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Silk Road admins: Sorry for the hack, we're sorting out refunds

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The masterminds of the SilkRoad 2.0 underground market have vowed to pay back all of the funds lost in a recent Bitcoin hack.

Administrator Defcon said that the team behind the darknet market would be donating all commissions it gathers on transactions towards reimbursing funds which were lifted from its escrow account by hackers last week.

"This leadership and this community will not stop until you are completely repaid," Defcon vowed.

"We know you feel defenseless right now. You are naked. Many of you are convinced there is no logical reason any darknet admin would ever fight to get your coins back."

The post puts to rest fears that Silk Road 2.0 would not attempt to relaunch in the wake of last week's incident which saw some $2.7m worth of Bitcoin vanish when an attacker exploited a transaction malleability vulnerability to empty all of the funds from Silk Road's transaction escrow wallet. According to administrators, 26 per cent of Silk Road's active users saw their entire Silk Road account funds wiped out in the attack.

The site has relaunched but has eliminated any central escrow plan (like the one which was hacked.) Rather, users and vendors will have the option of dealing directly with highly-trusted parties or using a reputation-based decentralized escrow system to hold funds pending delivery.

Additionally, the site said that it will launch support and dispute resolution services to help sort out transactions which were thrown for a loop by the attack itself.

Under the plan, Defcon vowed that the management would not collect any commission for itself until users were refunded "even if it takes a year." Or, perhaps more likely, until law enforcement shuts down the marketplace as it did the first Silk Road iteration.

"This is not an ideal climate, but it is the reality of the darknet today. I cannot emphasize strongly enough that every market which uses centralized escrow will fail," Defcon said.

"Centralization makes a market a huge target for attackers, and a huge target for dishonest administrators."

Meanwhile, Silk Road administrators say they are continuing to pore over information they have received on who might have been behind the hack. Defcon said that early indications are that no members of the administration were behind or complacent in the attack. ®

Internet Security Threat Report 2014

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