A Statement on the Circulating Supply of Primecoin
Dear Community,
We have heard your requests for a confirmed circulating supply of Primecoin and have been working hard to provide an answer. The complicating factors we faced were: (1) Primecoin’s relative nonuse; and (2) The Cryptsy hack. In the interest of full transparency we are providing both our answer and the work we have done to try to confirm this. We hope you find these satisfactory.
The Short Answer
The short answer is that the CoinMarketCap circulation of ~23 million is correct. While the primecoin.io site displayed a 4 million circulating supply, that website has not been updated in years and had not kept up with current supply.
We also are not able to burn any coins at this time. The Cryptsy exchange held a significant number of Primecoins and was “hacked” a few years ago. By hacked we mean the CEO, Paul Vernon, absconded to China with stolen cryptocurrencies worth millions. We hoped to trace those stolen coins and burn them as they were illicitly acquired. Unfortunately it appears those coins made their way back to circulation as detailed below.
Why Did It Take Us So Long?
For the circulating supply we, of course, saw that the wallet was showing 23 million circulating coins. But to make sure our developers compiled an accurate sampling of the Primecoin blockchain recording the block rewards for every tenth block. Extrapolating this data with an even distribution for the change between each sample we found the results were very similar to the number found on CoinMarketCap and the wallet’s readout. With this triple confirmation we are confident that 23 million is the correct supply. But we wanted to do more.
While finding the supply was easy, we also wanted to find the coins from the Cryptsy hack to determine if any could be burned as illicit proceeds. Tracing coins hacked over two years ago is a difficult endeavor because of how many ways there are to “wash” funds. Our development team spent many hours on a blockchain analysis and started a full forensic examination. Given we expected there would have been legal action we also scoured legal archives, poured through court filings, and read hundreds of pages of records to try to find an answer. Luckily we found that a prior lawsuit against Cryptsy resulted in some useful information. A class action lawsuit against Cryptsy resulted in the appointment of a Receiver/Corporate Monitor whose task was to “determine the nature, location and value of all property interests of Cryptsy, including, but not limited to, cryptocurrencies . . .” and take possession of those assets.
We found several parts of his work helpful. As a result, given the excessive demands on our development team and the quality of the Receiver’s information, we decided it would not be worth duplicating his efforts any further. The court-ordered Receivership employed a “computer forensic team” with direct access to Cryptsy’s servers. This gave them a level of access we would not be able to replicate, the power to legally compel document production. They worked for several months with that power. Our analysis of the relevant portions of their findings are below.
Where Are Cryptsy’s Primecoins Now?
We found the Receiver “successfully accessed Cryptsy’s servers, made a backup of the wallets on them and [completed] the lengthy and tedious process of reviewing hundreds of wallets on the servers . . . [taking] several months.” While we found a list of seized coins Primecoin was not among them. At the end of his receivership the Receiver was legally bound to acquire as much value as possible for the plaintiff class. He did so by liquidating the high value coins on exchanges, which likely did not include Primecoin, and also by selling all remaining altcoins to private buyers. Primecoin did not appear on any of those sell lists. However, and unfortunately, the Receiver found that Vernon was able to sneak out certain funds including Primecoin and move them to foreign exchanges before the team could seize them. Those exchanges did not respond to U.S. court orders.
Given the combination of these two factors: (1) that all secured cryptocurrencies were listed in the Receiver’s reports and sell lists and; (2) that Vernon was able to move at least some of his Primecoin to foreign exchanges we concluded that there were likely no “frozen” or “lost” wallets with Primecoin still in them otherwise the Receiver would have found them. Rather, the fact that at least some were moved to foreign exchanges likely means Cryptsy’s Primecoins were sold and are now back in the circulating supply meaning we are unable to burn those coins. While our development team followed up on these leads, they were unable to find much more beyond what the Receiver’s team uncovered. We have emailed the Receiver but have not heard back. We will update the community if they respond and any promising leads result.
Final Note
Again we want to assure you that we heard your requests for a confirmed circulating supply. We wanted to immediately respond to our many community members who asked but did not feel we should do so until we had exhausted every avenue. We hope you find this statement a satisfactory answer.
Going forward we would like to ask you to trust us. When a team member says that we are working on something and it cannot be rushed please have faith it is because we are exhaustively working on the issue and prefer to release information when we are wholly confident in its accuracy and thoroughness.
Sincerely,
The Bitcoin Prime Team
