In mid-August, a Redditor named “sick_silk” took the world by surprise when he posted that a dormant wallet containing 111,114.62 $BTC / $ BCH had got active indicating that the wallet belonged to the Dark Web drug’s marketplace SilkRoad. But now it turns out that there is no SilkRoad involvement. In the latest development regarding this matter, WizSec, a security specialist firm based in Tokyo, tweeted saying that the investigated wallet belonged to Mt Gox and not SilkRoad- a possibility which even the Redditor felt could be.
Mt Gox or SilkRoad the confusion clears
In August, in his firsts of the three-post series, “sick_silk” the Redditor, had posted saying that according to him the owner of a huge dormant wallet is moving funds actively, dividing it in chunks of 100 coins by sub wallets. The original wallet owned 111,114.62 $BTC / $ BCH, which, as of last week, valued ~ $844M (without considering other #Bitcoin forks). He had also noted that the chunks have been divided over time to 60,000 coins then to 30,000 / 20,000 / 10,000 / 5,000 / 500 and now 100 coins. He assumed it to be that of SilkRoad. On being asked about his surety of the wallet belonging to SilkRoad, the Redditor had said there were various possibilities of the ownership of the wallet including that it could of Mt Gox.
The confusion was sighted as the timing of the last transaction in the wallet before going dormant was about 4 years and 5 months old. This coincided with the event happening parallelly at Mt Gox and SilkRoad. Mt Gox, the exchange that is known for the biggest and one of the first hacks in cryptocurrency world went bankrupt after losing about $473 million worth of BTC to hackers in 2014 when the value of bitcoin was around $480. While for SilkRoad, the FBI took down the website and arrested its operator in November 2014.
In the 4th post, following the three-investigation post, the Redditor again discusses the most probable hypothesis for the wallet’s origin, in which he again reiterates connecting SilkRoad assumptions to a bitcointalk forum, while for Mt Gox assumption he says
“a Mt Gox cold wallet that has been seized or is still owned by Mt Gox: in fact the wallet funds moved in March 2014 right after Mt Gox filed for bankruptcy one month earlier in February 2014; these movements dates are really similar to the 200,000 lost coins “found” by Karpeles which moved March 7th, 2014 (1dda0f8827518ce4d1d824bf7600f75ec7e199774a090a947c58a65ab63552e3), just 2 days before the movements on the wallet we are talking about here.”
Sick_Silk’s assumptions and the hypothesis have now been confirmed by WizSec, who believes this to be of Mt Gox and the activation was due to the public rehabilitation program for payments to creditors of Mt Gox. WizSec has been well known for its investigation in the Mt Gox hack and had played a major role in providing evidence that concluded:
“most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot wallet over time, beginning in late 2011.”
— Tuur Demeester (@TuurDemeester) September 4, 2018
They guessed right later in the post; it’s an old MtGox whale, unrelated to Silk Road.
— WizSec (@wizsecurity) September 4, 2018
Mt Gox public rehabilitation program
In the last week of August 2018, Mt Gox, the exchange that is known for the biggest and one of the first hacks in cryptocurrency world, had started accepting claims for its creditors. On Aug. 23, Mt. Gox trustee Nobuaki Kobayashi released an online submission process for creditors to prove their claims. The deadline is set for October 22, 2018, to submit a filing. The notice also states the claimant or creditor will lose the right to claim if he or she misses the deadline. As the deadline is approaching and is just a month away, it could be assumed that the Wallet activation was because the payment due date is just around the corner.
A whale movement in the crypto market is risky as it impacts the prices significantly. But an event like Mt Gox payments to creditors is significantly positive and one of the biggest drivers to gain back the trust of the community against the industry that is marred by hacks and people losing their monies.
However, Kim Nilsson, who has been reclaiming his stake in the exchange, says the payouts can “completely crash the market”. And lack of willing buyers can further worsen the market situation.
The confusions regarding origins of this wallet seem to have finally cleared out and will bring to rest the fears of huge dumps in the market hoping Mt Gox claim process is phased out in a correct manner.
Do you still believe the wallet could be of SilkRoad? Do let us know your views on the same.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.