Silk Road’s latest successor may be the reason cryptocurrency is crashing
Darknet site Alpha Bay has been down for a week. It’s otherwise known as Silk Road 3.0, and it may be the reason that cryptocurrencies have seen a steady decline over the last little while. Ethereum was down 50% before climbing back up by 12% today. Bitcoin on the other hand has seen its market capitalization drop below $40 billion.
Most fear that the website is executing what is known as an exit scam. Simply put, it means the administrators of the website have decided to split proceeds earned in the form of various cryptocurrencies into a large number of wallets so that funds can be withdrawn in exchange for traditional fiat currency while their website disappears. It’s estimated that about $3.8 million worth of bitcoin has already been withdrawn from the site, although an official source has yet to link the Bitcoin address associated with the withdrawal back to Alpha Bay’s admins.
One Reddit user known as trappy_AB associated with Alpha Bay hinted at a security risk related to the collection of certain coins like Zcash and a potential increase of phishing attacks as reasons for the shut down. For those that don’t know, a phishing scam is basically when a website is copied to look almost like the original and presented to unsuspecting users who deposit coins or money into those sites only to find out those sites are illegitimate.
While some users are still holding out hope that the website is only down for maintenance and not for the purposes of bilking people out of their money, Alpha Bay isn’t the first darknet, Tor browser-based site to suddenly shut down. A site known as Evolve shut down abruptly in 2015. It featured a centralized escrow system that allowed the administrators of the site to walk away with millions of dollars worth of cryptocurrency with relative ease even while transactions were still pending.
It remains to be seen whether or not Alpha Bay will come back online in the near future or not. For now it’s clear that the owners of the site may not be the only ones playing with fire. Perhaps that reality is about to set in for the site’s merchants and buyers too.