holders on Mercado Bitcoin lost money. Some money was reportedly paid back, but the vast majority is still outstanding.”
A BitcoinTalk list prepared by dree12 has estimated the amount lost as 4,000 bitcoin[7][4], which was taken from an average of known Bitcoin Rain and Mercado Bitcoin victims, as well as a donation address[7][4][8]. According to the provided spreadsheet, there were 2734.821192 bitcoin reported missing, and a donation address was able to generate 5075.181457 bitcoin in total, with an average of 3905.001325 bitcoin which was rounded to 4000[8].
BitcoinTalk user dree12 gave a further estimate of the equivalent value of 2,150 bitcoin in 2013[4]. This was reported as the amount of the loss by Kyle Gibson[5]. The value was later estimated to be equivalent to 284 bitcoin in January 2014, or $231,440 USD[7].
Victims of Bitcoin Rain
A Google Docs was compiled to list some of the victims in Bitcoin Rain[8].
| BitcoinTalk User | Claimed Loss | Source |
|---|---|---|
| yelllowsin | 180 | https://bitcointalk.org/index.php?topic=160150.msg1697855#msg1697855 |
| Kaioflores | 100 | Trust Ratings |
| TradeFortress | 70 | Trust Ratings |
| rudrigorc2 | 60 | Trust Ratings |
| andrehorta | 43 | https://bitcointalk.org/index.php?topic=179992.msg1884659#msg1884659 |
| jajajuta | 20 | https://bitcointalk.org/index.php?topic=327848.msg3529629#msg3529629 |
| Pimbox | 1.04 | https://bitcointalk.org/index.php?topic=160150.msg1882168#msg1882168 |
| Total | 474.04 |
Victims of Mercado Bitcoin
The only known victim of Mercado Bitcoin which was listed was ThiagoCMC, who was reported to have lost 2260.781192[8].
The total amount lost has been estimated at $101,000 USD.
Immediate Reactions
Leandro César claimed there was a security breach, which had happened in the last few days. An announcement was made on the BitcoinTalk forum in Portuguese. It indicated limited information at the time, but was later updated with more information.
In the last few days we have had a security breach on our website.
We are at this time raising the information and creating the necessary strategy to return operations and mainly restore our ability to pay in the shortest possible time.
We cannot provide much information at this very moment when we are working on them.
All withdrawals of requested reais that have not yet been met, will be met as of today.
All legitimate deposits in reais that have not yet been credited will be canceled and their respective users refunded within 2 to 3 business days. Just wait for contact and instructions.
I will be updating the information here on this Thread.
We ask everyone just a little more patience for more information.
Ultimate Outcome
Accusations of Bitcoin Rain Ponzi
Accusations were levied against Leandro by a user named Erectus[1]. The discussion on the BitcoinTalk forum, in Portuguese, revolves around similarities between Leandro Mercado Bitcoin and Pirateat40, focusing on potential fraudulent activities[1]. Participants highlight resemblances in the way Leandro managed Bitcoin Rain and Mercado Bitcoin, drawing parallels to the Ponzi scheme orchestrated by Pirateat40[1]. Accusations include Leandro mixing funds from different entities, failure to provide clear explanations regarding alleged theft, and suspicions arising from the sudden shutdown of Bitcoin Rain after critical posts[1]. Erectus claims that Bitcoin Rain was a ponzi scheme and pointed to evidence that bitcoins involved in Bitcoin Rain had not been moved during the theft period[1]. While some express concerns and demand transparency from Leandro, others defend him or call for further investigation. Overall, the discussion reflects a mix of skepticism, frustration, and uncertainty among forum members regarding the legitimacy of Leandro's operations[1].
Reimbursements Announced
Thank you for your patience!
We apologize for the time without giving news and the waiting time for response of emails.
It has been a few days since we have been dedicated exclusively to solving all doubts and questions related to the market. However, as we have to update many people and at the same time, choose and execute a best possible action plan, we end up taking longer than desired.
The Bitcoin Market suffered an attack, which unfortunately was successful, in its implementation of a network code. Due to a coding error, it was possible for the attacker to generate new credit codes, without the amount being duly debited in his final balance. Getting it like this, generate a false amount of bitcoins within the system and redeem it in a timely manner during the night.
The amounts diverted were sufficient to compromise the functioning of the Bitcoin Market and another website that I also manage.
We will bear the losses with the limit of our current payment capacity.
All amounts will be paid according to the list below.
Bitcoin values will have to be paid in reais, following the last market price, also according to the list below.
Unfortunately we will not be able to take on a debt in bitcoins with the variation that is currently taking place. The last recorded Bitcoin Market quote was R$180.00 the unit of bitcoin.
We believe that we will be able to put on the air, a version of the site with the updated balances.
I honestly do not believe that it will please everyone with the decisions made, but it is the actions that we will BE ABLE to take to resolve the situation.
I appreciate the trust and partnership of the more than 2000 users who walked with us in this brief troubled period of the history of bitcoins in Brazil.
I also thank everyone who even during the silence still maintained the trust, which I promise, will never be broken.
I cannot say at the time whether or not the Bitcoin Market will continue. Only the next few days can say...
Any questions or new ideas use the Bitcoin Market administration email: admin@mercadobitcoin.com.br
Mercado Bitcoin Back Online
The Mercado Bitcoin website was brought back online with an announcement on April 18th, 2013[2].
Hello user,
I am happy to announce that I am no longer alone in this long and hard battle called Bitcoin Market.
After a long negotiation, I finally agreed on a partnership that will not only help in this time of crisis, but, how will also make the Bitcoin Market continue in its goal of popularizing and making Bitcoin as viable as possible in Brazil.
The new partners represent a large group of investors, possessing a lot of know-how and just like us, believe that Brazil can and will be the country of Bitcoin.
Inclusion In Lists
The incident was featured on multiple BitcoinTalk lists[4][7], the list put together by Kyle Gibson[5], and in the Bitcoin Exchange Guide list[9].
Total Amount Recovered
Leandro announced that customers of the exchange would be refunded.
According to BitcoinTalk, some funds were reportedly paid back, however the vast majority remained outstanding[4].
A donation address set up by Leandro César received a reported 5075.181457 bitcoin[8]. There was suspicion that Leandro César was donating to this address himself[8].
Ongoing Developments
TBD
Individual Prevention Policies
No specific policies for individual prevention have yet been identified in this case.
For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.
Platform Prevention Policies
Policies for platforms to take to prevent this situation have not yet been selected in this case.
For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.
Regulatory Prevention Policies
No specific regulatory policies have yet been identified in this case.
For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.
References
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Semelhanças entre Leandro Mercado Bitcoin e Pirateat40 - BitcoinTalk (Feb 27, 2024)
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Problema do Mercado Bitcoin - BitcoinTalk (Feb 27, 2024)
- ↑ 3.0 3.1 3.2 3.3 Mercado Bitcoin Homepage Archive March 9th, 2013 8:18:54 PM MST (Accessed Mar 12, 2024)
- ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses [Old] - BitcoinTalk (Jan 28, 2020)
- ↑ 5.0 5.1 5.2 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents - Kyle Gibson (Jan 25, 2020)
- ↑ New pirateat40 in Brasil! Leandro César owner of MercadoBitcoin.com.br - BitcoinTalk (Accessed Apr 2, 2024)
- ↑ 7.0 7.1 7.2 7.3 List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses - BitcoinTalk (Feb 15, 2020)
- ↑ 8.0 8.1 8.2 8.3 8.4 8.5 Bitcoin Rain - Google Sheets (Accessed Feb 27, 2024)
- ↑ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5, 2020)