TradeFortress of CoinLenders Making Restitutions from 2013 Hack

CoinLenders Logo
Logo courtesy of CoinLenders

In 2013, shortly after I first got involved in Bitcoin, I found a great way to accrue interest on my meager holdings: CoinLenders.

Run by an individual who I still only know by the moniker “TradeFortress,” CoinLenders advertised itself as a service that lent Bitcoins to exchanges, Bitcoin sales services, and the like to provide them with the liquidity they needed to operate. As collateral, CoinLenders would get ‘mining contracts,’ a term which seemed to indicate shares in revenues from mining operations, but was a term that, frankly, was never very clear to me.

The daily compounded interest on invested funds was high, and there was even an option to show how much your current balance was that would change by a few satoshis every time you refreshed the page.

Though I was a little skeptical of the high returns and the fact that the site was run by someone who was only known by a screen name, but this was 2013, possibilities seemed endless, and the number of actors with only screen names was huge. Slowly, I upped the amount I had invested in CoinLenders from a ‘test’ amount, to a substantial amount, to most of my Bitcoin holdings.

And then, CoinLenders and its associated wallet were hacked.

The uproar was furious. It made international news. Reports were that TradeFortress was a teenager working out of a house in Sydney, and you could Google street view the house.

On forums, the panic was palpable. I had lost nearly my whole Bitcoin stash, but what I lost was a tiny, tiny sum compared to the sums people on Bitcoin Forum were talking about. TradeFortress was in contact with people, and was even making restitution, but the amounts he was returning were a relatively small percent of people’s holdings.

I personally got back a bit more than a quarter of my original holdings, and I had to affirm that that cleared all claims for further repayment. I felt burned and stupid. On the other hand, I was also grateful to have gotten anything back at all. Many who have had funds hacked have had no recourse. I moved on with my life and slowly rebuilt my meager stash.

I had learned a lot from the experience:

  • Mistrust investment opportunities with high returns unless you fully understand how they work
  • Mistrust investment opportunities where the people running them do not have public, provable identities
  • Know that any time you are not holding the keys to your crypto, you do not in fact own those crypto
  • Know that if something looks too good to be true, it almost certainly is

In the intervening years, I have twice more lost Bitcoins, once on MT Gox, a very small sum of which I may still get a portion back, and once to a very scammy arbitrage site that I send a tiny amount to just to see what would happen. It was an obvious Ponzi scheme, and though it’s not very admirable, I was curious to see I could get my investment and profits off the site before the owners ran off with the cash. I couldn’t. That experiment paid for itself as I wrote an article about how these arbitrage/Ponzi schemes were run as a PSA.

In the intervening years, because of posts on forums and articles I had written, I was occasionally contacted by people who had lost funds in the CoinLenders hack asking for information about how to get in contact with TradeFortress. I always provided the email address I had, and I always heard back from the individuals after they had successfully been in contact and recouped part of their losses.

Then a few days ago I got an email from TradeFortress again, telling me he was ready to return a much larger percent of losses, minus the amount I had already been paid. I was shocked. Within two days, I had received a transaction for a substantial portion of my investment. Further, the dollar value of the Bitcoins a received far exceeds their value when they were lost in 2013.

When the hack happened in 2013, there were a lot of recriminations thrown at TradeFortress. Many people thought the hack was a cover for him having stolen the funds himself. His competence was attacked as the attack vector the hacker used was a known exploit that had been previously use in other hacks of Bitcoin businesses. There were reports that TradeFortress had fled to China with speculation that he would never been heard from again.

The fact that he made efforts to return funds in 2013 when he was under great pressure and under constant attack was admirable. His inbox must have been overflowing with angry emails. Then he remained in contact when people reached out to him over the years. And now, according to him, good investments in coins like Ethereum and the general rise in the markets have put him in a position to try to make more of a restitution.

TradeFortress has put a post on Bitcoin Forum inviting anyone who lost funds to be in touch. He says he will continue to return funds to a certain percentage through 2018 – and if the amount of that percentage rises, people can come back to be topped off.

In my own eyes at least, TradeFortress has completely rehabilitated himself. Though I have not gotten full restitution, I did invest with CoinLenders knowing there was a risk and need to take responsibility for that. Further, I did accept partial payment in 2013 with a statement that I released TradeFortress from any further claim. I did not ask him to return more, he contacted me personally.

With all the news of hacks and scams in the cryptospace, it is great to know that there are also those who are doing what they can to act honorably under sometimes terrible circumstances.