Crypto Cabal: The Dark Side of Crypto
Since our investigation started we have had:
8962 DDoS Attacks
16466 Brute Force Login Attacks on Administrator Accounts
19 Day Zero Attacks Multiple Attempts to Hijack Social Media, and other Personal Accounts This is not to mention the actual real-life events that took place that cannot be explained.
This subject is very complex and involves many downright dangerous people. It reveals for the first time how cryptocurrencies really work. To write this in detail would take 100 pages minimum with several hundred additional pages of technical information. What we write now, we believe to be 100% true to the best of our knowledge based on available information. Understand, we are not a government with unlimited resources. However, more and more community members are coming to us now with corroborating documentation. Turning over what we have to the authorities would be far simpler. To put this in print we must consider our liability and safety.The topic is going to take time to relay. Please understand that we will reference code but we are not publishing it. If you understand crypto you may connect the dots and get this. If you do not, realize the possibilities and take that away from this. All you need to really accept is this: In man’s history if he could do a thing he did. - If it is possible, it is being done. - Just because you learned this today doesn’t mean someone else didn’t know years ago.
Getting Personal
I have mentioned how Jon and I met, but never have I gone into the details that led us to today. In December I was looking for someone who could help me buy a couple cryptos and store them safely. Not long afterward on 12/16/17 the exchange I was using (trying to find an attorney so we cannot name them, but you can assume who) froze my account while BTC was crashing. I regained access on the 20th. As a result of the lockout, I lost a lot of money. On January 1, I ran a year-end transaction report on that exchange for my 2017 taxes. The reports, which I ran several times showed that my account held 49.89 Bitcoin (almost one million on Dec 16. On Jan 1 about $550,000) that did not show on my dashboard. The math for the transactions did not match anything in my account. I reached out to Jon as the only tech person I knew who might help. Using the transaction IDs in my account, Jon found that I did, in fact, "have" the 49.89 BTC in my account, they were just invisible. He could not explain how the math could be wrong, where the BTC was or why the BTC would not show on my account dashboard. He also found something extremely odd, the 49.89 BTC we found was made up of hundreds of smaller pieces, even though the 50 BTC received was in a single transaction.
Jon spent several days tracing each coin’s history. Within two days all the data in my account had changed again and now everything matched the few remaining coins. The 49.98 BTC were gone. All record of them was gone. All the transaction IDs were changed. Even the reports that are supposed to be immutable and unchangeable once generated were also changed to now reflect the altered numbers. I actually watched several lines of data change before my eyes. Fortunately, we have printouts of everything stored offline.
We put tickets in. Eventually, we provided all the cryptological reports and records to the exchanges (JSON file included), which quickly agreed it was their error and also agreed to refund the coins in 48-hours. They also provided us claim and incident numbers. That was two months ago. They have stopped answering tickets and emails. No refund was made. Jon's account was locked on their main exchange, as well as their partner exchange. What we found in January started us on this journey. Consider this for a moment, the data in your account is fungible. It can change at any time, and unless you take screenshots every day out to the 10th decimal point, you will never know when a .0000001 disappears.. You just cannot make this shit up. It was clear very early on that if moving money on this level was this blatant, the authorities must know, they must be allowing it and there must be much more nefarious activity.
Arbitraging
Some Exchanges (at the basic entry level) are arbitraging your money. The more basic and user-friendly the exchange features, the more likely they are playing with your money. Take a snapshot of the price of BTC on the various exchanges around the world and you will find that all coin prices vary as much as 12% second to second most days. On your exchange, the BTC price is $10,000. You place an order for 1 BTC @ $10,000. (forget fees for this) the Exchange takes your $10,000 and buys $10,000 of BTC on a mid-eastern exchange where BTC is selling for $9400. Your exchange purchases 1.06382979 BTC with your $10,000. You get your 1 BTC and the exchange gets the .06382979 BTC. And that explains the fractional makeup of BTC on exchanges. It also explains why the daily dollar, market cap, and unit numbers never square like they do with the stock market. In the above transaction, the market would report two separate BTC sales, when it was really one sale. The exchange used the same 10K in both instances. Realize this is happening on a much bigger level - not at a single transaction level, but at a multimillion-dollar level.
But, how you ask? Easy. Most folks do not understand this nuance. How could my exchange change my numbers and records? Because the coins you see in your account on an exchange are not yours. The exchanges hold those coins in their general wallets. There could be one HD wallet, a thousand regular wallets, or a million. Your account is merely a ledger entry. You have access to your public keys for sending and receiving, but you do not hold the actual private key. The exchanges hold those. So they can receive into their general wallet 1.06382979 BTC. You get an entry on your ledger that you now have 1 BTC. Do this 18,600,000 million times. If an exchange grabs just .0125 BTC ($125 differential @ $10,000 BTC) on 18.6 million transactions they gain 234,000 BTC. ($2,340,000,000)
We find the differential is often as much as 10%. Assume exchange clients own 5,000,000 BTC in the Exchange's general wallet, but that wallet actually holds 5,235,000 BTC. They built 235,000 from fractions. And you’ll never see it. “NO” you say. Take a look at the right side of our page where you see “our $100 Portfolio". When we discovered this was going on in exchanges Jon wrote a arbitrage trading bot to do exactly this. In approximately 60 days our arbitraging program has turned $100 into $266. Yes, the original coin values have risen a bit, but that only accounts for about $47. So by arbitraging, we have made $119 in less than 60 days on a $100 investment. A single exchange may do 50 million transactions daily. But this is legal. Immoral? Yes, but legal. So why would they not just pay me my 49.89 BTC? Why were they faking numbers. There was no logical legal reason for their actions, unless it was more than arbitraging. This led us to:
Scrubbing
Some (or more than some) exchanges are Scrubbing small percentages from billions of transactions. Impossible you say. There would be a record you say. That’s what we thought too, but not what we found. Exchanges use ledger entries to hold your balance. Who knows where your actual coin rests. Because the entries are not directly on the blockchain, they can be changed, modified, and made to corroborate whatever the exchange pleases. The proof of this is abundant on social media, on forums, and anywhere on the open internet. Most cases go without a reply via support - they get "forgotten" about because of timescale. Imagine what can be done when the report in front of your eyes changes. Keep in mind, a lot of "reporting" is considered "beta" - even though they have been available for two years. How does something stay in beta for two years? Our situation was corroborated not only by the actual information which we downloaded or screenshotted but also by the actual blockchain itself. The records reflecting those transactions disappeared because they are on a "side-chain." Once we understood scrubbing was happening we knew what to look at next.
After following the breadcrumbs we have empirical proof that there are a half dozen or more people/entities currently stealing crypto on an industrial scale, and much of this activity appears to find its genesis in and around the Korean Peninsula and to some extent within the US. These may be several agencies within our own government, hence the reluctance to report this, or criminal enterprises, or foreign governments, or D, all of the above. We do not have the time or resources to track exactly who this is, obfuscation is simple in today's world. Finding the source or origin of transactions is impossible, especially when dealing with anonymous cryptocurrencies. Haven’t any of you ever wondered where all the hundreds of billions have gone? Look at the market cap fluctuations and subtract the amount of loss- you are left with billions unaccounted for since December alone. We also know an important piece as to how the Cartels and N. Korea are using and stealing crypto.
The Cartels and Bad Guys
We all have heard the claims that coins like Monero or Dcred are secret or that the Cartels and other organized criminals are using them for transactions. Right? Well that all sounds good but think it through. There must be more to it. You are the Jones cartel and you sell the Smith family $20,000,000 of heroin. In the old days, they gave you 20 million in cash in suitcases. This exchange put all the players in the same place with the drugs and the money. This often made for easy pickings for the DEA. For a while, they used bank transfers, but that's not possible any longer.
Then Monero arrived. Totally secret. Now I deliver 20 million in heroin to you in New York and you transfer 20 million in Monero from Paris to me in Columbia. OK, have you ever asked, then what happens? How do you spend Monero? You can’t unless you're interested in something else entirely. As long as it’s Monero it’s a secret. But unless you are just going to store Monero for 50+ years, how do you pay your bills, your men, your operating expenses with it? You cannot. The first time you convert it to fiat (CASH), it’s no longer a secret. At some point you must be able to convert Monero to real money. You may store it safely as crypto, you may want it hidden today, but at some point you will need access to it in real money. What then? The answer is simple, you can wash the coins extremely easily by using a local p2p exchange, or even better- drop them on multiple exchanges and then sell those coins. You went from 20 million in heroin, to 20 million in monero, to perhaps 19 million in fiat once all is said and done. In some cases the numbers work in your favor and even more is made - due to the natural market movement.
Even better, is the story of Monero Gold (XMRG) - they used a known bug in the ERC20 specification to run a buffer overflow and create unlimited tokens from their original hard capped token. This token was sold to thousands of people, siphoned into Bittrex, and that is where it currently resides. Bittrex knows who the owner is, but will not release or help refund the half million stolen from individuals. The monero gold website - www.monero-gold.org - currently shows a very terroristic image of the twin towers, something that I take great personal offense is. Is this terrorist action? Most would say that this is just another crypto scam, but I would surmise that a lot of these scams are funding a whole lot more than a developers trip to Cancun.
Most people see crypto as the new thing. But they do not understand it. The reason I continuously reference document storage with ICOs is because storage is inherent in any token. All cryptos are storage devices, like a thumb drive. I started asking Jon about what could be stored. Could I store numbers and send them? Yes. Could I store data and send it? Yes. Could I store account logins and passwords and send them? Yes. And best of all, could I program a token or coin to perform operations? Yes.
I’m old school. I recall the famous story of the banker who was using early computers to steal the odd pennies from hundreds of thousands of accounts. By the time he was caught, he’d stolen millions; one penny or two at a time. Jon initially had assured me this was not possible with Crypto because there would be a transaction record. You cannot hijack a transaction in operation to siphon off anything. If you send one BTC then one BTC (minus fees) will arrive. Or so he thought. Scrubbing was clearly happening. Think of all the reports of people receiving less than was sent, or of entire coins or transactions disappearing. How about all the so-called hacks of exchange accounts where huge sums vanish? It was happening. Claiming it was not possible did not change that fact. I’m a Sherlock Holmes guy. “If you remove the impossible, whatever remains, no matter how improbable, must be true.” This is when I had my first epiphany about crypto. The first was that the younger people involved in crypto may be so enamored (in love) with owning/creating the technology that they cannot see the problems. Secondly, Blockchain is a 12-year old technology. Because of its rise in 2017 people are conflating some mainstream traction with it also being new tech. It’s old tech now. Thirdly, I/we had empirical evidence that the exchange was somehow altering "unalterable" account records and coins were disappearing with impunity. We knew coins were being built like a building from bricks. I began asking Jon endless what ifs. During the process Jon evolved from an, “it is just not possible” Crypto defender to a “Holy shit it’s all true” crusader.
Embedding
One question I asked Jon was how would the Governments eventually be able to have coins pay a variable tax based on what was bought? Jon’s answer was: code. That’s when it all came together. Cryptos can hold smart contracts and execute them at a programmed time or under specific conditions. A Gov coin could be used to charge 5% on food purchases, 8% on Entertainment, 12% on cars etc. All of this could be built into the coins and their sending addresses. Smart contracts can be put into coins. And guess what, encrypted ‘send-to’ commands and OTHER TOKENS can also be embedded into coins.
Billions of dollars of Ethereum can be hidden inside $1,000 of another coin and moved around the world. We call them coins or tokens but they are just data, a string of symbols on a blockchain for which you have an address. If you embed one coin in another and send thru your node, the only transaction record is of the Mule coin. Once we proved that data and other tokens could ride in mule coins, extraction became a wall for us. We knew for certain that we could embed all of the account data and login info for 100 individual accounts, on dozens of exchanges across the world, holding the $20,000,000, into a 100,000 $.001 ABC Coins. Each coin carries 100,000 identical copies of the data. We could send them to you and using the encryption key you extract the account data and have $20,000,000.
What a way to pay someone for illegal goods or services. Laundered and legal money could be hiding in thousands of different cryptocurrencies in millions of small accounts. Here’s the cool part. Every coin carried the same encrypted data. You would eventually get all the coins, but you only need one. If anyone got the coins instead they would not have the encryption key to read the data and you could send another batch. Consider how N. Korea uses this tech. It’s not enough to have money, you have to able to use it. You have verified accounts in a hundred countries. This is seamless and completely undetectable. Ten minutes spent on any ethereum block explorer will turn up some pretty "worthless" code hitching a ride on any given transaction.
But how could the hidden coins be safely extracted? If we embed a token in another token it has to be transacted to extract it. When I send the mule coin the embedded send-to code executes and sends the embedded tokens to my wallet leaving a public trail. This poses a problem because even if you have a huge node and send the mule coins from one wallet on your phone to another wallet on your phone while you are standing beside your huge node, there is no guarantee you will get all of those transactions. Yes you still get the $20,000,000 in the token but there are now thousands of global records of that token falling out of mule coins and being sent to your wallet address.
All blockchain transactions are public, to a point. You could not chance that some node owned by a 16 year old would grab that transaction. You would get all your coins, but there would be a public record you did not control. This is where it gets into tech When we figured this was happening Jon wrote some pretty sophisticated search algorithms. It took just a few hours to find transacted coins on the Ethereum Blockchain that had encrypted (Nonce_Send"NefariousAddress") ‘send me to this address’ codes embedded in them This meant that when a coin was transacted, a portion (%) of that coin was being sent to the encrypted address "hidden" inside. And this is when the shit started for us in earnest. Huge attacks on us and this site began. The next day some of the largest tech companies on earth all declared in unison that they had been hacked by crypto miners and were not responsible for whatever their computers had been used for. A couple days ago Bill Gates suddenly decides crypto is killing people. You can draw your own conclusion from the timing coincidences. Every time Jon found a piece of code it self-destructed within seconds or minutes and was followed by news of companies involved with crypto. What we were finding was sophisticated on levels only possible by a very few bodies.
Why?
We did not know if we had found a government beta test for consumption taxing, a CIA, DIA, or NSA black funding program or N. Korea’s office 39. At once, we knew for a certainty that someone with huge resources was scrubbing small percentages from millions of transactions around the world daily. We knew that someone or ones were embedding data in other coins. Here’s where it gets stranger. To embed code or data into a coin it must be in your physical possession. And to do it en mass you must have access to thousands of coins at a time. You could embed your own coins, but why? We figured that the only place thousands and millions of client tokens/coin are in someone else’s possession is on an exchange where your account is just a ledger entry. The exchanges hold physical possession of all the coins on their exchange. This choke point allows almost ANYTHING to take place.
We tried to embed data. Not only can it be done, Jon is sure it can be done in huge batches if given the resources and time. This means that a single employee at an exchange can code millions of coins in seconds once the main program is created to do so. And the next time those tokens are transacted they scrub a fraction or the entire token. You’ve all heard stories of coins that disappear in transit. This is why. We’ve all read the stories of millions or billions of dollars vanishing from exchanges overnight. Putting scrub/send code into those coins may be why. Understand that we are not speculating. We are trying to put this in a narrative form so it can be understood. The next steps are simple logic, if you can do this then you must be able to do that too. The larger next steps just take money, the kind cartels, the US and N. Korea would have to develop the tech.
We’ve discovered several methods of moving, storing and disappearing huge amounts of money. A courier from a cartel, Iran, N. Korea, etc. can carry a hard copy (via thumb drive, trezor, nano, or paper wallet) full of low-value ABC crypto that has a billion dollars in Ethereum embedded in it Even if the courier was intercepted, or if he opened the wallet the ETH would be invisible. If the wallet was lost the same info/coins can be reloaded into the next wallet. If the wallet is hacked the embedded, ETH cannot be extracted without the encryption key. The data would self-destruct. Crypto is not like paper money. If you lost the wallet with a billion dollars in it you’ve not lost a cent. You can simply reload the data. Ok, we knew what was happening and in what places. We knew coins were being hidden in other coins, but there was still the problem of extracting them without a trail. I know this is complex.
Just imagine being a criminal or N Korea and having 5 billion in ETH with no record of them ever being sent to you. And this works with any ERC20 (Ethereum blockchain) token. So as a criminal, a courier brings you a wallet loaded with crypto. It holds embedded ETH. The trick is still transacting the mule tokens to extract the hidden tokens without leaving a trace. This stumped us for a while until we found TIM. If you read our post on TIM then you know about GeoFencing. Using TIM tech coins can be coded to only transact within a specific geographic area. This was done to protect the node operators in a specific area guaranteeing transaction support virtually anywhere by providing a franchise like transaction protocol. It works like this. The TIM token is constantly aware of where it is. Only nodes in the same area can verify TIM transactions within those defined areas. So if you are in Boston, the huge NODES in China and Iceland cannot steal your transactions. Nor can anyone ever amass enough transaction capacity for a 51% attack. We think this is new tech, but it’s not. Of course it’s not.
We now had our answer for record less transaction/extractions. The Transaction areas can be as small as 1/4 mile. Here’s the short version. If you have 20 mil in embedded ETH in geo-aware mule tokens you can set up your own node and as long as there is not another node within your 1/4 mile area you get 100% of all transactions in that area. You can transact the mule coins and extract the 20 mil in ETH and the only record of that transaction lives in your node. No government can ever see or find it. This is what we found. Monero may be anonymous but it’s also impractical and unusable. This tech gives the users immediate access to billions, it allows them to hide hundreds of billions and only resurrect the hidden tokens when they need cash.
They can use the same tech to re-embed tokens or account info and send it to other criminals or terrorist groups the same way. You can literally hand a burner phone with an ETH wallet to pay anyone who has access to the same tech. You can move small amounts of ETH or any other token into hundreds of exchange accounts or private wallets to pay people or whomever and have no records whatsoever. We don’t need to tell you all how important your addresses are. Once they are on the Gov or hacker radar you are a target and they can find every transaction you make. With this tech you can move money around the world with absolute secrecy. Only a small modification is needed to the node's code to not callback with that transaction's log. To take the tech one step further, create your own token, make it private, use it to transact data on your own blockchain, and no trace ever exists except in your own backyard: which you can be sure to bury.
Now think of an entire state like North Korea, with unlimited resources. In N Korea Office 39 is the agency tasked with all forms of funding the regime. They counterfeit, run drugs, sell arms, extort, kidnap and traffic humans. Rumors were that N. Korea would run out of hard currency by October 2018. Office 39 employes the best hackers and coders in the world whose only job is to steal, create and otherwise generate money that the US cannot trace. Office 39 creates false legends for dozens of agents who find jobs with exchanges and secretly code transactions. Multiple agencies within a rogue state with thousands of individuals are being tasked to create a cryptocurrency cabal. Remember those crazy conspiracies about a "New World Order"? Well, in theory: this would be there way of funding it. I want to go back to Monero Gold for a second. Looking at the data, the accounts from victims, the hard evidence: you can find a clear and obvious connection to possible terrorism. Their is Semitic imagery on their website, mockery of the 9/11 attacks, and movement of funds that certainly seems to constitute funding a terrorist organization. How do we prevent this from happening?
If we told you about the myriad of odd and weird happenings in and around our homes lately, you'd think we were making it up. We are actually scared.
Posted from my blog with SteemPress : https://www.cryptocriterion.com/crypto-cabal-dark-side-crypto/