News BTC-e: The fleet that survived Pearl Harbor... for now...

BTC-e: The fleet that survived Pearl Harbor… for now – Crypto Insider


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Mr. Robot in real life: Much of the drama surrounding BTC-e’s unfinished recovery played out in the shadows.


July 25, 2017: Users attempting to visit the long-established crypto currency exchange known as BTC-e get a “bad gateway” message instead. It is much worse, something calls “the first time the US government has attacked a foreign exchange on foreign soil.”

July 26: U.S. enforcers arrest Alexander Vinnik in Greece. He’s a Russian accused of money laundering. But some claim he’s a leader of the exchange. BTC-e contests this claim, but statements coming from the organization are initially few and don’t even seem believable.

August 1 (approximately): A man apparently in the Palestinian Territories launches or hosts a petition to be sent to the U.S. Justice Department. It demands the return of the currency seized by Washington and stands at over 4,000 signatures in early September.

August 9: reports BTC-e is claiming it has successfully maintained control over 55% of customer funds despite the raid and that it will issue tokens to cover the other 45% on a relaunched site.

Sept 1: site relaunches as and begins returning some funds within three days. CoinDesk reports the process is “anything but smooth,” but “refunds” do begin on schedule. To paraphrase Commander Adama… we’re still alive; who’d have believed it a month ago? Most or many passwords appear to be reset, requiring a new password be sent to the user’s e-mail even if they last logged in during late July 2017. Users are told they can pull out 55% of their funds with 72 hours if they agree to forfeit their accounts and the remaining 45%. The exchange tells the world that users who “believe in us” may be able to recoup their full accounts later by sticking with it. BTC-e says it will not serve U.S. customers in the future and projects an essentially complete relaunch later in September.

Sept. 7, 2017: Pushback against Vinnik’s arrest belatedly gets off the ground as his wife accuses globetrotting U.S. intel services of attempting to make him their servant. “If I am guilty of something,” he reportedly tells Russia Today, “then my country should judge me.”4

There’s a real-time strategy game called Astro Empires, still very popular online since its launch around 2009. What draws me to it is the unspoken ethical element and the ability to be neutral like Switzerland. The game tends to climax seconds after you were sitting around doing nothing. Usually a blood-red message will appear in the upper right and you will learn someone much more powerful has occupied one of your bases with lots of allies and no provocation. Sometimes it was one you’d overlooked or left an unnecessarily vulnerable fleet at. You see the enemy’s recyclers feasting on your debris and then discover the worst part: He’s going to make a profit on the kill. It is a debacle. For hours, sometimes days, you scramble to maneuver, escape, strike back in even the smallest way. You wonder… is this the war I won’t be able to survive?

But over time, you regroup, gain knowlege, spot opportunities. You wear the enemy down if you can just hold it together, save this scrap, preserve that scout and stay in the fight. The most important thing in the game isn’t killing but rather well-organized production, construction and stealth. You sometimes can’t liberate your bases or even find a weak spot in the superior foe, but you can usually rebuild, collect, deprive.

So it must have been for the faceless but very three-dimensional pioneers from this beleaguered monetary endeavor. Peering bleary toward the late-night glow of laptop monitors, darting furtive into hidden spaces to retrieve caches of backup data… calculating, reconnecting, rebooting… never safe but never relenting. We might not ever know what risks they had to take, what heroic or selfish things each of them did. But whatever they did, it worked… partly. To paraphrase one observer, when was the last time you heard of an organization recouping and refunding any of its funds after a Federal attack like this?

BTC-e refund process

As one of the people who – reluctantly – exercised the refund option… here is how it played out.

Being a partial off-gridder living below the poverty line, I didn’t have that much money in BTC-e compared to what mainstream traders would have had. But it was a big percentage of my assets; there simply was no better, established place I’d found for trading a narrow basket of cryptos and fiats cheaply… with good graphing and no battery of personal data demanded.

When I began looking over the organization’s plan for making things right with its users, initially I was hopeful. Upon re-entering the site right after relaunch, it informed me that my (relatively recent) password had expired and e-mailed me a new one, activated by clicking a link. This was confusing, because one of BTC-e’s recent pronouncements warns of phishing scams and urges users not to click links in e-mails. Nevertheless, this e-mail and its link were legit; upon logging in… well let’s just say you’ve never seen a chat box full of trolls that looked so good. Because above it was my balance, just as it had read the day before this particular apocalypse. Most of the trolls, actually not trolls at all in most cases, seemed to be expressing their plans to stick with BTC-e… or scolding other users for asking questions that were answered in the posted news updates.

“This is my home,” one of them said.

One question that seemed unanswered at this point was whether one could withdraw partially from the exchange. Clicking on “withdraw” under any of my coins let me to a message indicating normal withdrawals were disabled. Clicking “refund” provided the following detailed “eject button” for completely evacuating the site but didn’t quite settle the issue:

BTCe cryptocurrency exchange refund process

In fact, there were only three options: sticking with it completely, bailing out completely, or donating a portion of your coin to the exchange on your way out. I wrote down the pros and cons of each course of action, slept on it and determined that I wanted to stay in but couldn’t.

BTC-e’s recovery against the odds

BTC-e’s plan for survival and “making good” no longer appeared just satisfactory to me; it appeared somewhere between competent and brilliant. The elements were nearly all there to inspire confidence… a seemingly miraculous partial-recovery against a world-conquering Power, a token set up perhaps quickly in crisis but also in the midst of an ICO boom, the goodwill of many users, an apparent road-map for recovering all assets. They were the place where lighting had already struck without killing them, likely hardened now and reconstituted against the next blow. I believed in them. Staying in, at least for a while, was worth the risk, except for one thing: They claimed that once the site was fully reconstituted, they would refuse to serve people in the U.S., or at least U.S. citizens in the U.S.

This meant that the whole business for us stateside folk was more of a closing window than an eject-button. After coming fully back on line, perhaps very soon, BTC-e would become a place where… though I might believe in them, they wouldn’t believe in me. I could only remain there by pretending to be an Irishman or something.

So I clicked all my coins it had listed for me, a list which impressively already included Bitcoin Cash. I added wallet addresses to which I could withdraw and then punched “refund.” At this point I got an error message indicating there was a problem with my Bitcoin Cash wallet address. It was located on a newly formed account at I did some checking, found no errors, couldn’t easily come up with another place to put Bitcoin Cash. I half-considered entering “-” instead, which would have donated the BCH to these folks who had stood up so well against so much. But another punch of the “refund” button resulted in no errors and a message indicating my refund was processing. That was on September 3.

The site indicated I would receive my coins within 72 hours. On September 4, more like 24 hours later, I received the amounts promised, of all coins promised except BCH.  On September 5, the Bitcoin Cash came through. Nothing failed.  With the rise in crypto prices since the day the site went down… I had suffered a loss of about 15% real value.  Logins by me on BTC-e were now disallowed. But finally it was possible to breathe and reflect.

On July 25, a date that should live in infamy, we witnessed the modern equivalent of a world government, with a military budget roughly ten times the size of Russia’s… lash out globally and near-randomly at the sustenance of individuals or the progeny thereof who it had once liberated from fascism, communism and nationalism in sequence. Belgians, Estonians, Bosniaks… some of each surely now gazing with a fury not preceded,  at the Anakin-Skywalker-turned-Darth-Vader figure now preying upon them from vast distances.

Lessons from history

The attack on BTC-e really could be viewed like Pearl Harbor or like the Battle of the Coral Sea… the former analogy being a little to pessimistic toward our side and the latter one a little too sanguine. At Pearl Harbor (usually perceived as a major IJN victory), Tokyo actually failed to achieve its strategic objective, which was the elimination of American carriers or perhaps the blockage of the facility. The Americans were able to preserve the important parts of their fleet and keep the harbor open. More importantly, the Japanese even screwed up their attempt to do the slightly-more-honorable-than-1904 thing of declaring war before the attack. This was what turned the Americans from neutrals into fanatical killing machines.

The monetary anger at Washington fortunately hasn’t had that effect and hopefully never will. But we may hope that its next attack (or perhaps China’s) will see stronger resistance both in terms of successfully protecting assets and providing the civic pushback worthy of our large but excessively fragmented community.

Flawed, unaligned with any nation, accused of being too friendly toward all, a place where everyone was treated as innocent unit there was some obvious counter-active reason… BTC-e accomplished more than nearly all before it and may accomplish much more than it did before this raid. Until you quit, you haven’t lost. BTC-e didn’t quit.

Featured image from Markus Spiske on Unsplash

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BTC-e: The fleet that survived Pearl Harbor... for now - Crypto Insider
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