The first actual hack of an exchange occurs on June 19th, 2011. Mt. Gox exchange is hacked for approximately 2,643 Bitcoins during a transfer of ownership involving an account with administrator rights. The perpetrator was never found and the Bitcoins were never returned. Mt. Gox took full responsibility for the hack and reimbursed all users affected.

#U.S. Dollar value at time of event: $47,123 | Hacker unknown

Just one day later, a number of users on the wallet service MyBitcoin are compromised. A total of 4,019 Bitcoin is stolen from various users wallets. Coincidence? Apparently not, because it later turns out that all of these users also had an account on Mt. Gox and were using the same password on MyBitcoin, indicating that the hack of Mt. Gox involved a database leak which was now used to gain access to various accounts on MyBitcoin. About 1% of all users was using the same password. The operators of MyBitcoin are anonymous, but one ‘Tom Williams’, releases a statement on the matter. Even though the thefts are initially a result of the Mt. Gox breach, the situation forces the community to deal with (and question) the anonymity of MyBitcoin’s operators as well. Mr Williams ensures that the losses will be covered, but also insists to stay anonymous.

#U.S. Dollar value at time of event: $71,656 | Hacker unknown

About a month later, on July 26th, 2011, Polish exchange Bitomat announces to have accidentally — oops — deleted their entire wallet. Administrator Bartek Szabat releases a statement on Reddit. All Bitcoin (17,000) that were in custody are supposedly lost. The exchange is put up for sale to cover for the losses. Later on August 11th, Mt Gox decides to buy Bitomat by absorbing its debt and integrates all users of Bitomat into their exchange in an attempt to restore faith in Bitcoin.

#U.S. Dollar value at time of event: $231,570 | Inside job suspected

And then, just three days after Bitomat, a much bigger disaster strikes. The anonymous Mr Tom Williams appears to be making a run for it with the service MyBitcoin, which holds approximately 154,406 Bitcoin at that moment in time, worth over a million dollars. The whole service disappears from the internet on July 29th, 2011. Tom Williams has gone ghost and the community is left clueless. Some Bitcointalk users immediately pursue to investigate but technical query’s come up with nothing but an overseas server and a private whois, and there are no other leads to follow. It now looks like all hope is lost..

But then on August 4th, 5 days later, the website unexpectedly comes back online. It is displaying a message on the front page allegedly written by Mr Williams.

He claims that the service got hacked, and 51% of all Bitcoins (78,739 Bitcoin) have been stolen. The remaining funds will be redistributed among their rightful owners after the announcement, and MyBitcoin will file for bankruptcy afterwards. A well known Bitcoin evangelist by the name of Bruce Wagner, who hosted a lot of Bitcoin talkshows (OnlyOneTV) in the early Bitcoin days, had been fiercely promoting the service among friends and family in prior to the event. He claims to have had all of his 25,000 Bitcoins stored at MyBitcoin at the time of the incident, and encourages all victims to file a report with the FBI, something he did as well.

But drama is trending in the Bitcoin community (some anti-bitcoiner has even been hosting a blog about it called buttcoin — it’s hilarious), and it’s not long before some sniffing around leads to the discovery that MyBitcoin was hosted by quite uncommon and obscure webhost Arvixe, which just happens to be Bruce Wagner’s webhost for his Bitcoin TV-show ‘OnlyOneTV’ as well. Hmm. Coincidence? Yes, maybe. But another clue presents itself when people on a totally different forum, called somethingawful, coincidentally do a little scratching under the surface of Bruce’s history. Apparently Bruce has conducted a little bit of illegitimate business before, and the Ohio court has quite a record of accusations held against him between 1995 and 2002, some of which are trading fraud and insurance fraud. But more importantly, he has been convicted by a Chicago court judge for running a mortgage fraud scam under the name of Bold Funding in 2004. The courts ruling prohibits Bruce from participating in certain types of businesses and ordered him to pay $365,000 to his victims.

“Somebody tell BitcoinTalk. THE BARREL HAS NO BOTTOM.”

Is this the same Bruce, though? Yes, it is, because he actually confirms this in a Bitcointalk post trying to explain the story behind it. Right, OK, so what? Well.. the rabbit hole goes even deeper, get ready to go full conspiracy. Buttcoin is now getting his hands dirty and he seems to have brought the heavier digging equipment. He quickly finds that — and it may be a bit of a stretch — Bold Funding, the fraudulent business Bruce was convicted for, had a couple of online reviews on freeadvice.com. Needless to say, all of them were negative, since the whole Bold Funding business was a scam. Except for one. Our boy Buttcoin exposes a little bit of extra history on this matter: buried under a pile of negative reviews and scam accusations lies a quite flattering review written by…

“..Tod Williams.”

Buttcoin blog.

‘Tod’ is a very happy customer who claims to have had a wonderful experience with Bold Funding. We already know that this is bullshit, because Bold Funding was openly declared a fraud later on. So, it is indeed quite safe to assume that we are looking at an example of Astroturfing here, meaning someone falsely promoting their own business or service under a different name. I must give it to the Bitcoin community, they go to impressive lengths investigating these kind of things. Could it be Bruce?