Admins from Silk Road successor, Evolution, reportedly vanish with millions in user funds
Bitcoin prices have been on a mini run of late, rising from early year lows to approach the $300 threshold again for the first time in months. But that rally suffered a major setback overnight as yet another major merchant – albeit an underground one – appears to have defrauded users out of tens of millions of dollars worth of virtual currency.
Evolution, a fourteen-month-old, massively popular successor to the Silk Road online drug marketplace disappeared from the dark Web in the last 24 hours. According to at least one staffer, the site’s administrators have absconded with the user funds – an ill-gotten sum that could be as high as $12 million.
At its peak, Evolution featured more than 20,000 listings for drugs and other contraband (weapons, etc) across its marketplace, making it larger than the original Silk Road or it eponymous copycat Silk Road 2 ever were.
The trouble signals began several days ago, with users reporting delayed withdrawals, something that has been a telltale sign in other cases of fraud, like Mt. Gox. Then, yesterday afternoon, a known Evolution spokesperson going by the online handle NSWGreat posted to Reddit confirming everyone’s worst fears: that users have in fact been defrauded and the site’s admins, known only as Verto and Kimble, are behind it. He writes:
I hate to the bearer of bad news, but I've been suspicious the past few days with withdrawals not working and admins usually are more forth coming in explaining to me why they're slow but they weren't this time. Just kept giving me time-frames
I have admin access to see parts of the back end, the admins are preparing to exit scam with all the funds. Not a single withdrawal has gone through in almost a week. Automatic withdrawals has been disabled which is only doing on rare occasions
I am so sorry, but Verto and Kimble have fucked us all. I have over $20,000 in escrow myself from sales.
I can't fucking believe it, absolute scum. I am giving this warning to you all as soon as I possibly could of.
No, none of the staff were aware of the scam. Admins had been dodging their job all week, ignoring our requests, etc. The only things that admins were doing when we asked was disabling WDs.
Like I would say XXXX person has double accounts, insertproof. They wouldn't acknowledge it. (Usually is insta ban)
But we put up a request for a vendor to have WDs disabled because we're sus, they'd disable them without even reviewing their accounts. (Usually they write up their investigations in the vendor notes)
There is nothing I could tell anyone about Verto or Kimble in regards to their location. When asked for some form of proof about his assertions, NSWGreat says:
Also as I explained, I can't have any proof because it was a OTR jabber conversation which I closed after abusing Verto for being a low life scum. I didn't even think twice about taking a pretty picture to stop cry babies on Reddit, I was too busy being worried about the millions of dollars that I knew were being stolen from my friends and fellow vendors. Fuck me.Obviously NWSGreat’s explanation of things, and profession of his own innocence, should be taken with a heaping pile of salt. In the comment threads, he admits to using the site both to sell and use heroin, and fact that seriously calls into question his judgement and impartiality But one thing that seems clear, Evolution is no more and plenty of users have lost meaningful sums of money.
Evolution is hardly the first large-scale bitcoin merchant or exchange to go under and to take client funds with it. In some cases, such as Silk Road and Silk Road 2, law enforcement has seized these assets, deeming them to associated with illegal activity. In other cases, sites like Mt. Gox and BitStamp have been the victim of alleged third-party hacks. Evolution, like MyCoin and GBL before it, seems to fall into a third category: fraud by those who operate the business.
Devastating as these events may be for those who lost funds as a result, they serve as a reminder of what should be an obvious truth – when doing (often illegal) business in untraceable, unregulated currencies, the adage of caveat emptor applies. There likely will never be a regulated or trustworthy online drug marketplace – naturally – but virtual currency exchanges are moving in that direction, as are exchange traded investment vehicles. Absent this type of oversight, it’s likely we’ll see more consumers losing virtual funds to shady online businesses.
“I wish I could of done more,” NSWGreat says, “I hope you can forgive me for not noticing and speaking up earlier.”
[Disclosure: Michael Carney has accepted a position as an associate at Upfront Ventures that begins in April. To the best of Pando’s knowledge, the companies in this post and their competitors have no affiliation with Upfront. This post went through Pando’s usual editorial process.]