Bitcoinsports.eu Bets Big and Loses. Literally.

“The weird thing is that he is online pretty much every day,” wrote TheNewAnon. “Most scammers just take the money and disappear. I wonder why he is still around.”

“Isn’t that weird?,” replied Quone17. “It seems like that would increase the chances that someone who’s owed 50 BTC will track him down…and make him pay.”

One of the reasons we like bitcoin so much, is that it comes without all the red tape. Think of how much simpler things are, betting on sports with bitcoins. Yet we must grudgingly admit — at least the dollar offered legal options, in case of scams.

What recourse a bitcoin user has if he’s scammed is virtually non-existent. Even if there’s a way to “track him down”, there’s not a way to “make him pay.” It’s a technical feature of the currency itself: one that makes it difficult to regulate, and one to which the currency itself owes some of its value.

Without a private key (like a password), the currency is immobile — even in plain sight. A bank can move your money if the government requires it, but not your bitcoins. No one moves them without the private key. Just ask the FBI, which needed several months to confiscate the Silk Road’s Ross Ulbricht’s BTC (and still won’t say how they did it).

Anyway, how is BitcoinSports.eu a scam? The administrator, known only as Bit365, still pays on small bets. Some smaller investments were also successfully cashed-in. Bitcointalk user Kyraishi wrote, “I think Bit365 will pay everyone who is owed. The question is ‘WHEN’ … in 4 years?”

Are you even truly scammed if the “scammer” pays you in 4 years? These are questions we never had to ask ourselves before today.

BitcoinSports.eu is still functioning, using anonymously-registered servers in Iceland. The host refuses to give Bit365’s identity without a legal requisite, even though Bit365 owes an estimated 200 BTC (about $200,000). Sixty-percent of this is owed to only four people. The largest such debt is 53 BTC (about $50,000) owed to BitcoinTalk user Jumex19.

How did this happen? When the site was launched in February, 2013, there was no indication it was going to be anything other than exactly what it said it was — a great site for anonymous bitcoin sports betting. It took just a few clicks to bet a game — just seconds, really. Bet payouts would take anywhere from an hour to four days — but they would always eventually come. Occasionally, a user would have to jog Bit365’s memory by emailing him an unpaid bet slip.

Six months later, Bit365 announced a new investment program. An investor could add his bitcoins to Bit365’s bankroll for other users to bet against, and share in the site’s profits. It was brilliant, and it worked. Bettors placed larger and larger bets against a swelling bankroll — the maximum bet went up to 15 BTC. It was a lot of trust to have, but it had been built over time.

But only about three months later, on November 30, the value of bitcoin peaked at around $1,200. Though no one could have predicted it, the aftermath was expected enough. Everyone cashed-in their investments. Only to find — suddenly and rudely — that their investments weren’t cashing out. For the first time in months, anxious emails to Bit365 weren’t resulting in payouts — or responses either. It seemed to many that someone had simply picked up, and run off with their money. As had happened so many times before in bitcoin history.

On December 20, Bit365 — typically stoic and unresponsive — finally reacted to the crescendo of internet curses and threats to “dox” him (obtain “documents” that would lead to his identity):

“We realize many of you are panicking and I am here

to update everyone on the current status of payouts and

hopefully ease some tensions …

 

What you do not know, is when we went to recover the

majority of site funds from the thousands of addresses in

cold storage, we were unable to recover the wallet files.”

He lost his private keys, making his own bitcoins utterly inaccessible. Well, that’s one way to lose money; the other is to make bad business decisions … such as overly complex offline wallet transactions. At any rate, the investors’ bitcoins, like a sunken ship laden with gold, might as well be at the bottom of the ocean. The only difference might be that we can get to the bottom of the ocean.

“In hindsight, it was a bad idea to not let everyone

know about this at the time, but we did not want everyone

to think their BTC was gone forever.”

We can even sympathize with his uncommunicativeness. It’s become something of a trademark for Bit365. After all, nothing informs investors that their investment is gone forever quite like “… [letting] everyone know … [that] their BTC was gone forever.” Who would want to get up in front of a room and say this? He’d have class-action suits waiting for him under the windshield wiper of his car. Not to mention criminal charges for Fraud.

But in the bitcoin world, it’s totally different. There are no lawyers. No judges. No courtrooms. Bit365 quietly removed his front page’s link to the BitcoinTalk thread regarding his site, changed his email address, and finally closed the thread itself, saying in effect, that even though there are 200 bitcoins owed, there is really nothing more to talk about regarding BitcoinSports.eu.

The irony is that this just might be true.