Bitcoin Gold Users Lose Over $2.5m, Accuse the Team of Scam

Over 3,200 Bitcoin Gold user wallets have been emptied by malefactors on the night of November 13th to 14th due to a vulnerability in the only BTG wallet, Mybtgwallet. According to preliminary estimations, the losses comprise 300 BTC and 300 BTG, which exceeds $2.5 million.

A group for victims (102 people) was organized in Slack by an activist nicknamed Concorde. They are confident that even if the Bitcoin Gold team was not directly involved in the scam, it still provided the malefactors with everything they needed to steal the coins, so they should be held equally culpable.

It is known that the Bitcoin Gold team hired a third party to develop the ecosystem. It was John Dass, who was dubbed DEVELOPER in the official Bitcoin Gold slack channel. He openly called users to chose the wallet he had developed. Notably, the BTG team confirmed their cooperation with John Dass, and endorsed the usage of Mybtgwallet.

“If you want, can import this like a etc seed,” John Dass told one of the miners.

When the BTG network was launched, Mybtgwallet was the only way to generate a BTG address for miners, aside from downloading a full node, which took about 147 gigabytes. For that reason, most users generated the address via the wallet, where the BTC wallet’s seed phase had to be input.

“Yes that wallet is not fake it’s by a 3rd party creator who has been working with our team keep in mind it’s still in beta some features are limited,” the project’s official Twitter read.

There are allegations that the malefactors accessed the seed phases and used it to steal the assets.

On Sunday, November 12th, Bitcoin Gold representatives have stated the wallet is launched.

“No both of those wallets are safe and work keep in mind some of the features may not work until the Main net is launched,” the team responded to allegations of a possible scam.

Later the BTG team distanced itself from third-party applications and stated it cannot held liable for any work by John Dass.

The users, however, claim that Bitcoin Gold’s official website was hacked nearly one month before the mainnet was launched, and changed the official Twitter address for a fake one. No statements have been issued by developers in this regard, so the users suspect they didn’t want any negative media coverage or public accusations, and concealed the fact.

Sources suggest that a group of 8 people under the auspices of a business angel are negotiating with the developers. The group demanded that the developers remunerate all assets at the exchange rate of November 14th to 15th, otherwise they would be sued individually and collectively for aiding and abetting. The group gave the developers only 24 hours to comply.

The spokespersons for the group claim the BTG team stated they were cooperating with the FBI to bring back the money.

The screenshot shows a BTG employee named Joseph asks one of Slack channel members to notify all U.S. citizens who fell victims of the theft they should fill in forms to attract the attention from the FBI.

Tuesday, November 21st, the activist group decided to go on the war path and sue Bitcoin Gold for aiding and abetting. The spokespersons for the developers on their side have threatened they would not cooperate whatsoever if the developments are covered in the media.

ForkLog will be monitoring the developments.

  • Joseph Cavallaro Jr.

    Thank you for doing this article. I was one of the victims of this scam.

  • mohamed

    please donate to myBTGwallet victims , even a single penny will make a difference
    BTC: 13cTYuuKwvQ5WFKThvCk8b9fgcBGjq5AkL
    BTG: GaPRnKBuhkHpCmszpsJkaC9rzw4gWFRBB3
    ETH: 0xee272005d7cd5003Db1A0FDc9F16e13b501aE00f
    LTC: LUmaxZHmtMY2Mr5zbs7UPfHVQKSFVB5AMu
    BCH: 13JQm9iSTaouD7Lc66F5A4GMAcd4vBx69F
    DASH: XuxjYkW3s5RSxahMu8cujaJHoJ9m3Agd6J
    ZEC: t1TcHtnxEmGTQChEgeg3ZdTcB4bhkA3F6fQ

    • Omkar Dani

      do not donate to this addresses
      as they r not represented by the btg foundation

      • ricky

        The BTG devs have offered to pay expenses to track down the scammer. I don’t see why donations are needed.

        • Sinners

          Why BTG needs to donate? It was your own mistake and Greed that have cost you this. Go find the one responsible and BTG please let them pay for finding the scammer themselves, they have to learn to take responsibility to give away their seeds an/or privates!

  • Alpha Q Up

    wow This is one hell of a crazy story! Why did the Bitcoin Gold team even let some guy make a wallet for them are they that lazy to make their own wallet? I think it’s 1000% responsibility to pay that back to who ever lost because of them. Well now I know to stay far away from BTG and I hope everything works out for the people who lost.

    • ricky

      The BTG team did make an official wallet. The Bitcoin Gold core wallet.

  • ricky

    Hello,

    I am a member of the BTG community. I
    am not a developer and do not have any official possition with or
    ties to the BTG development team. I have been a BTG miner since the
    moment BTG launched and have also been an active member in the
    official BTG slack channel since before launch. I will first state my
    observations, that I feel are statements of fact.

    BTG has assisted many developers
    to have their applications be able to interact and work with the BTG
    blockchain. This was in no way unique to John Dass.

    BTG posts compatible pools,
    exchanges and wallets on the BTG website and on social media. That
    this wallet got posted was not unique to Mybtgwallet.

    John Dass was never a member of
    the BTG development team. He did have developer as part of his user
    created name in the slack channel, and I assume BTG was OK with
    this because he was a wallet developer.

    Users should have followed the
    following basic, common sense and common knowledge steps for example
    moving BTC out of the wallet before sweeping their wallets for BTG.
    This should have been done regardless of the BTG wallet they wished
    to use. Also a cached version of the website showing how it appeared
    on Nov 12 shows that there were other wallets available on that site
    on that date. It was not just the scam wallet and the core wallet,
    there were four additional wallets available.

    John Dass changed the coding of
    the wallet adding the scam portion of the coding AFTER his coding
    had been reviewed by the BTG team and the wallet had been added to
    the website.

    While you did, and still do, need
    to download the full node (about 147 GB) to be able to use all the
    features of the Bitcoin Gold core wallet, you did not need to
    download the full node to generate a paper wallet. Mining funds
    could have been sent to a paper wallet generated by Bitcoin Gold
    core wallet. This fact makes this portion of your story factually
    incorrect.

    The BTG team has not been
    unresponsive. They have offered to pay the legal costs and fees to
    track down the scammer. This offer was not acceptable.

    Do not misunderstand I feel sorry for
    anyone that was scammed. But I can not support this groups methods or
    demands of the Bitcoin Gold team. This group claims that because the
    wallet was listed on the website or posted on social media that makes
    the Bitcoin Gold developers responsible for repaying their losses.

    They say that because they followed a
    link on the the Bitcoin Gold website. No other facts that I stated
    above matter. They have been emailing exchanges asking them not to
    support BTG and informing the BTG team that they will contact them
    and recommend otherwise if the team pays them their losses out of the
    teams personal funds. I feel this is blackmail.

    From their letter, “As well, the
    Bitcoin Gold Team removed all links from their website and deleted
    social media posts (twitter) regarding the compromised online wallet
    mybtgwallet.com after some users began to claim that their wallets
    were emptied. “ I guess they feel this helps establish the BTG
    team’s guilt. I feel it helps prove they were acting responsibly.
    After they became aware that code had been added to the wallet to
    make it a scam, what reasonable, honest person would leave up
    anything promoting that scam? Of coarse anything pointing to this was
    taken down to try to prevent anyone else from being scammed.

    I have also been monitoring the
    StolenBTC group slack. They claim to have a lawyer that will be
    filing a class action lawsuit. To be involved in this you have to
    provide one of the members on slack several things including your
    hacked wallet address, and a copy of your ID. Someone came in
    claiming to be a victim, but was opposed to providing the ID to
    people on slack. This individual asked for the lawyer’s phone number
    to contact the lawyer directly. A member @ Kryptosaurous Rex gave a
    number and said to ask for Joe. A simple google search revealed the
    number was the number to a pizza shop in New York owned by a Joe. I
    have witnessed people in the slack discussing how to destroy
    confidence in BTG and another user say “I much rather see BTG
    reduced to nothing”. I have seen them make false statements, and
    partially true statements to implicate BTG staff, while leaving out
    the parts that make them appear not guilty. It is my opinion that if
    they sue, they could be counter sued for defamation and blackmail. As
    a side note to them, you should only state the complete truth. If you
    pursue this based on lies and purposefully omitted portions of the
    fact, you could lose more than you already have. You have been
    scammed, you should not lower yourselves to that level. Also, “I
    much rather see BTG reduced to nothing”, do you not realize this
    would result in a lot of other people losing money due to your
    actions and careless attitude?

    To my knowledge, everything I have
    stated here is true. If the person that wrote this article wanted
    more information they should have contacted the BTG team.

  • anaon1
  • anaon1

    The following is the counterpoint / rebutal by a BTG supporter who was blocked? from responding. I didnt write it but it closely matches my feelings.

    I am a member of the BTG community. I am not a developer and do not have any official possition with or ties to the BTG development team. I have been a BTG miner since the moment BTG launched and have also been an active member in the official BTG slack channel since before launch. I will first state my observations, that I feel are statements of fact.

    BTG has assisted many developers to have their applications be able to interact and work with the BTG blockchain. This was in no way unique to John Dass.
    BTG posts compatible pools, exchanges and wallets on the BTG website and on social media. That this wallet got posted was not unique to Mybtgwallet.
    John Dass was never a member of the BTG development team. He did have developer as part of his user created name in the slack channel, and I assume BTG was OK with this because he was a wallet developer.
    Users should have followed the following basic, common sense and common knowledge steps for example moving BTC out of the wallet before sweeping their wallets for BTG. This should have been done regardless of the BTG wallet they wished to use. Also a cached version of the website showing how it appeared on Nov 12 shows that there were other wallets available on that site on that date. It was not just the scam wallet and the core wallet, there were four additional wallets available.
    John Dass changed the coding of the wallet adding the scam portion of the coding AFTER his coding had been reviewed by the BTG team and the wallet had been added to the website.
    While you did, and still do, need to download the full node (about 147 GB) to be able to use all the features of the Bitcoin Gold core wallet, you did not need to download the full node to generate a paper wallet. Mining funds could have been sent to a paper wallet generated by Bitcoin Gold core wallet. This fact makes this portion of your story factually incorrect.
    The BTG team has not been unresponsive. They have offered to pay the legal costs and fees to track down the scammer. This offer was not acceptable.

    Do not misunderstand I feel sorry for anyone that was scammed. But I can not support this groups methods or demands of the Bitcoin Gold team. This group claims that because the wallet was listed on the website or posted on social media that makes the Bitcoin Gold developers responsible for repaying their losses.
    They say that because they followed a link on the the Bitcoin Gold website. No other facts that I stated above matter. They have been emailing exchanges asking them not to support BTG and informing the BTG team that they will contact them and recommend otherwise if the team pays them their losses out of the teams personal funds. I feel this is blackmail.
    From their letter, “As well, the Bitcoin Gold Team removed all links from their website and deleted social media posts (twitter) regarding the compromised online wallet mybtgwallet.com after some users began to claim that their wallets were emptied. “ I guess they feel this helps establish the BTG team’s guilt. I feel it helps prove they were acting responsibly. After they became aware that code had been added to the wallet to make it a scam, what reasonable, honest person would leave up anything promoting that scam? Of coarse anything pointing to this was taken down to try to prevent anyone else from being scammed.
    I have also been monitoring the StolenBTC group slack. They claim to have a lawyer that will be filing a class action lawsuit. To be involved in this you have to provide one of the members on slack several things including your hacked wallet address, and a copy of your ID. Someone came in claiming to be a victim, but was opposed to providing the ID to people on slack. This individual asked for the lawyer’s phone number to contact the lawyer directly. A member @ Kryptosaurous Rex gave a number and said to ask for Joe. A simple google search revealed the number was the number to a pizza shop in New York owned by a Joe. I have witnessed people in the slack discussing how to destroy confidence in BTG and another user say “I much rather see BTG reduced to nothing”. I have seen them make false statements, and partially true statements to implicate BTG staff, while leaving out the parts that make them appear not guilty. It is my opinion that if they sue, they could be counter sued for defamation and blackmail. As a side note to them, you should only state the complete truth. If you pursue this based on lies and purposefully omitted portions of the fact, you could lose more than you already have. You have been scammed, you should not lower yourselves to that level. Also, “I much rather see BTG reduced to nothing”, do you not realize this would result in a lot of other people losing money due to your actions and careless attitude?

    To my knowledge, everything I have stated here is true. If the person that wrote this article wanted more information they should have contacted the BTG team.

  • Bit Bux

    I almost got scammed too, great article.

    Earn 3 Bitcoin in 3 Weeks With Small Investment (or without)
    https://goo.gl/7UA336