Sheep Marketplace 2013: the first great post-Silk-Road exit scam
In late November 2013, barely six weeks after the FBI seized Silk Road, its most crowded successor went quiet. Sheep Marketplace, opened in March 2013 and flooded with refugees after the October 2013 raid, announced it was shutting down. The stated reason: a single vendor had found a bug and emptied the escrow. Most users did not believe it, and their audit of the damage on the public blockchain became the first great crowdsourced exit-scam investigation.
A market that grew in Silk Road's shadow
Sheep Marketplace launched in March 2013 as one mid-sized option among several. October 2013 changed that almost overnight. With Silk Road seized in the first days of October 2013, buyers and vendors went looking for a new home, and Sheep absorbed a large share of them. The surrounding period was chaotic: as Andy Greenberg reported in Forbes, Atlantis had shut down voluntarily in late September 2013, the Project Black Flag administrator had admitted stealing his users' coins, and every closure pushed more trade somewhere new. Then payments started misbehaving. According to Motherboard's report of 2 December 2013, large-volume vendors found themselves unable to withdraw from around 20 November 2013. The administrators blamed technical problems connected to an update of the site's automatic tumbler, claimed on 27 November that 90 percent of users could withdraw normally, and by 30 November 2013 the site's forum was offline behind a supposed spam filter. Deposits kept working throughout, which is the shape of a site collecting money it no longer intends to return.The official story: a vendor found a bug
The site's farewell message, quoted by Greenberg on 1 December 2013, blamed one seller for everything.This vendor found bug in system and stole 5400 BTC - your money, our provisions, all was stolen. We were trying to resolve this problem, but we were not successful.The administrators promised to redistribute whatever remained to users' emergency addresses, then went permanently offline over the first weekend of December 2013 without returning anything. Even the official loss varied by outlet: the BBC put it at $5.3 million, Forbes rounded it to roughly $6 million, and the Guardian converted the same 5,400 BTC to £3.5 million. The one number presented as fact never quite held still. That flexibility set the tone.
The blockchain told a different story
Every bitcoin movement is public, and in late 2013 the affected users read them in real time. Reddit threads tracked coins leaving Sheep's wallets, with one widely shared count reaching 39,918 BTC - around $40 million at 2013 prices, per Motherboard. Forbes cited a Reddit tally of 39,900 BTC worth about $44 million. Estimates ran higher still: CSO Online reported suggestions that the true take could approach 100,000 BTC, more than $100 million. None of the higher figures was ever confirmed; the honest summary is a range with real uncertainty. All observers agreed the claimed 5,400 BTC did not square with the flows on the chain. The crowd chase turned farcical. Users posting under the name sheeproadreloaded2 followed the coins into Bitcoin Fog, a mixing service, which made a memorable mistake: on the night the stolen coins arrived, the tumbler's pool held roughly 96,000 BTC, so roughly 96,000 came out the other side in traceable form. The trail ended inside the internal wallet of the BTC-e exchange, not at a person. Suspicion meanwhile fell on an innocent former moderator, who gave an interview to a Czech newspaper to clear his name, as the Guardian recounted. Death threats against the site's operator circulated within days. One UK-based user chasing the coins, writing as TheNodManOut, summarized the experience for CSO Online: I've just chased a thief through a washing machine for you.Nobody was named, at first
In 2013 nobody could put a face on any of it. Backopy, the administrator of Black Market Reloaded - itself overwhelmed by Sheep's refugees - was never definitively identified, and neither were Sheep's own operators that year. A leak later changed the picture: Gwern Branwen's chronology records a December 2013 claim, passed by a source who had shared the material with the FBI, that the site had been created by Tomáš Jiřikovský, a Czech man previously accused in a bitcoin scam. Branwen called him the likely creator, an allegation, not proof. The years after the collapse supplied partial answers. Czech police arrested Jiřikovský in 2015 after, according to coverage in Branwen's directory, he paid for an expensive house with bitcoin; Czech press reported a nine-year prison sentence in 2017. In the United States, two Florida men arrested in 2016 pleaded guilty in 2018 to wire fraud tied to the same theft, according to the case history on Wikipedia. Even with convictions, the full accounting of the coins has never been settled.Why the aftermath mattered
Sheep's collapse is remembered less for the money than for the habits it created. It was an early demonstration that a market operator's promises mean nothing without independent verification - the community began demanding signed announcements, watching wallet balances in public, and treating escrow balances as unsecured loans to anonymous counterparties. The phrase exit scam moved from forum slang toward mainstream reporting with this case.- Escrow distrust became permanent: funds left sitting on any market came to be seen as donations awaiting collection.
- Community verification culture hardened around blockchain forensics, PGP-signed statements and hash precommitments, a method Branwen himself used to timestamp market claims in 2013.
- Every later disappearance was measured against the same script first performed here: stall withdrawals, blame a bug or a vendor, promise a fix, vanish.