Bitcoin-Trader Goes Rogue – HYIP Exposed

October 19, 2014 03:37 UTC has disappeared overnight with the only communication being a letter sent out to all of their victims claiming that a hacker stole all of their funds and that they offered to comply with the hacker’s ransom notice. Bitcoin-Trader closed all of their social media accounts as well as their website almost overnight, while ducking under the cover of playing the victim of a hacker and claiming to file for bankruptcy. The letter sent to all former account holders reads like an emotionless story of cop-outs to the effect of, “We got hacked, and we’ll file for bankruptcy. Ciao!” Former Bitcoin-Trader customers are left to fend for themselves on Bitcoin Forums.

Also read: LSM Labs: A Poorly Veiled Scam

Bitcoin-Trader Exposed as a HYIP

John Carley of Bitcoin-Trader sent the following message to account holders before disappearing into the ether.

Regrettably I have to announce the failure and closure of Bitcoin Trader.

While preparing for the final audit results, a task we were working on for weeks now, our bitcoin wallet has been hacked and emptied, just after exchanging our fiat holdings within the exchanges to bitcoin and transferring our entire holdings to our wallet, in order to proof our solvency.

It is a known fact that I personally opposed any proof of solvency, but agreed to conduct it for the sake of a few dozen small and medium investors.

The hacker contacted me shortly after he took advantage of our holdings and demanded a ransom in order to transfer the coins back. I have agreed to a 25% ransom of the entire sum, but haven’t heard back from him for several days now.

My aim was to create something based on trust, just as bitcoin itself is based on distributed trust. Unfortunately, I must admit today, [that] I have failed. All [that’s] left to do now is to declare bankruptcy with the Panamanian authorities and to hand over all relevant files and information for further investigation.

Bitcoin-Trader refuses to network with other HYIPs

Why in the world would a hacker return 75% of the funds in the first place in order to keep 25%? Furthermore, why would anyone even agree to pay a ransom to anyone? There’s just so many things in this letter that don’t make much sense for them to say unless they are illegitimate. As a HYIP, how could they be legitimate? Unfortunately, CCN wrote a sponsored story and ran a banner ad for Bitcoin-Trader before Bitcoin-Trader showed their true colors.

So, how was this exposed as a HYIP? “fingertoe11” of Reddit spells everything out in black and white. Bitcoin-Trader wouldn’t disclose their first “proof of solvency” to the public as it could have exposed them. One of the easiest things to verify that the Bitcoin-Trader HYIP scam observed was forcing victims to leave their money tied up for months at a time with the company. The returns listed on the Bitcoin-Trader website were just under 1% in the last days, but for quite a few months at the beginning of the HYIP, 2-3% was not uncommon. The weirdest part of the whole ordeal is that on their contact form in big bold red letters they refused to network with other HYIP programs.

What do you think about Bitcoin-Trader and their HYIP scam? Were you a victim? If you were a victim, how do you intend to handle the situation?

Disclosure: I lost around $40 in this HYIP, but I withdrew my funds that I gained as profit, in Bitcoin a few weeks prior.

Photo Credits: Logo victimized from’s cache of Bitcoin-Trader and the screenshot as well; other images from Shutterstock.

Last modified: October 19, 2014 07:25 UTC

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