Sheep Marketplace

~ the obituary ~

The first time i heard the name Sheep Marketplace was in the coverage of its own robbery, which is true of almost everybody outside it. For eight months it was a market nobody wrote about. Then it was the market that lost the money, and that is the only reason there is anything to write.

It opened in march 2013, a Tor hidden service run out of the Czech Republic by a man later named as Tomáš Jiříkovský. Nothing about the design was new. Bitcoin held in escrow and a seller rating beside every listing, the whole arrangement copied from the market above it in the rankings.

That market came off the network on 2 october 2013, when the FBI arrested Ross Ulbricht and seized Silk Road. Sellers with inventory and buyers with balances went looking for the next address, and a good share of them ended up on Sheep. It went from small to enormous in under a month without changing a line of code, which is a bad way for anything holding other people's money to grow.

i was reading this from a country with no stake in it. The names in these stories were handles and the money was a currency i did not own, so what stayed with me was the engineering shape of it rather than the crime. A market where the operator holds the escrow has exactly one failure mode, and it is not the police.

~ the case file ~

~ the climb ~

The Silk Road takedown was supposed to be the end of the category. What it actually did was scatter a working economy across the three or four sites that were still up, and Sheep took the largest piece because it was the biggest one already running when the seizure notice went up.

Nobody involved treated the new size as a problem. The escrow balance grew because that is what escrow does when volume arrives, and every coin sitting in it belonged to somebody who had not been paid yet.

~ the day it died ~

On 21 november 2013 a seller trading under the name EBOOK101 found a flaw in the withdrawal path. Money could be pulled out of an escrow account without the balance ever being marked down, so the same coins could be taken again and again. About 5,400 bitcoin left, worth roughly six million dollars at the exchange rate that week.

The site froze payouts and was gone within days. Whether the operator was robbed or performed the robbery has never been settled to everyone's satisfaction, and the court documents from the 2017 trial lean toward the second reading. Either way the users lost the same amount.

~ the chase ~

What happened next was unusual, and it happened because the ledger is public. Users of a drug market sat down and traced their own stolen coins across the blockchain, hop by hop, watching them get pushed through the Bitcoin Fog tumbler and out toward the BTC-e exchange. A transaction near ninety six thousand coins broke the mixing and made the trail readable again. The press put a hundred million dollar figure on what the crowd was watching move.

Czech police arrested Jiříkovský in march 2015. He was convicted in october 2017 and sentenced to nine years. Two men in Florida later pleaded guilty in connection with the same theft, and around four million dollars was seized. Most of the people who had a balance on Sheep the week it closed never saw any of it.

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