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# The SEC Rejects a Bitcoin ETF 3-1. The Lone Dissenter Gets a Nickname Within Hours That Sticks for Life.

![](https://m.stacker.news/149706)

***

The Bitcoin community didn't wait for a press conference. They named her before the day was even over, and the name never left.

## A Second Rejection

The Winklevoss twins had already been rejected once, in March 2017. On July 26, 2018, their second attempt at a Bitcoin ETF through their exchange Gemini came before the full SEC Commission for a final vote.

The result was 3-1 against. The majority's reasoning: Bitcoin markets were unregulated and vulnerable to manipulation, which made a Bitcoin-backed exchange-traded product too risky to approve under the Commission's investor protection mandate.

## The Dissent

One commissioner, Hester Peirce, voted no on the rejection itself. Her dissent flipped the majority's own logic: blocking a regulated, transparent ETF didn't protect investors, it pushed them toward less efficient, less transparent ways of getting Bitcoin exposure instead.

The Bitcoin community didn't wait for follow-up coverage. Within hours of her dissent going public, people online had already nicknamed her Crypto Mom. The name stuck for the rest of her career at the SEC. It became a running bit, too: Peirce developed a habit of giving her statements witty titles, "Kraken Down" and "Outdated" among them, and industry lawyers reportedly started scanning SEC speech indexes just for her name, reading the title before the substance.

## Five and a Half Years

Her Winklevoss dissent set the terms of an argument that would run for five and a half more years: was Bitcoin too risky to regulate, or was refusing to regulate it the actual failure? The SEC kept rejecting ETF applications. Peirce kept dissenting.

The turning point wasn't a change of heart. In August 2023, a US Court of Appeals ruled the SEC needed a coherent explanation for denying a Bitcoin ETF conversion, effectively forcing the agency's hand after a decade of refusals.

## Vindication

On January 10, 2024, the SEC approved spot Bitcoin ETFs. Peirce's statement that day was titled "Out, Damned Spot! Out, I Say!" She wrote: "We squandered a decade of opportunities to do our job... we refused to do so until a court called our bluff."

She was careful about what she was actually celebrating. "I am not celebrating bitcoin or bitcoin-related products," she wrote. "I am celebrating the right of American investors to express their thoughts on bitcoin by buying and selling spot bitcoin ETPs."

***

*Part of an ongoing series on Bitcoin history. This event falls on July 26, 2018.*

Daily Bitcoin Lore (8 years ago): SEC Rejects Bitcoin ETF, Crypto Mom Is Born

Daily Bitcoin Lore (16 years ago): ArtForz Controls 20-30% of Network Hash

I didn’t know that the inevitability of GPU mining was on his radar seemingly long before it materialized.

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# The Exchange Behind Mt. Gox's Missing Coins Gets Shut Down in a Greek Beach Town

![](https://m.stacker.news/149575)

***

FBI agents had tracked him for over a year. When they finally moved, it happened in a quiet beachside village in northern Greece, not a raid on some crypto fortress.

## A Giant, Unregulated Exchange

BTC-e had been running since 2011 and grew into one of the largest crypto exchanges on earth: over $9 billion in transactions, more than a million users worldwide, many of them in the United States, almost none of them KYC verified.

On July 25, 2017, Greek police arrested Alexander Vinnik, a 38-year-old Russian national, at a small beachside village in the north of the country. FBI agents had reportedly tracked him for more than a year before making the move.

Vinnik denied running the exchange at all, describing himself as merely a technical consultant to BTC-e. Prosecutors said withdrawals from BTC-e administrator accounts went directly to his personal bank accounts.

## The Mt. Gox Trail

The Mt. Gox connection came from independent researchers at WizSec, who had spent years tracing where Mt. Gox's missing coins actually went. Court documents in Mt. Gox's own bankruptcy case later showed nearly 300,000 BTC flowing into BTC-e wallets.

The exchange's alleged client list went far beyond one hack. Prosecutors also linked BTC-e to laundering ransomware payments, and separately, to funds tied to two corrupt federal agents who had stolen from the Silk Road investigation they were supposed to be running.

## The Numbers, and What Actually Happened

The numbers in the original indictment were staggering: up to $4 billion allegedly laundered since 2011, a $110 million civil penalty against the exchange, a $12 million personal fine for Vinnik, and a sentence of up to 55 years if convicted on every count.

What followed was a five-country tug of war. Greece held him while the US, Russia, and France all sought custody. France won first, trying him separately over Locky ransomware payments and sentencing him to five years before his case moved on. Vinnik was eventually extradited to the United States and pleaded guilty in May 2024 to a single conspiracy to commit money laundering charge, a far narrower resolution than the 55-year exposure prosecutors had once described.

## The Ending Nobody Expected

In February 2025, Vinnik was released as part of a prisoner exchange with Russia, traded for an American named Marc Fogel. The man linked to Bitcoin's largest exchange collapse walked free in a diplomatic trade.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 25, 2017.*

Daily Bitcoin Lore (9 years ago): BTC-e Falls, Tied to Mt. Gox's Missing Coins

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# A New Account Accused Someone of Hoarding Bitcoin's Mining Power. It Became the Biggest Hoarder of All.

![](https://m.stacker.news/149574)

***

Nobody knew the handle ArtForz yet. Within months it would control more mining power than anyone else alive.

## Satoshi Saw This Coming

Seven months earlier, Satoshi had tried to head this exact problem off. On December 12, 2009, he wrote: "We should have a gentleman's agreement to postpone the GPU arms race as long as we can. It's nice how anyone with just a CPU can compete fairly equally right now."

The agreement didn't hold. By July 2010, a user calling himself Nenolod, real name William Pitock, ran roughly 1,000 CPU cores and had reportedly amassed around 10 percent of all circulating Bitcoin, sparking a heated Bitcointalk thread about whether that concentration threatened the network.

## A Bounty and a Debate

One forum member jokingly offered Nenolod 31,337 BTC at a specific address if he could prove the system was broken. Others did the math out loud: was it even profitable to run 1,000 cores for the reward, or was Nenolod burning more in electricity than he was earning?

At 10:51 PM on July 24, 2010, a new account registered on Bitcointalk under the handle ArtForz. Within hours, his first posts appeared in that exact thread, adding technical skepticism about the hashrate numbers being discussed. Not a mining boast. A challenge to the math.

## What Nobody Saw Coming

Nobody in that thread knew what ArtForz would become. He is widely credited, alongside Laszlo Hanyecz, as one of the first to mine Bitcoin with GPUs using private code, an approach that made the CPU fairness Satoshi had hoped to preserve obsolete within months.

By October 2010, forum moderator theymos estimated ArtForz's own mining operation controlled somewhere between 20 and 30 percent of the entire network's hashing power, an estimate made in real time by people watching the blockchain, not a figure ArtForz ever confirmed himself.

## The Irony

The account that entered Bitcoin history by questioning whether one person should hold outsized mining power went on to become the person most cited, that same year, as holding outsized mining power.

ArtForz never revealed who he was. He stayed active in Bitcoin's technical community for a couple of years, then faded from the record entirely, one of the most consequential anonymous figures in Bitcoin's early history, remembered by a handle and a debate he didn't start.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 24, 2010.*

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July 23, 2011 | 15 years ago today

# Love, Grief, and an Accidental Bitcoin Fortune

![](https://m.stacker.news/149355)

***

Most Bitcoin history from 2010 and 2011 is told through code commits, exchange listings, and forum arguments about the future of money. This one is different. It comes from a single Bitcointalk post by a user going by EarlyAdopter, describing a partner who built something neither of them fully understood, and who died before he could see what it turned into. It is a personal account, not an audited record, and it's worth reading as exactly that: one person's story of grief and unexpected fortune, not a verified case study.

## Trying to Explain What Didn't Exist Yet

EarlyAdopter's own account starts in early 2010, with a partner trying to explain this strange new digital currency over conversation. It didn't take. As EarlyAdopter put it, "It was early 2010 I think. We were talking one day and he was trying to explain Bitcoin to me." The explanations didn't land, at least not in a way that made the idea feel real or worth acting on.

## From Talk to Action

About a month later, the approach changed. Instead of trying to talk EarlyAdopter into understanding Bitcoin, the partner started acting on his own conviction. He bought computers at an auction without asking permission first, and then bought graphics cards specifically for mining. There was no more explaining after that. There was just equipment showing up.

## A Guest Room Mining Rig

A guest room in their house became the setup. It's worth pausing on how modest that sounds by today's standards. A spare bedroom and a handful of consumer graphics cards was still, in that window of Bitcoin's history, enough to plausibly matter. There was no industrial buildout, no warehouse, no specialized hardware. Just a hobbyist's rig assembled from auction computers and gaming cards, running down the hall from where they slept.

## Watching the Numbers Shrink

The early returns, by EarlyAdopter's telling, sound almost absurd next to what mining looks like now: hundreds of bitcoins a day. But there's a detail in the story that quietly fits the timeline rather than undermining it. EarlyAdopter recalled asking how the mining was going and noticing the daily number kept getting smaller each time. That wasn't bad luck or a failing rig. Mining difficulty was climbing steadily through 2010 as more people discovered Bitcoin and pointed their own hardware at it. A rig that produces less over time, month after month, without anyone changing the hardware, is the signature you'd expect from that period.

## Illness, Loss, and an Unmanaged Fortune

In early 2011, the partner got sick and died. EarlyAdopter wasn't technical, and hadn't been the one running the rigs or keeping track of the coins day to day. In the aftermath, the mining hardware got sold off, but the wallets stayed. For a long stretch after that, by EarlyAdopter's own account, nobody checked what any of it was actually worth. Whatever had accumulated in those wallets just sat there, unexamined, while the person left behind dealt with the more immediate weight of the loss.

## The Summer of the First Price Mania

That changed in the summer of 2011. Bitcoin had just gone through its first real price mania, spiking toward roughly $30 in June before settling back into a range of $8 to $15 by July. Somewhere in that window, EarlyAdopter finally opened the wallets and looked at what was inside, and then wrote about it in a post at [https://bitcointalk.org/index.php?topic=31186.0](https://bitcointalk.org/index.php?topic=31186.0). It's a short, personal post buried in an ordinary forum thread, easy to miss unless you already know it's there.

## "I Almost Had a Heart Attack"

The reaction, in EarlyAdopter's own words: "I almost had a heart attack! (I actually have a bad heart). I couldn't believe what they were worth!" The coins were enough to pay off the house and clear every remaining debt. "It felt like I had won the lottery," the post reads.

## A Number Kept Private

When other forum members pushed for a specific coin count, EarlyAdopter never gave one. Even in a small, close community built around openly discussing this new money, some numbers stayed private. The only answer offered was a wink.

## Warm Replies From the Forum

The replies underneath were mostly warm. One user, hsf\_context, wrote, "Beautiful man... Bitcoin will continue to grow." Another, bitcola, was more matter of fact about the whole thing: "You are right. You 'lucked out'. Right place, right time."

## Not Everyone Believed It

Not every reader took the story at face value. A user named Jaime Frontero pushed back on parts of the timeline, questioning in particular whether GPU mining hardware was really as available and effective as described that early in 2010. It's a fair question, and worth keeping in mind. This is a single, emotionally charged forum post, not a documented chain of receipts. The mechanism EarlyAdopter describes, a rig whose output shrank as network difficulty rose, fits what's known about mining in that period. The specifics of dates and hardware availability were disputed at the time, by people who were actually there.

## Gratitude Nobody Got to See

EarlyAdopter closed the post with something plainer than any of the numbers involved: gratitude that the partner had set all of this in motion before he died, and sadness that he never got to see how it turned out. "I'll always be thankful for what he did for me," the post ends.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 23, 2011.*

Daily Bitcoin Lore (15 years ago): Love, Grief, and a Bitcoin Fortune

Daily Bitcoin Lore (15 years ago): The Paper That Proved Bitcoin Isn't Anonymous

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July 22, 2011 | 15 years ago today

# The Paper That Proved Bitcoin Isn't Anonymous

![](https://m.stacker.news/149240)

***

Bitcoin was two and a half years old on the day this paper was submitted, still trading in the neighborhood of $20 to $30, and there was essentially no academic literature about it yet. Most people who used it took for granted that a system built on public keys instead of names was, by design, anonymous. On July 22, 2011, two researchers in Dublin gave that assumption its first serious academic test, and the result became the founding document of an entire field.

## Who Reid and Harrigan Were

Fergal Reid and Martin Harrigan were researchers at University College Dublin, working at a moment when Bitcoin was still closer to a message board curiosity than a financial asset. There was no venture capital pouring into the space, no regulatory apparatus paying attention, and almost nothing published in peer-reviewed venues about how the system actually behaved once real people started using it. Their paper, titled "An Analysis of Anonymity in the Bitcoin System," was submitted to arXiv that day and later presented at IEEE SocialCom 2011 before being published as a book chapter by Springer in 2013. The arXiv submission itself is still there, timestamped and unchanged, at [https://arxiv.org/abs/1107.4524](https://arxiv.org/abs/1107.4524).

## Two Graphs, One Blockchain

The core insight was that Bitcoin's public transaction history could be turned into a network graph, and in fact into two linked ones. The first had individual transactions as its nodes. The second was built at a higher level of abstraction, with "users" as nodes, where a user was a cluster of public keys the researchers inferred belonged to a single real-world entity rather than a single key.

That inference rested on a heuristic that has since become the backbone of the entire chain-analysis industry: if a single transaction spends from multiple inputs at once, those inputs almost certainly share a common owner, because only someone holding every one of those private keys could produce the signatures needed to spend them together. Applied across enough transactions, this simple rule lets a researcher collapse a sprawling list of pseudonymous addresses into a much smaller set of real actors, all without ever seeing a name on the ledger itself.

## Context Discovery: Closing the Gap Between Keys and People

A graph of clustered keys still isn't a name. Reid and Harrigan closed that gap with a technique they called context discovery: cross-referencing their clusters against information that was sitting in plain sight elsewhere on the internet. Posts on the Bitcoin Forum where users voluntarily attached their public keys to their handles, activity around the Bitcoin Faucet, and even Twitter posts all provided the missing link between a cluster of keys and an actual identity or persona. None of this required any privileged access. It was all publicly available, scattered across a handful of places the Bitcoin community of 2011 was already congregating.

## Tracing WikiLeaks Donors

To demonstrate what the method could actually do, Reid and Harrigan pointed it at WikiLeaks' public Bitcoin donation address. Donors who gave to that address reasonably assumed their contributions were untraceable, since nothing about a Bitcoin transaction reveals a name. Yet by combining the clustering heuristic with context discovery, the researchers showed that a meaningful number of those donors could be linked back to identifiable public presences using nothing more than the blockchain itself and information the donors, or people connected to them, had already posted online.

## Tracing a Theft: The allinvain Case

The paper's second demonstration was arguably even more striking. In June 2011, a Bitcoin Forum user known as allinvain reported that roughly 25,000 BTC, worth about $500,000 at the time with Bitcoin trading near $20, had been stolen from his wallet. Reid and Harrigan used their transaction graph to follow the stolen coins as they moved through the network. The exercise doubled as a public proof of concept: the same transparency that was supposed to make Bitcoin trustless and auditable could also function as a forensic trail, turning a theft into something that could be tracked in the open rather than simply disappearing into the ledger's noise.

## The Legacy: Pseudonymous, Not Anonymous

The paper's lasting influence isn't really about WikiLeaks or allinvain specifically. It's the clustering heuristic itself, the common-input-ownership rule that Reid and Harrigan formalized in 2011, which is the direct ancestor of the tools that chain-analysis firms use today to trace stolen funds, sanctions evasion, and ransomware payments. It's also the reason "pseudonymous, not anonymous" became, and remains, the more precise way to describe Bitcoin: an argument the Bitcoin community is still having, fifteen years and countless privacy proposals later.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 22, 2011.*

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July 21, 2008 | 18 years ago today

# E-Gold Pleads Guilty to Money Laundering Charges

![](https://m.stacker.news/149168)

***

E-gold was a pre-Bitcoin digital currency, an early attempt to move value online without a central bank standing behind it. Its own downfall is the direct reason its founder says Bitcoin exists: proof that a centralized currency issuer is a single point of failure, and on July 21, 2008, the United States government supplied that proof in a federal courtroom.

## A Doctor's Answer to Monetary Manipulation

Douglas Jackson was a radiation oncologist practicing in Melbourne, Florida, not a technologist or a banker. What set him on the path to founding e-gold was a Thomas Sowell column about F.A. Hayek's The Road to Serfdom. Jackson came away from it convinced that monetary manipulation by governments had caused real wars and real economic calamities throughout history, not abstract ones.

In 1996, Jackson and attorney Barry Downey built e-gold directly on that conviction. The design goal was a payment system where value moved peer to peer, backed by something no government could print or inflate away, operating outside any single country's monetary control.

## Gold You Could Actually Move

The mechanism behind e-gold was straightforward in concept and unusual in execution. Accounts held digital ownership of real gold bullion. The operation started small, with gold coins kept in a Florida safe deposit box, but reserves eventually scaled to 3.8 tons, more gold than backed the Canadian or Mexican currencies at the time. Users could transfer ownership of that gold to each other instantly, by weight or by value, for a fee that started around 1 percent and later moved to a sliding scale capping around $2 per transaction.

Two separate entities ran the system: e-gold managed the accounts themselves, while an affiliate, Gold & Silver Reserve Inc., handled currency exchange. That split mattered because it let independent businesses build their own payment tools on top of e-gold's infrastructure rather than depending on a single monolithic company. By 2006, e-gold served customers in more than 100 countries and was processing roughly $3 billion a year in peer-to-peer transactions, a genuinely significant figure for a system most people had never heard of.

## The Honeypot Working Against Itself

Here is the irony that makes the case study land harder. Wired described e-gold as having become "one of law enforcement's most productive honey pots," because the platform was actively helping catch credit card thieves and hackers who used it to move stolen funds, at the exact same time it was itself the target of a federal investigation. Jackson cooperated voluntarily with the agencies building the case against him, a detail that sits uneasily with the later media narrative that painted e-gold as a haven built for criminals.

## A Raid Built on a Misleading Warrant

In December 2005, Secret Service and FBI agents raided Jackson's office and his home. They froze e-gold's accounts and seized computers. The judge who signed the search warrants authorizing all of it, John Facciola, later said he had been led to believe he was authorizing a child pornography investigation. No such charges were ever part of the case against Jackson or e-gold, at any point.

## The Opinion Nobody Was Allowed to See

What makes the prosecution genuinely troubling is not just the misleading warrant, it is what came after. No regulator had ever definitively ruled that e-gold was operating as an unlicensed money transmitter before the raid took place. In 2006, the Florida Office of Financial Regulation drafted an opinion that reached the opposite conclusion: e-gold was not subject to money transmitter regulation at all, on the grounds that there was "no evidence that e-gold is money."

Prosecutors never disclosed that opinion to Jackson, to the grand jury, or to the judge overseeing the case. The Secret Service had specifically instructed the Florida regulator to avoid communicating with Jackson about the opinion directly. Jackson only learned the opinion existed years later, and only because he filed a Freedom of Information Act request to find out.

## Guilty Pleas All Around

Jackson was formally charged in April 2007 with operating an unlicensed money transmitting business. On July 21, 2008, e-gold and its affiliate Gold & Silver Reserve Inc. each pleaded guilty to conspiracy to launder money and conspiracy to operate an unlicensed money transmitting business, as the Department of Justice detailed in its own press release announcing the pleas ([https://www.justice.gov/archive/opa/pr/2008/July/08-crm-635.html](https://www.justice.gov/archive/opa/pr/2008/July/08-crm-635.html)). Jackson himself pleaded guilty to the same conspiracy charges. Two other senior directors, Barry Downey and Reid Jackson, pleaded guilty separately to related licensing violations in the District of Columbia.

## No Prison, No Path Forward

Sentencing brought no prison time for Jackson: 300 hours of community service, three years of supervised release, and six months of home confinement on an ankle monitor. The sentencing judge, Rosemary Collyer, said explicitly that she believed e-gold "should continue to exist," provided it complied with anti-money-laundering rules going forward.

It never got that chance. Jackson's felony conviction made him legally unable to obtain the money transmitter licenses e-gold would have needed to keep operating under the very rules the judge wanted it to follow. The company shut down for good in 2009, not because a court ordered it closed, but because the conviction itself made continued operation impossible.

## The Direct Line to Bitcoin

Jackson has drawn the connection to Bitcoin himself, in plain terms: "The bitcoin bubble never would have happened in the first place if we had not had to exit the business." Cypherpunk economist Jon Matonis has made the identical argument independently of Jackson: a centralized digital currency, no matter how well backed by real assets, is always one prosecution away from being shut down entirely. That is precisely the design problem Bitcoin's decentralization was built to solve, and e-gold's guilty plea is the concrete, documented case that proves why the problem was worth solving.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 21, 2008.*

Daily Bitcoin Lore (18 years ago): E-Gold Pleads Guilty to Money Laundering

Daily Bitcoin Lore (10 years ago): Ethereum Hard-Forks to Reverse The DAO Hack

100%  I don’t really do any “cRyPtO” posts but in this case it’s worth contrasting this with the bitcoin network’s ethos.

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July 20, 2017 | 9 years ago today

# GAW Miners' Josh Garza Pleads Guilty to Wire Fraud

![](https://m.stacker.news/148968)

***

For a couple of years in the mid-2010s, GAW Miners was one of the more visible names in Bitcoin cloud mining. Its CEO, Homero "Josh" Garza, was a regular presence on the conference circuit, and the company's core product, shares in Bitcoin mining hardware sold to retail buyers under the name "Hashlets," moved fast among people who wanted mining income without the hassle of running rigs themselves. The hardware behind those sales was never what it was advertised to be. On July 20, 2017, Garza pleaded guilty in federal court to one count of wire fraud, closing out a case that had been building since an SEC complaint filed in late 2015.

## The Hashlet mechanism

GAW Miners began selling Hashlets in 2014, marketed as shares in real Bitcoin mining hardware that the company owned and operated. Buy a Hashlet, and you were supposed to get a steady stream of mined bitcoin proportional to your share of that hashpower. It read like a straightforward cloud mining product: pay for a slice of the machines, collect the output.

The catch was that GAW never came close to owning the hashpower it was selling. By the SEC's later account, at times the company sold more hashpower on paper than existed across the entire Bitcoin network, an accounting gap that only works if new money keeps arriving to cover what's owed to people who bought in earlier. Payouts to early Hashlet buyers came largely from cash paid in by newer investors rather than from any mining actually taking place. More than 10,000 people bought Hashlets, some from over 100 countries, drawn in part by Garza's high-profile presence in the Bitcoin world at the time.

## The 9/11 charity crack

The first real dent in GAW's public image came in April 2015, when leaked emails published by CoinBuzz showed the company had sold 2,296 "Remember Hashlets," a product marketed with a promise that 100% of the proceeds would go to a 9/11 memorial charity. Sales totaled roughly $48,000. Only about $10,000 of it actually reached the charity.

The leaked correspondence reportedly had Garza himself acknowledging the diversion of funds. It was a small dollar figure next to the millions moving through the broader Hashlet business, but it was the kind of concrete, easily verified lie that punctures a carefully built public image in a way that abstract mining-math accusations don't.

## PayCoin and the $20 floor that wasn't

By late 2014, GAW had already pivoted toward launching its own currency, PayCoin, promoted through a companion wallet and exchange called Paybase. The pitch was aggressive even by the standards of the era: PayCoin was guaranteed never to trade below $20, with Paybase pledged to buy back any coin at that floor if the market wouldn't.

The guarantee did not survive contact with the market. PayCoin's price fell from that promised $20 floor to a few cents. Early 2015 brought frozen Paybase withdrawals, a suddenly unreachable Garza, and the exchange shutting down entirely that April. The pattern was consistent with what had already surfaced on the Hashlet side: promises of guaranteed returns backed by nothing that could actually deliver them once enough people wanted to cash out at once.

## The SEC steps in

On December 1, 2015, the SEC filed civil fraud charges in Hartford, Connecticut against Garza, GAW Miners LLC, and ZenMiner LLC. The complaint alleged roughly $20 million in Hashlet contracts had been sold on promises of "always-profitable" mining shares that GAW did not have the hashpower to back. It was the first formal regulatory reckoning for a company that had, up to that point, mostly been unraveling in leaked emails and frozen withdrawals rather than in a courtroom.

## The guilty plea

Garza pleaded guilty in federal court in Connecticut on July 20, 2017, to one count of wire fraud. In doing so, he admitted the schemes had defrauded investors of $9,182,000, a figure confirmed in [CoinDesk's report on the plea](https://www.coindesk.com/markets/2017/07/20/garza-pleads-guilty-gaw-miners-ceo-cops-to-9-million-fraud/). That number sits below the SEC's earlier $20 million civil estimate, since the criminal admission covers a specific fraud count rather than the full scope of the civil complaint, but it is a real figure attached to real victims, not an inflated headline number.

## Sentencing

Garza was sentenced on September 13, 2018, to 21 months in federal prison and three years of supervised release, with the first six months of that supervised release required to be served in home confinement. It was a meaningful sentence for a meaningful fraud, one that touched more than 10,000 buyers across over 100 countries, without needing embellishment to make the point: a cloud mining company that sold hashpower it never owned, a coin with a guaranteed floor that lasted about a month, and a charity promise that mostly never arrived.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 20, 2017.*

Daily Bitcoin Lore (9 years ago): GAW Miners CEO Pleads Guilty to Wire Fraud

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July 20, 2017 | 9 years ago today

# Hansa Shutdown Reveals Month-Long Dutch Police Honeypot

![](https://m.stacker.news/148952)

***

For nearly a month in the summer of 2017, one of the dark web's biggest markets kept running exactly as its buyers and vendors expected: list a product, get paid in Bitcoin, message the customer, ship the order. Except every password typed into that login screen was being recorded in plaintext, every "encrypted" message was being read before encryption ever ran, and every vendor filling in a shipping form was handing their real world address straight to Dutch police. Nobody on Hansa knew the market had already been seized. The reveal came on July 20, 2017, when Dutch and American authorities jointly announced the takedown of Hansa alongside the much larger AlphaBay market, unveiling the sting for the first time as Operation Bayonet.

## The wallet reuse that started it all

The operation's roots go back to October 2016, when the security firm Bitdefender tipped off Dutch police that Hansa's infrastructure was hosted in the Netherlands. The lead that got them there was a Bitcoin mistake, not a browser fingerprint or a server misconfiguration: Hansa's admins had reused the same Bitcoin wallet to pay both their old hosting provider and their new one. That single reused address linked the two arrangements together, and from there investigators traced the servers, along with related infrastructure the admins were running in Lithuania. It's a detail that would become one of the defining lessons of the dark web market era: address reuse doesn't just leak on-chain, it can connect an entire criminal operation's hosting history for anyone paying attention to the blockchain.

## A silent takeover, three minutes of downtime

The takedown itself was coordinated with unusual precision. On June 20, 2017, German police raided Hansa's administrators while they were actively logged into the site's back end, seizing computers with unencrypted hard drives, handing investigators the keys to everything. At the same moment, Dutch police seized Hansa's servers, took over operating the site, and began impersonating the admins to the market's existing user base. The site's downtime during the handover was about three minutes. To the tens of thousands of people buying and selling on Hansa, nothing had changed. In reality, the market they trusted was now being run by Dutch law enforcement.

## Rewriting the code from the inside

Over the following month, Dutch police quietly modified Hansa's source code while it kept operating as normal. Every login on the site now recorded the user's password in plaintext, letting investigators test those same credentials against other darknet markets, on the reasonable bet that people reuse passwords across accounts the way Hansa's own admins had reused a Bitcoin wallet. Vendor account panels were also modified to add new fields demanding tracking numbers and full shipping addresses under the guise of routine site improvements, information investigators could feed straight to law enforcement partners waiting on the other end of every shipment.

## Two different traps for two different platforms

It's worth keeping these two mechanisms distinct, because they worked in entirely different ways. On Dream Market, a rival darknet market, some of the passwords harvested from Hansa's logins turned out to be reused by vendors there too. Dutch police logged into those vendor accounts and secretly swapped in PGP encryption keys they controlled on at least fourteen of them. Any buyer on Dream Market who thought they were writing an encrypted message to a trusted seller was, on at least those accounts, writing directly to Dutch police using a substituted key the vendor never knew existed.

Hansa itself needed no such substitution. The market had a convenience feature that automatically PGP-encrypted messages for users, sparing them the hassle of managing encryption themselves. Police simply recorded the plaintext copy of every message before that automatic encryption ran. There was no key swap required and no vendor cooperation to defeat: every "private" message sent through Hansa during that month was captured in the clear at the moment it was typed, a direct consequence of a feature built for user convenience rather than an attack on the encryption itself.

## Active traps beyond the code

Beyond the passive logging, Dutch police ran deliberate traps against vendors still operating on the site. Some were sent a "backup" inventory spreadsheet containing a hidden beacon that, once opened, revealed the vendor's real IP address. Others were told their hard drive had crashed and were asked to resend product photos, many of which still carried GPS location data embedded in the file's metadata, information vendors had never intended to hand over but that gave investigators a physical location all the same.

## AlphaBay's collapse floods Hansa with new users

The sting gained an unplanned boost from outside events. On July 5, 2017, AlphaBay, then the largest dark web market, was seized after its admin, Alexandre Cazes, was arrested in Thailand with his laptop open and unencrypted, exposing the servers behind the site he ran. Displaced AlphaBay users needed somewhere to go, and within days signups on Hansa jumped roughly sevenfold as the crowd flowed straight into a market Dutch police were already controlling.

## The reveal and the tally

On July 20, 2017, the Netherlands and the United States jointly announced both takedowns, revealing the Hansa sting publicly for the first time as Operation Bayonet. Forbes covered the story that day, [reporting on the coordinated dark web bust](https://www.forbes.com/sites/thomasbrewster/2017/07/20/alphabay-hansa-dark-web-markets-taken-down-in-massive-drug-bust-operation/) that had quietly run for weeks under everyone's nose. Over the month they operated Hansa, Dutch police tracked roughly 27,000 illegal transactions, collected close to 10,000 international buyer delivery addresses for Europol to distribute to law enforcement partners across dozens of countries, and seized more than 2,500 BTC. Every Bitcoin payment that crossed Hansa's marketplace during that final month had gone straight into the hands of the people who ran the sting, the same chain of custody that had started nearly a year earlier with one reused wallet address.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 20, 2017.*

Daily Bitcoin Lore (9 years ago): Hansa Shutdown Reveals Dutch Police Honeypot

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 20, 2016 | 10 years ago today

# Ethereum Hard-Forks to Reverse The DAO Hack

![](https://m.stacker.news/148920)

***

This is a Bitcoin history account, and normally that means we stay in our own chain's story. Today we're making an exception, because ten years ago Ethereum ran the experiment Bitcoin has always refused to run. It stole back stolen money by rewriting its own ledger, and it did so in full public view, with a vote, a deadline, and a name for the philosophy on the losing side. Bitcoin has never done this, not for Mt. Gox, not for any exchange collapse since, no matter how large the loss. The DAO fork is the clearest real-world test of why that refusal is treated as load-bearing rather than stubborn.

## The DAO and the Exploit

The DAO was a decentralized venture fund built on top of Ethereum. Anyone could buy in with ether and vote on which projects the pooled funds would back, a structure that made it one of the more ambitious experiments the smart contract world had tried at the time. In June 2016 an attacker found a flaw in how the DAO's code handled withdrawals. A function could be made to call itself recursively before the contract updated the caller's balance, letting the attacker pull ether out of the fund far more times than they were entitled to and route it into a child copy of the DAO under their control.

The theft came to roughly sixty million dollars at the time. But the DAO's own rules included a waiting period, about 27 days, before the attacker's child contract could actually release those funds. That window is what turned a bad week into a month-long crisis for Ethereum's core developers and community: they had a hard deadline to decide whether to do nothing, attempt some kind of countermeasure, or intervene directly at the protocol level.

## The Hard Fork Decision and Execution

The option that won out was a hard fork. Rather than accept the theft as final, Ethereum's developers proposed rewriting the chain's rules so the drained funds would move into a new contract built to do one thing: let the original token holders withdraw ether at the DAO's original exchange rate, as though the theft had never settled. It was framed by supporters as a rescue operation for thousands of ordinary participants. It was also, unavoidably, an edit to a ledger that had been marketed as immutable.

The fork executed on July 20, 2016. As [CoinDesk reported at the time](https://www.coindesk.com/tech/2016/07/20/ethereum-executes-blockchain-hard-fork-to-return-dao-funds), the China-based mining pool BW.com mined the new chain's first block, moving the stolen ether into the withdrawal-only contract. Christoph Jentzsch, the Slock.it co-founder who had authored most of the DAO's original code, wrote afterward that he'd witnessed "remarkable feedback and support from many different sides" during the scramble to get the fork built and shipped in time.

## Ethereum Classic and the "Code Is Law" Split

Not everyone accepted the fork as legitimate. A minority of miners and users rejected it outright, arguing that a blockchain's history should never be altered regardless of the circumstances, a position that got shortened into the phrase "code is law." That minority kept validating the original, unaltered chain where the attacker's funds were never clawed back. That holdout chain became Ethereum Classic. The forked chain, the one that reversed the theft, became the Ethereum that exchanges, developers, and most of the public now simply call Ethereum.

A month later, Ethereum Classic was still running, still had real value trading against it, and had not collapsed the way some fork skeptics predicted. In Bitcoin circles that outcome got read less as a footnote and more as a data point: a chain that refused to reverse a hack could survive, and a chain that did reverse one had just demonstrated, in the most public way possible, that its immutability was negotiable under pressure.

## What This Says About Bitcoin

Bitcoin has absorbed its own share of catastrophic losses, Mt. Gox chief among them, and has never once forked to undo one, no matter how sympathetic the victims or how large the sum. That stance isn't an accident or an oversight. It's treated inside Bitcoin culture as close to the whole point: a ledger that can be edited by consensus whenever the stakes get high enough isn't really a ledger, it's a database with extra steps. The DAO fork didn't invent that argument, but it gave it a real-world control group. Ten years on, it's still the case study Bitcoin people reach for first.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 20, 2016.*

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 19, 2016 | 10 years ago today

# Bitmain Quietly Acquires Blocktrail

![](https://m.stacker.news/148765)

***

Ten years ago today, one of the least dramatic acquisitions in Bitcoin's history closed: three employees, an undisclosed price, and almost no headlines. Beijing-based Bitmain Technologies bought Blocktrail, a small Amsterdam startup that built a bitcoin wallet, a block explorer, and a developer API. On its own, the deal was forgettable. What makes it worth remembering is what it completed. With Blocktrail folded in, a single company now owned a piece of every layer of Bitcoin: the hardware, the hashpower, the pools, the explorer, and the wallets. And it happened right as the block size war was raging.

## A Three-Person Deal

The terms were modest by any standard. Bitmain acquired Blocktrail for an undisclosed sum, brought its 3 full-time employees onto the team, and merged the startup into BTC.com, the block explorer and analytics platform Bitmain had launched in September 2015. Blocktrail's multi-signature HD wallet technology and its developer API became part of that platform. CoinDesk covered the announcement at the time ([https://www.coindesk.com/markets/2016/07/19/bitcoin-miner-bitmain-acquires-data-startup-blocktrail](https://www.coindesk.com/markets/2016/07/19/bitcoin-miner-bitmain-acquires-data-startup-blocktrail)), and the quotes from both sides read like standard acquisition boilerplate.

"Blocktrail's products, services and team are highly valuable to us," said Bitmain co-founder Jihan Wu.

Blocktrail co-founder Boaz Bechar was more revealing, perhaps without meaning to be. "We've seen a lot of consolidation going on in the past year, and for us, it was really a perfect match," he said, adding: "I think BTC.com is going to be strong. We're going to have a bigger team and bigger resources."

Consolidation was exactly the right word. It just carried more weight than a press-release quote suggested.

## From Russia's Facebook to a Bitcoin Wallet

Blocktrail itself had a surprising pedigree. The startup was founded in 2014 by Bechar and Lev Leviev, whose investment holding BlockCorp seeded it with an initial 500,000 euros. This Lev Leviev is a Russian-Israeli entrepreneur, not the famous diamond mogul who shares his name, and his earlier career is the kind of detail that makes you look twice. In 2006 he co-founded VK.com, Russia's largest social network, alongside Pavel Durov, the same Pavel Durov who would go on to found Telegram. Leviev served as VK's chief operating officer until 2012, then moved into investing.

So one of the two people behind a small Bitcoin wallet startup that Bitmain quietly absorbed had, a decade earlier, helped build "Russia's Facebook" next to the future founder of Telegram. Bitcoin's early corporate history is full of these strange intersections, and this is one of the stranger ones.

## Completing the Stack

To see why this small deal mattered, you have to look at what Bitmain already was in July 2016. The company, co-founded by Jihan Wu and Micree Zhan, made the dominant Antminer line of ASIC mining hardware. It ran Antpool, one of the largest Bitcoin mining pools in the world. It operated Hashnest, a cloud-mining service. And it had BTC.com, its explorer and analytics site.

Blocktrail's wallet and API were the missing pieces. After July 19, 2016, Bitmain had a foothold in hardware, hashpower, pool operation, block data, and user wallets, all under one roof. No single acquisition created that structure, and this one was among the smallest. But the logic behind it, one company at every layer, is the part of the story that aged into significance.

## The Block Size War Context

The timing is what gives the deal its weight. July 2016 was deep in Bitcoin's block size war, the multi-year fight over how to scale the network that SegWit was meant to resolve. Jihan Wu was in the process of becoming one of the most powerful and controversial figures in that fight. He was central to the miner-coordination efforts behind the Hong Kong Agreement and later the New York Agreement, better known as SegWit2x. Bitmain was embroiled in the AsicBoost controversy, a covert mining-efficiency technique that SegWit would close off, which some in the community believed explained miner resistance to the upgrade. And when SegWit2x collapsed, Bitmain became a key backer of the August 2017 Bitcoin Cash fork.

None of that was visible in a three-person acqui-hire announcement in July 2016. All of it was building at the same time, inside the same company.

## Eighteen Months Later

By early 2018, roughly eighteen months after this forgettable acquisition, the combined hashrate of Bitmain-controlled or Bitmain-linked pools, meaning BTC.com, AntPool, and ViaBTC, was approaching the 51% threshold that underpins Bitcoin's core security assumption. Bitcoin Magazine and multiple mining-industry trackers described BTC.com, the very platform Blocktrail had been folded into, as the largest Bitcoin mining pool in the world for years running through this period, propped up by Bitmain's own hardware advantage. That level of concentration in one company's hands alarmed the community, and rightly so.

To be clear about causality: the Blocktrail deal did not produce the 51% scare. Three employees and a wallet API do not move hashrate. But the deal ran on the same consolidation logic that did, and that is the lesson worth carrying forward. Centralization in Bitcoin rarely arrives as one dramatic event. It accumulates through unremarkable deals like this one, each individually too boring to fight about, until someone finally adds up the stack.

---

*Part of an ongoing series on Bitcoin history. This event falls on July 19, 2016.*

Daily Bitcoin Lore (10 years ago): Bitmain Quietly Acquires Blocktrail

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 19, 2017 | 9 years ago today

# "Leeroy Jenkins!!!!" in #bitcoin-wizards

![](https://m.stacker.news/148741)

***

In the small hours of July 19, 2017, with Bitcoin two days away from the most closely watched miner vote of the scaling era, the #bitcoin-wizards IRC channel produced one of the great one-line exchanges in the channel's history. A developer asked, in earnest technical language, why nearly half of Bitcoin's miners appeared to be lining up to orphan their own blocks. The complete answer he received, from one of the most rigorous protocol engineers in the room, was a battle cry from a 2005 World of Warcraft video. To see why the joke was not just funny but precise, you need both halves: the strange corner Bitcoin's miner signaling had backed itself into that week, and what actually happens in that video.

## The Standoff, and a Clever Shortcut

By mid-2017, Bitcoin had spent roughly two years locked in the block size war, the long fight over how the network should scale. SegWit (BIP141) was the proposed fix, but activating it required 95 percent of miner hashpower to signal support by setting "bit 1" in the blocks they mined, and miners were stalling. Some of that was genuine technical and economic disagreement. Some of it, many suspected at the time, was that SegWit closed a loophole called AsicBoost that gave certain miners a covert efficiency edge, and that congested blocks meant richer fee revenue besides.

The stall provoked a grassroots counterattack: the UASF movement (BIP148), under which ordinary economic nodes would simply start rejecting any block that failed to signal SegWit on August 1, 2017, ready or not. Miners answered with a compromise authored by James Hilliard called BIP91. Instead of needing 95 percent on bit 1 directly, BIP91 needed only 80 percent of hashpower signaling a different bit, bit 4. Once that locked in and enforcement began, every block would be required to signal bit 1 or be orphaned, meaning rejected by the network with its block reward gone. It was a lower-threshold, faster path to the same destination, with one safety feature that matters to this story: unlike an earlier version that enforced instantly, the deployed BIP91 had what gmaxwell called a "quieting period," roughly two and a half days for miners to actually turn bit 1 on before the orphaning rule went live.

## Idiots, or Lulz?

That is the state of play at 03:07 UTC on July 19, when the developer oleganza put the uncomfortable arithmetic to the channel, verbatim:

> Seems like BIP91 is very close to be activated (bit 4), but still 45% of blocks signal segwit (bit 1). Does this mean, BIP91-signalling miners are idiots ready to orphan half of their own blocks, or does it mean, they don't run btc1, but only signal BIP91 for lulz?

![](https://m.stacker.news/148742)

Bit 4 was about to lock in, yet 45 percent of blocks were still not signaling actual SegWit. Nearly half the network's hashpower was voting to switch on a rule that, as things stood, would throw out its own blocks. One minute later came the entirety of gmaxwell's first response:

> gmaxwell: oleganza: leeroy jenkins!!!!

And sixty seconds after that, midnightmagic added the deadpan capstone:

> midnightmagic: least i have chicken

## At Least I Have Chicken

For anyone who missed the mid-2000s internet: on May 11, 2005, a World of Warcraft guild called Pals for Life, led by a player named Ben Schulz, uploaded a video titled "Leeroy!!" to the fan site Warcraftmovies. In it, the raid group spends a long stretch meticulously planning a dangerous dungeon room in Upper Blackrock Spire, computing survival probabilities and assigning roles. Schulz's character, Leeroy Jenkins, is away from his keyboard the entire time, preparing a plate of chicken. When he returns, he ignores the plan the group just spent minutes building, charges alone into the room screaming his own name as a battle cry, and the encounter collapses. The whole raid dies. When his furious guildmates blame him, Leeroy's only defense is: "At least I have chicken!"

(link for those who are unfamiliar: [https://www.youtube.com/watch?v=mLyOj\_QD4a4](https://www.youtube.com/watch?v=mLyOj_QD4a4))

It became one of the internet's first defining viral memes, shorthand for reckless, uncoordinated action that ignores a careful plan and dooms the whole group, and Blizzard eventually wrote Leeroy Jenkins into the game itself as an NPC and a card. (A footnote for completists: whether the original video was spontaneous was debated for over a decade, and in December 2017 Schulz and the video's recorder released a "dry run" take suggesting it was a rehearsed bit. That changes nothing about what the meme has always meant, or how it was used here.)

## The Serious Version of the Joke

gmaxwell's two-word answer, unpacked: the miners signaling bit 4 without bit 1 were Leeroy. They were charging toward switching on an enforcement rule without doing the coordination work the plan actually depended on, apparently oblivious that this could blow up the very outcome everyone was working toward. And midnightmagic's follow-up quotes Leeroy's own post-disaster excuse, implying the miners' position was exactly as self-defeating: if this went wrong, their defense would amount to a plate of chicken.

What makes the exchange more than a meme drop is that gmaxwell immediately laid out, in sober detail, why the Leeroy scenario was live. The chronic problem was "fake signaling": miners setting version bits they did not actually enforce. As he put it, "because of the high incidence of fake versionbit signaling, all of this is fairly risky for miners and the network," and "it's perfectly plausible that the enforcement point is reached but a supermajority of the hashpower doesn't actually enforce because its been fake signaling and spy mining." The thresholds could pass on paper while much of the real hashpower had never upgraded, and "there is a very limited window where that can be fixed without creating large funds loss risk if that starts happening."

At 03:33 he shared the contingency planning he had been giving privately: "Advice I gave to some is that they need to have a BIP-91 and a non-BIP91 node and be ready to switch if fake signaling resulted in a submajority enforcing." He punctuated it with "(fking fake signaling)". A few minutes later he talked himself from "I think it's unlikely that we don't get some damaging reorgs out of this, but possible" to the blunter "I think it's likely that there will be damaging reorgs; though I wouldn't place a big bet on it." A reorg here would mean chains of already-accepted blocks getting overwritten, with real transactions, and real money, caught in the churn.

## The Raid That Didn't Wipe

This time, the raid held formation. BIP91 locked in on July 21, 2017 at block 477,120 and activated on July 22 at roughly 04:46 UTC, and within twenty-four hours 88.2 percent of the network was signaling SegWit, comfortably above what was needed. The damaging reorgs never came. Miners had done what gmaxwell speculated at 03:09 they might: turned bit 1 on at the last minute, inside that two-and-a-half-day quieting window. SegWit itself locked in on August 9 and activated August 24, while the broader blocksize conflict rolled on separately into the August 1 Bitcoin Cash fork, which is another and much larger story.

The whole exchange is preserved in the gnusha #bitcoin-wizards log for July 19, 2017, a small time capsule from the week Bitcoin's most consequential upgrade fight got resolved by, of all things, an at-the-last-minute raid plan actually coming together. Least they had chicken.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 19, 2017.*

Daily Bitcoin Lore (9 years ago): "Leeroy Jenkins!!!!" in #bitcoin-wizards

Daily Bitcoin Lore (12 years ago): Dell, Largest Company Yet to Accept Bitcoin

Given Michael Dell's past enthusiasm for bitcoin, I'm honestly surprised that's not a thing.

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 18, 2014 | 12 years ago today

# Dell Becomes the Largest Company by Revenue to Accept Bitcoin

![](https://m.stacker.news/148691)

***

On July 18, 2014, a computer giant with roughly $57 billion in annual revenue started taking bitcoin for everything it sold, from budget laptops to enterprise servers. The story of how Dell could move that fast begins with a shareholder revolt exactly one year earlier, to the day.

## Escaping the Quarterly Treadmill

In 2013, Michael Dell took his company private in a $24.4 billion buyout with Silver Lake Partners. The explicit goal was to escape Wall Street's quarterly earnings pressure and free the company to make the kind of long-term bets a public company answering to analysts every ninety days cannot. The deal very nearly did not happen. On July 18, 2013, exactly one year before the Bitcoin announcement, Dell's special committee abruptly adjourned the shareholder vote to keep the buyout from failing outright at the ballot box. Michael Dell was roughly 150 million votes short of approval.

## Icahn's Mockery and a Narrow Escape

Carl Icahn, the activist investor fighting the deal, ridiculed the delay in an open letter: "Can you imagine a political election contest where one side could push off the election to wait for a better day to hold the election?" The vote was adjourned three times, on July 18, July 24, and August 2, before shareholders finally approved a sweetened $13.75 per share offer on September 12, 2013. The buyout closed on October 29, 2013, and Dell was a private company again, free to place bets without a quarterly audience.

## One Year Later, to the Day

On July 18, 2014, the now-private Dell announced it would accept bitcoin via Coinbase for everything it sold to US customers. Michael Dell broke the news himself on Twitter: "Dell is now the world's largest ecommerce business to accept #bitcoin." CoinDesk covered the launch the same day at [https://www.coindesk.com/markets/2014/07/18/computer-giant-dell-now-accepts-bitcoin](https://www.coindesk.com/markets/2014/07/18/computer-giant-dell-now-accepts-bitcoin), noting the rollout details: a dedicated bitcoin page on Dell's site, a 10% discount on Alienware gaming products for bitcoin buyers, and refunds on bitcoin purchases paid out as USD checks rather than bitcoin. At roughly $57 billion in revenue, Dell was about four times the size of the previous record holder, DISH Network.

## The Fourteen-Day Build

The detail that connects the buyout to the Bitcoin launch came from Dell's CIO of Commerce Services, Paul Walsh, who said the entire Coinbase integration was built and shipped in two weeks: "It is always our goal to respond quickly to our customers and ensure their needs are met. Partnering with Coinbase to implement this solution in 14 days is a prime example of the new, more agile Dell." A public Dell, choreographing every move for quarterly earnings calls, would have been hard pressed to greenlight and ship a bitcoin checkout in fourteen days. A private Dell simply did it.

## The Bitcoin World Reacts

Coverage was immediate. PCWorld, the LA Times, and the NY Times all picked up the story, along with international outlets like De Telegraaf, and r/bitcoin lit up with enthusiasm. Contemporary observers pointed out that by taking bitcoin directly, Dell was sidestepping traditional card processing fees. Less than a month later, the bet produced a headline of its own: a customer placed a PowerEdge server order worth more than 85 BTC, around $50,000, likely an entire server farm's worth of hardware. Michael Dell tweeted about that one personally too.

## The Quiet Exit

The experiment stayed modest, and it did not last. Dell expanded bitcoin payments to Canada and the UK in 2015, then discontinued them entirely in October 2017, citing low demand and high transaction fees. Not long after Dell walked away, bitcoin's price ran to nearly $20,000. The bold move was real, the volume in practice was small, and the ending was quiet. But for a moment in the summer of 2014, the fastest-moving bitcoin merchant in the world was a $57 billion company that had spent the previous year fighting for the freedom to move that fast.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 18, 2014.*

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 18, 2013 | 13 years ago today

# Erik Voorhees Sells SatoshiDice, Bitcoin's First Major Acquisition

![](https://m.stacker.news/148690)

***

On July 18, 2013, Erik Voorhees announced he had sold SatoshiDice, the Bitcoin dice game he built, for 126,315 BTC, worth about $11.47 million at the time. It is widely cited as the first major acquisition in Bitcoin industry history, and thirteen years later, nobody has ever confirmed who bought it.

## A Dice Game Funded by Unregistered Shares

SatoshiDice launched in late April 2012, and Voorhees capitalized it in a way that could only have happened in early Bitcoin: he sold ownership shares on MPEx, a Romanian Bitcoin securities exchange, in an offering that was never registered with any regulator. Between August 2012 and February 2013, SatoshiDice sold 13 million shares across two separate offerings, raising 50,600 BTC. At the time, that entire raise was worth about $722,659. Keep that figure in mind, because within five months it would look absurdly small next to what the company sold for.

## Reading the Wind

On May 16, 2013, SatoshiDice blocked every US-based IP address from the site. A company spokesperson told CoinDesk: "The best way to limit legal risk for SatoshiDice, and thereby protect its stakeholders, is to block US players." The same statement declared that "SatoshiDice is building a ubiquitous global brand in the bitcoin space, and must take the coercive threat of government seriously."

The detail that makes this interesting is what did not happen: CoinDesk explicitly noted that no citation or notice from any government agency had prompted the move. This was not a response to enforcement. It was a founder sensing where the wind was blowing and getting his stakeholders out of the way. Two months later, he cashed out entirely.

## An $11.5 Million Exit

CoinDesk covered the sale announcement the same day it broke ([https://www.coindesk.com/markets/2013/07/18/bitcoin-company-acquisitions-begin-gambling-site-satoshidice-sells-for-115-million-126315-btc](https://www.coindesk.com/markets/2013/07/18/bitcoin-company-acquisitions-begin-gambling-site-satoshidice-sells-for-115-million-126315-btc)): 126,315 BTC changing hands, roughly $11.47 million, for a business whose share offering had raised $722K less than a year earlier. The buyer was never publicly named. Contemporary reports speculated it was "a significant existing gaming institute," but no confirmation ever surfaced, and the buyer's identity remains one of the enduring small mysteries of the era.

## The Shareholder Payout

The buyout math for MPEx shareholders was unusually generous, and Voorhees made a point of saying so. Shares had originally sold for 0.00126315 BTC each, about 12 cents. As part of the sale, he paid shareholders an extra 0.00223685 BTC per share on top, bringing the total payout to 0.0035 BTC per share, roughly 32 cents. He characterized it as "a 277% premium over the sale price and a roughly 175% premium over the current market price."

## "The Right Thing to Do"

His forum announcement, quoted by CoinDesk, struck a personal note: "I believe this to be a solid, desirable, and fair outcome for those who have put their trust in S.DICE." And to shareholders who had planned to hold for years: "While I know some S.DICE owners intended to hold for a long time, and will thus be dismayed by the buyout, it is my sincere hope that this compensation level will be amenable. It is substantially higher than the contract mandates, and it is almost 3x higher than all private owners are being paid. It has not been easy to negotiate to this level, but I believe it is the right thing to do."

## The SEC's Epilogue

The regulatory risk Voorhees had been maneuvering around caught up with him anyway, just not in the way the US IP block anticipated. On June 3, 2014, the SEC charged him with two counts of offering unregistered securities, covering both the SatoshiDice share sales and a separate 2012 offering for a venture called FeedZeBirds. He settled for $50,843 in total, made up of $15,843.98 in disgorged profits plus a $35,000 penalty, and agreed to a five-year ban on issuing any Bitcoin-denominated unregistered securities. The first major exit in Bitcoin industry history closed with the founder eleven months away from a federal securities settlement over the very shares that funded it.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 18, 2013.*

Daily Bitcoin Lore (13 years ago): Erik Voorhees Sells SatoshiDice for $11.5M

Daily Bitcoin Lore (7 years ago): China Court: Bitcoin Is Protected Property

Yeah, and they don't seem to mind the mental gymnastics it takes for such a ruling to make sense either, LoL.

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 18, 2010 | 16 years ago today

# Mt. Gox Opens on a Dormant Card-Game Domain

![](https://m.stacker.news/148620)

***

In January 2007, Jed McCaleb registered the domain mtgox.com (Magic: The Gathering Online eXchange), intending to build a site where players could trade cards. The project never shipped. Three years later, that same dormant domain became Bitcoin's most important infrastructure, handling the majority of global Bitcoin trading at its peak before collapsing in one of the most consequential exchange failures in financial history.

## The Man Who Built It

McCaleb was not an amateur experimenting with a weekend project. Before Bitcoin, he had built eDonkey2000, one of the largest peer-to-peer file-sharing networks in the world. At its peak the eDonkey network had over 4 million simultaneous users. The RIAA eventually took legal action, and McCaleb's company MetaMachine paid $30 million to settle in 2006 and ceased distributing its software. McCaleb was left without a primary project and looking for the next thing.

He discovered Bitcoin through a Slashdot article in June 2010, the same piece that brought a wave of early adopters into the community. He recognized that Bitcoin had no serious exchange infrastructure. Bitcoin Market, launched in March 2010 by a forum user called dwdollar, offered basic trading but no real order book and no automated matching. McCaleb saw a gap and filled it using what he already had: a domain name, some server infrastructure, and a few weeks of development time.

## The Launch and What It Changed

The announcement, posted on Bitcointalk on July 18, 2010 at 1:57 AM, is a study in understatement: "I just put up a new bitcoin exchange. Please let me know what you think." That post, now archived at [https://bitcointalk.org/index.php?topic=444.0](https://bitcointalk.org/index.php?topic=444.0), generated immediate discussion about features, spreads, and security. McCaleb clarified that all trades matched between users, that prices reflected real bids and asks rather than operator-set rates, and that the site was on dedicated hosting running continuously.

The functional difference from what came before was significant. Before Gox, if you wanted to buy Bitcoin you either found someone willing to sell in a forum thread, worked through a slow manual process with Bitcoin Market, or tried peer-to-peer trades that required trust in a stranger. Gox provided what a modern exchange provides: a live order book, real-time price data, 24-hour volume figures, and automated settlement. The first trade on the platform priced Bitcoin at $0.05.

## The Sale and Its Consequences

McCaleb ran Gox for less than eight months. By early 2011, the compliance requirements for operating a money-transmitting service had grown complex enough that he decided to pass the business to someone willing to handle them. He sold to Mark Karpeles, a French developer living in Japan, with the stated explanation that the exchange needed "someone better able to take it to the next level."

What followed under Karpeles is well documented: years of security failures the exchange concealed from users, a hack that drained 630,000 BTC in 2011 that was never publicly disclosed at the time, and eventually a 2014 collapse that wiped out 850,000 BTC belonging to customers and the exchange itself. McCaleb, who had already moved on to co-found Ripple and later Stellar, bore no responsibility for any of it.

The arc from McCaleb's one-sentence forum post to Karpeles's bankruptcy filing is 16 years old today. The domain McCaleb almost used for trading game cards became the address where Bitcoin's price was set for the better part of four years, and the place where its largest single theft occurred.

***

*Part of an ongoing series on Bitcoin history. This event falls on July 18, 2010.*

Daily Bitcoin Lore (16 years ago): Mt. Gox Opens on a Dormant Card-Game Domain

[*@daily\_btc\_lore*](https://x.com/daily_btc_lore) *| Daily Bitcoin History Threads*

July 18, 2019 | 7 years ago today

# Hangzhou Court Rules Bitcoin Is Legally Protected Property

![](https://m.stacker.news/148610)

***

In September 2017, China banned Bitcoin exchanges and ICOs outright. Platforms shut down overnight, trading volume evaporated, and the state's message was unmistakable: Bitcoin had no legal standing in China's financial system. Two years later, China's own courts disagreed.

[https://cryptobriefing.com/bitcoin-declared-legal-commodity-in-chinese-court/](https://cryptobriefing.com/bitcoin-declared-legal-commodity-in-chinese-court/)

## The Case That Produced the Ruling

Mr. Wu had deposited 2,675 Bitcoin on FXBTC, a Chinese exchange, before the 2017 crackdown. When FXBTC shut down in 2018 as a direct result of that regulatory action, his coins went with it. He sued for their return. The court applied a three-part test for property under Chinese law: the thing must have value, be scarce, and be disposable. Bitcoin met all three. Wu still lost — he couldn't prove the account was his — but the principle stood.

## The Contradiction That Never Resolved

The People's Bank of China moved quickly: "Bitcoin is virtual property, but it's not fiat money." Courts would protect a property interest; the state would not permit trading or speculation. China's 2021 crackdown banned mining and declared all transactions illegal, yet courts kept affirming that citizens held valid property rights in Bitcoin they already possessed. You couldn't mine it, buy it, or sell it. But if someone took yours, the law was on your side.

The Hangzhou ruling confirmed that Bitcoin's existence as property was more durable than any single regulatory action against it.

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*Part of an ongoing series on Bitcoin history. This event falls on July 18, 2019.*