There's a £60m Bitcoin heist going down right now, and you can watch in real-time

Sheep Marketplace closed down over the weekend after someone got away with 96,000 bitcoins - and angry users are chasing him around the internet.

One of the largest heists in bitcoin history is happening right now. 96,000 bitcoins - that’s roughly £60m as of the time of writing - was taken from the accounts of customers, vendors and administrators of the Sheep Marketplace over the weekend.

Sheep was one of the main sites that came to replace the Silk Road when it closed in October, but it too has now closed as a result of this theft. It’s a little hard to work out exactly what’s happened, but Sheep customers have been piecing it together on reddit’s r/sheepmarketplace.

Here's what happened: someone (or some group) managed to fake the balances in peoples’ accounts on the site, showing that they had their bitcoins in their wallets when they’d actually been transferred out. Over the course of a week the whole site was drained, until the weekend when the site's administrators realised what was happening and shut everything down.

Originally it was thought that only 5,200BTC - or £3m - was taken, with a message posted on Sheep's homepage blaming a vendor called "EBOOK101" for finding and exploiting a bug. However, over the weekend it became clear that the amount stolen was much, much larger.

In a normal robbery that money would be gone by now, but it isn't. Bitcoin is pseudonymous, not anonymous, and bitcoins can’t just disappear. It works because each and every transaction is public and visible to each and every other person using the Bitcoin network, and a person is only as anonymous as their link to their wallet.

A couple of reddit users realised that the sheer size of the heist makes “tumbling” the coins - the normal method of laundering bitcoins - impossible, as long as they kept on their toes. Someone with bitcoin can send some to a tumbler like bitcoinfog, where it will be split into smaller subdivisions and mixed with other bitcoins from other places, recombining and splitting again several times over until the whole amount eventually comes out the other end, theoretically in such a way that it’s impossible to track. Silk Road’s in-built tumbler successfully foiled the FBI, allegedly.

However, reddit user TheNodManOut managed to track where the first bunch of transfers out of Sheep went, and from there and silkroadreloaded2 worked out which tumbler that the thief was using. Here’s how silkroadreloaded2 describes what’s happened since (“Tomas” is the alleged owner of Sheep, and one of the suspects for many users):

All day, we've been chasing the scoundrel with our stolen bitcoins through the blockchain. Around lunchtime (UK), I was chasing him across the roof of a moving train, (metaphorically). I was less than 20 minutes, or 2 blockchain confirmations, behind "Tomas".

He was desperately creating new wallet addresses and moving his 49 retirement wallets through them, but having to wait for 3 or 4 confirmations each time before moving them again. Each time I caught up, I "666"ed him - sent 0.00666 bitcoins to mess up his lovely round numbers like 4,000. Then,all of a sudden, decimal places started appearing, and fractions of bitcoins were jumping from wallet to wallet like grasshoppers on a hotplate without stopping for confirmations.

Shit!

He was tumbling our stolen bitcoins a second time, and a tumbler is unbeatable....

Unless you guess which one it is, nearly all the coins belong to the person you're tracking, jump in with him, and get jumbled up through the same wallets using the same algorithm. I was hopping from foot to foot shouting "come on!" at my laptop, waiting an age for 6 blockchain confirmations to get 0.5 btc into "bitcoin fog". My half a bitcoin got sliced and diced through loads of wallets and I followed the biggest chunk with blockchain.info - along with 96,000 stolen ones!

Or, in other words:

He gathered 96,000 in one pot, then split it into about 50 smaller ones. then he saw me 666ing them all. Imagine a sports stadium with 96,000 people in it, each with $1000.

He sent them all via different routes all over the world, but the same 96,000 people then arrived at a different stadium and he went to bed.

Now there are 96,001, and I just phoned you on my mobile to tell you where the stadium is.

A major problem with tumblers is that they only work with lots of bitcoins coming and going from a lot of different sources - if a tumbler is taking in 96,000 bitcoins, those will massively outnumber all other bitcoins being tumbled and it’ll be easy to spot them coming out the other end. Mix in a little of your own with all those other ones and you'll find out the wallet addresses that the tumbler uses, and it should be easy to spot large transactions splitting off from there.

The fascinating consequence of this is that you can see the stolen bitcoins on the public blockchain, and as long as there are people keeping tabs on it there’s going to be no way for the thief to cash in on their haul. Considering how people rely on tumblers to maintain anonymity when buying illegal stuff online, this unusual loophole is something of a revelation.

Right now, as you’re reading this, you can watch as the the thief starts trying to move their bitcoins on again - it’s currently down to 92,000 bitcoins and dropping as smaller chunks begin going out. Selling those bitcoins and turning them into cash is going to be extremely difficult, as the major Bitcoin exchanges all demand proof of identity (specifically to avoid charges that they're involved in money laundering), and if they're broken down into smaller quantities to sell via a site like localbitcoins.com a paper trail will still be generated. As soon as it's possible to link one real-life bank account or identity to any bitcoins from that stash, it will be possible to work out their real-life identity.

This counts as one of the largest robberies in history at Bitcoin's current market value, ranking in the same company as real-life thefts like the $108m diamond theft at the Harry Winston store in Paris in 2008. 96,000 bitcoins also places the thief as one of the wealthiest Bitcoin millionaires on the current rich list (but bear in mind that few serious Bitcoin players keep their currency in just one wallet) - and all without having to go to the trouble of wearing balaclavas or threatening someone with a gun.

Let's watch and see what happens next.

Some fan-made physical bitcoins. (Photo: antanacoins/Flickr)

Ian Steadman is a staff science and technology writer at the New Statesman. He is on Twitter as @iansteadman.

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How the internet has democratised pornography

With people now free to circumvent the big studios, different bodies, tastes and even pubic hair styles are being represented online.

Our opinions and tastes are influenced by the media we consume: that much is obvious. But although it’s easy to have that conversation if the medium we are discussing is “safe for work”, pornography carries so much stigma that we only engage with it on simple terms. Porn is either “good” or “bad”: a magical tool for ­empowerment or a destructive influence on society. Many “pro-porn” campaigners shy away from nuanced critique, fearing it could lead to censorship. “Anti-porn” campaigners, convinced that porn is harmful by definition, need look no further than the mainstream tube sites – essentially, aggregators of clips from elsewhere – to gather examples that will back them up.

When we talk about the influence of porn, the emphasis is usually on a particular type of video – hardcore sex scenes featuring mostly slim, pubic-hairless women and faceless men: porn made for men about women. This kind of porn is credited with everything from the pornification of pop music to changing what we actually do in bed. Last year the UK government released a policy note that suggested porn was responsible for a rise in the number of young people trying anal sex. Although the original researcher, Cicely Marston, pointed out that there was no clear link between the two, the note prompted a broad debate about the impact of porn. But in doing so, we have already lost – by accepting a definition of “porn” shaped less by our desires than by the dominant players in the industry.

On the day you read this, one single site, PornHub, will get somewhere between four and five million visits from within the UK. Millions more will visit YouPorn, Tube8, Redtube or similar sites. It’s clear that they’re influential. Perhaps less clear is that they are not unbiased aggregators: they don’t just reflect our tastes, they shape what we think and how we live. We can see this even in simple editorial decisions such as categorisation: PornHub offers 14 categories by default, including anal, threesome and milf (“mum I’d like to f***”), and then “For Women” as a separate category. So standard is it for mainstream sites to assume their audience is straight and male that “point of view” porn has become synonymous with “top-down view of a man getting a blow job”. Tropes that have entered everyday life – such as shaved pubic hair – abound here.

Alongside categories and tags, tube sites also decide what you see at the top of their results and on the home page. Hence the videos you see at the top tend towards escalation to get clicks: biggest gang bang ever. Dirtiest slut. Horniest milf. To find porn that doesn’t fit this mould you must go out of your way to search for it. Few people do, of course, so the clickbait gets promoted more frequently, and this in turn shapes what we click on next time. Is it any wonder we’ve ended up with such a narrow definition of porn? In reality, the front page of PornHub reflects our desires about as accurately as the Daily Mail “sidebar of shame” reflects Kim Kardashian.

Perhaps what we need is more competition? All the sites I have mentioned are owned by the same company – MindGeek. Besides porn tube sites, MindGeek has a stake in other adult websites and production companies: Brazzers, Digital Playground, Twistys, PornMD and many more. Even tube sites not owned by MindGeek, such as Xhamster, usually follow the same model: lots of free content, plus algorithms that chase page views aggressively, so tending towards hardcore clickbait.

Because porn is increasingly defined by these sites, steps taken to tackle its spread often end up doing the opposite of what was intended. For instance, the British government’s Digital Economy Bill aims to reduce the influence of porn on young people by forcing porn sites to age-verify users, but will in fact hand more power to large companies. The big players have the resources to implement age verification easily, and even to use legislation as a way to expand further into the market. MindGeek is already developing age-verification software that can be licensed to other websites; so it’s likely that, when the bill’s rules come in, small porn producers will either go out of business or be compelled to license software from the big players.

There are glimmers of hope for the ethical porn consumer. Tube sites may dominate search results, but the internet has also helped revolutionise porn production. Aspiring producers and performers no longer need a contract with a studio – all that’s required is a camera and a platform to distribute their work. That platform might be their own website, a dedicated cam site, or even something as simple as Snapchat.

This democratisation of porn has had positive effects. There’s more diversity of body shape, sexual taste and even pubic hair style on a cam site than on the home page of PornHub. Pleasure takes a more central role, too: one of the most popular “games” on the webcam site Chaturbate is for performers to hook up sex toys to the website, with users paying to try to give them an orgasm. Crucially, without a studio, performers can set their own boundaries.

Kelly Pierce, a performer who now works mostly on cam, told me that one of the main benefits of working independently is a sense of security. “As long as you put time in you know you are going to make money doing it,” she said. “You don’t spend your time searching for shoots, but actually working towards monetary gain.” She also has more freedom in her work: “You have nobody to answer to but yourself, and obviously your fans. Sometimes politics comes into play when you work for others than yourself.”

Cam sites are also big business, and the next logical step in the trickle-down of power is for performers to have their own distribution platforms. Unfortunately, no matter how well-meaning your indie porn project, the “Adult” label makes it most likely you’ll fail. Mainstream payment providers won’t work with adult businesses, and specialist providers take a huge cut of revenue. Major ad networks avoid porn, so the only advertising option is to sign up to an “adult” network, which is probably owned by a large porn company and will fill your site with bouncing-boob gifs and hot milfs “in your area”: exactly the kind of thing you’re trying to fight against. Those who are trying to take on the might of Big Porn need not just to change what we watch, but challenge what we think porn is, too.

The internet has given the porn industry a huge boost – cheaper production and distribution, the potential for more variety, and an influence that it would be ridiculous to ignore. But in our failure properly to analyse the industry, we are accepting a definition of porn that has been handed to us by the dominant players in the market.

Girl on the Net writes one of the UK’s most popular sex blogs: girlonthenet.com

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times