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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Not just a one-quack mind: ducks are capable of abstract thought

Newborn ducklings can differentiate between objects that are the same and objects that are different, causing scientists to rethink the place of abstract thinking.

There’s a particular loftiness to abstract thought. British philosopher and leading Enlightenment thinker John Locke asserted that “brutes abstract not” – by which he meant anything which doesn’t fall under the supreme-all-mighty-greater-than-everything category of Homo sapiens was most probably unequipped to deal with the headiness and complexities of abstract thinking.

Intelligence parameters tail-ended by “bird-brained” or “Einstein” tend to place the ability to think in abstract ways at the Einstein end of the spectrum. However, in light of some recent research coming out of the University of Oxford, it seems that the cognitive abilities of our feathery counterparts have been underestimated.

In a study published in Science, led by Alex Kacelnik – a professor of behavioural psychology – a group of ducklings demonstrated the ability to think abstractly within hours of being hatched, distinguishing the concepts of “same” and “different” with success.

Young ducklings generally become accustomed to their mother’s features via a process called imprinting – a learning mechanism that helps them identify the individual traits of their mothers. Kacelnik said: “Adult female ducks look very similar to each other, so recognising one’s mother is very difficult. Ducklings see their mothers from different angles, distances, light conditions, etc, so their brains use every possible source of information to avoid errors, and abstracting some properties helps in this job.”

It’s this hypothesised abstracting of some properties that led Kacelnik to believe that there must be more going on with the ducklings beyond their imprinting of sensory inputs such as shapes, colours or sounds.

The ability to differentiate the same from the different has previously been used as means to reveal the brain’s capacity to deal with abstract properties, and has been shown in other birds and mammals, such as parrots, pigeons, bees and monkeys. For the most part, these animals were trained, given guidance on how to determine sameness and differences between objects.

What makes Kacelnik’s ducklings special then, as the research showed, was that they were given no training at all in learning the relations between objects which are the same and object which are different.

“Other animals can be trained to respond to abstract relations such as same or different, but not after a single exposure and without reinforcement,” said Kacelnik.

Along with his fellow researcher Antone Martinho III, Kacelnik hatched and domesticated mallard ducklings and then threw them straight into an experiment. The ducklings were presented pairs of objects – either identical or different in shape or colour – to see whether they could find links and relations between the pairs.

The initial pairs they were presented served as the imprinting ones; it would be the characteristics of these pairs which the ducklings would first learn. The initial pairs involved red cones and red cylinders which the ducklings were left to observe and assimilate into their minds for 25 minutes. They were then exposed to a range of different pairs of objects: red pyramid and red pyramid, red cylinder and red cube.

What Kacelnik and his research partner found was that the ducklings weren’t imprinting the individual features of the objects but the relations between them; it’s why of the 76 ducklings that were experimented with, 68 per cent tended to move towards the new pairs which were identical to the very first pairs they were exposed to.

Put simply, if they initially imprinted an identical pair of objects, they were more likely to favour a second pair of identical objects, but if they initially imprinted a pair of objects that were different, they would favour a second pair of differing objects similar to the first.

The results from the experiment seem to highlight a misunderstanding of the advanced nature of this type of conceptual thought process. As science journalist Ed Yong suggests, there could be, “different levels of abstract concepts, from simple ones that young birds can quickly learn after limited experience, to complex ones that adult birds can cope with”.

Though the research doesn’t in any way assume or point towards intelligence in ducklings to rival that of humans, it seems that the growth in scientific literature on the topic continues to refute the notions that human being as somehow superior. Kacelnik told me: “The last few decades of comparative cognition research have destroyed many claims about human uniqueness and this trend is likely to continue.”