Monero appears to have lost its darknet market integrations, and very well may have fallen victim to an exit scam.
Darknet market Oasis, the first to accept Monero, has abruptly gone offline in an apparent exit scam, making off with customer funds. An estimated 150 Bitcoins were lost, as well as an indeterminate amount of Monero.
Several users report that attempts to withdraw XMR from AlphaBay, the darknet market whose integration was closely correlated with the currency’s meteoric rise, were unresponsive as well.
HolladsHerbs, Reddit user, posted in the /r/DarkNetMarkets subreddit a theory that Oasis first accepted Monero in order to pump up the currency to make a significant profit:
“Everyone is looking at the 150 BTC Oasis made from their exit scam while in fact Oasis probably made most of their money from their Pump&Dump (tm) game they pulled of with their Monero stunt.
They where[sic] the first market to support Monero and they also where[sic] the first to know Monero was going to get accepted on the dark-web. By simply taking long positions and buying loads of Monero just before they made their announcement they most likely made huge amounts of money, way more than 150 Bitcoins.”
Previously hacked MyMonero web wallet unresponsive
The web wallet for Monero, MyMonero run by famed XMR developer FluffyPony, has been unresponsive for several days, according to several users on Reddit. Users reportedly were unable to withdraw funds and have contacted support days ago, with no response. Users are still able to import private keys to another wallet to secure their funds.
MyMonero wallets have been targeted in several large thefts, resulting in millions of dollars worth stolen this year. The evidence at this point is inconclusive as to whether the thefts resulted from security vulnerabilities in individual users’ machines, or from the wallet itself.
Fake site MyMonero.co (as opposed to .com) has a warning posted about the hacks, theorizing that the wallet itself is vulnerable, although insisting that MyMonero operator FluffyPony is not himself culpable.
Monero’s rise to fame intricately tied to darknet markets
The rapid rise to the top rankings Monero experienced recently was closely correlated with the AlphaBay darknet market integration as the privacy-centric cryptocurrency took over Bitcoin’s unique user base, a limited demographic concerned with financial anonymity above all.
However, excess concentration on single points of failure, in this case a focus on a couple darknet markets as well as only operating one web wallet, resulted in the bubble popping. This has already resulted in a 50% drop in XMR’s price.
Update: Since this article's publication, AlphaBay has responded that they are up and running, that interruptions in Monero transactions were due to a software upgrade.