In 2010, a 16-year-old Chinese teenager named Zhou Tong bought Bitcoin for $10. Later, this self-taught programming genius built the first cryptocurrency margin trading platform, Bitcoinica, in just 4 days. However, due to consecutive hacker attacks, Bitcoinica ultimately lost 101,554 BTC. This article is sourced from the author Rizzo and translated by PANews.
In 2010, a 16-year-old Chinese teenager named Zhou Tong bought Bitcoin for $10. Later, this self-taught programming genius built the first cryptocurrency margin trading platform, Bitcoinica, in just 4 days. The trading volume of this platform reached $40 million per month, second only to the largest exchange at that time, Mt. Gox.
However, due to three consecutive hacker attacks, Bitcoinica ultimately lost 101,554 BTC.
Recently, X account Rizzo told the story of this legend. PANews has translated the original article, which will tell the story of how the teenager lost 10.2 million bitcoins, currently worth $6.8 billion, in a dramatic way.
At the age of 16, the Chinese teenager Zhou Tong bought Bitcoin for $10 and became interested in the idea that this currency could be transmitted globally. He introduced Bitcoin to all his friends because he thought it was “cool.”
At that time, buying Bitcoin in 2011 was very difficult and time-consuming, relying on intermediaries. The largest exchange at the time, Mt. Gox, was often offline. Shortly after Zhou Tong bought Bitcoin, Mt. Gox even experienced a flash crash, causing the price of Bitcoin to drop to $0.01.
However, Zhou Tong was not discouraged by the price drop. This self-taught programmer built a trading platform called Bitcoinica in just 4 days. It was not just another Bitcoin exchange, it allowed margin trading, allowing traders and miners to speculate on future prices.
Users could immediately bet up to 50 bitcoins.
After going live, Bitcoinica’s trading volume skyrocketed, reaching $40 million per month, second only to Mt. Gox. As for Zhou Tong, he earned $10,000 in the first two weeks, equivalent to about 2,000 bitcoins.
However, Bitcoinica soon encountered some resistance. Some users were concerned about Zhou Tong’s young age, while others were worried about his lack of experience. As the value of Bitcoin increased, users became more concerned about the security measures taken by the exchange to protect their bitcoins.
Bitcoinica continued to trade hundreds of thousands of bitcoins per month. But by the end of 2011, when investors found him, Zhou Tong quickly sold the company. He was still in school at the time and busy with exams.
The new owner, Wendon Group, had some doubts about Zhou Tong’s work. Therefore, they sought the help of experienced Bitcoin developers to conduct the necessary audits for the exchange. One of them was Amir Taaki, a outspoken activist known for his involvement with WikiLeaks and 3D-printed guns.
Wendon Group wanted to prove to Zhou Tong and Amir that they were serious—they made a large investment. They even spent $1 million to purchase the industry’s most sought-after domain name: http://Bitcoin.com.
However, Bitcoinica soon fell victim to hacker attacks. In March 2012, it lost 43,554 bitcoins. This loss caused a sensation and was permanently etched on the cover of the second issue of “Bitcoin Magazine.”
The situation worsened. In May and July of that year, Bitcoinica’s servers were attacked twice, and a total of 58,000 bitcoins were stolen. At that time, there were no hardware wallets or multisignature wallets: all the hackers had to do was reset a few passwords. (Note: The original X post mentioned the loss of 99,000 bitcoins, which may be an incomplete calculation.)
Who should be held responsible for these consecutive attacks? Zhou Tong? Wendon Group? Or Amir? Users didn’t care, they just wanted to recover their lost bitcoins. Users like @rogerkver lost over 24,000 BTC.
Today, what happened remains a mystery. Zhou Tong’s conclusion about this situation is that Bitcoin users and businesses need to take their personal security seriously.
Due to these attack incidents, Zhou Tong’s reputation collapsed overnight. His name became one of the earliest viral Bitcoin memes. In the OG community, “Zhou Tonged” is still used to describe investors who have been robbed and deceived.
Zhou Tong’s final move was to invest 1,000 bitcoins into rare Casascius coins. In fact, he owns one of the three rarest pieces, which are now worth over $60 million. Then, he left the industry…
Exchange hacks continue to this day. That’s why serious Bitcoin investors are advised to use hardware wallets or multisignature custody. It is estimated that over 1 million bitcoins, worth $65 billion, have been lost in exchange hacks. Calculated by the total number of lost bitcoins, Bitcoinica is the third-largest loss in history.
Today, Bitcoinica is still a warning that reminds people of the 6.8 billion dollars worth of bitcoins lost. Users should take their custodial responsibilities seriously and use multisignature security measures, learning from the Bitcoinica incident.