16-year-old Zhou Tong, a self-taught programming prodigy from China, purchased Bitcoin for $10 in 2010. In just four days, he established the first margin trading platform for cryptocurrencies called Bitcoinica. At its peak, Bitcoinica had a trading volume of $40 million per month, second only to Mt. Gox, the largest exchange at the time. Unfortunately, due to three consecutive hacking attacks, Bitcoinica lost a total of 101,554 BTC.
Recently, a foreign blogger named Rizzo from the X platform shared the story of this legendary teenager. PANews has translated the original article, which tells the dramatic story of how this young teenager lost 102,000 BTC, now worth $6.8 billion.
At the age of 16, Chinese teenager Zhou Tong purchased Bitcoin for $10 and was fascinated by the idea of a currency that could be sent 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, 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.
Zhou Tong wasn’t discouraged by the price drop. The self-taught programmer built a trading platform called Bitcoinica in just four days. It wasn’t just another Bitcoin exchange; it allowed margin trading, enabling traders and miners to speculate on future prices. Users could instantly bet up to 50 BTC.
After its launch, Bitcoinica’s trading volume skyrocketed, reaching $40 million per month, second only to Mt. Gox. As for Zhou Tong, he made $10,000, equivalent to about 2,000 BTC, in the first two weeks.
However, Bitcoinica soon faced some resistance. Some users were concerned about Zhou Tong’s young age, while others worried about his lack of experience. As Bitcoin’s value increased, users became more concerned about the security measures taken by the exchange to protect their Bitcoin.
Bitcoinica continued to trade hundreds of thousands of BTC each month. But by the end of 2011, when investors found him, Zhou Tong quickly sold the company. At that time, he was still in school, 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 proper audits of the exchange. One of them was Amir Taaki, an outspoken activist involved in hacking activities and passionate about Wikileaks and 3D-printed guns.
Wendon Group wanted to prove to Zhou Tong and Amir that they were serious, so they made a massive 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 hacking attacks. In March 2012, it lost 43,554 BTC. This loss caused a huge uproar and was permanently engraved on the cover of the second edition of Bitcoin Magazine.
The situation worsened. In May and July of the same year, Bitcoinica’s servers were attacked again, resulting in a total loss of 58,000 BTC. At that time, there were no hardware wallets or multi-signature solutions. All the hackers had to do was reset a few passwords. (Note: The original X platform post mentions a loss of 99,000 BTC, which may be an incomplete calculation.)
Who was responsible for these consecutive attacks? Zhou Tong? Wendon Group? Or Amir? Users didn’t care; they just wanted to recover their lost Bitcoin. Users like @rogerkver lost over 24,000 BTC.
Today, what exactly happened remains a mystery. Zhou Tong’s conclusion from this experience 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. Among OGs, “Zhou Tonged” is still used to describe investors who have been robbed and deceived.
Zhou Tong’s final move was to invest 1,000 BTC in rare Casascius coins. In fact, he owns one of only three of these rare collectibles, which are now worth over $60 million. Then he left the industry…
Exchange hacking attacks continue to this day. That’s why serious Bitcoin investors are advised to use hardware wallets or multi-signature custody solutions. It is estimated that over 1 million BTC, worth $65 billion, has been lost in exchange hacking attacks. Calculated by the total lost BTC, Bitcoinica is the third-largest loss in history.
Today, Bitcoinica remains a warning, reminding people of the 102,000 BTC, now worth $6.8 billion, that was lost. Users should take their custody seriously and use multi-signature security measures, learning from the Bitcoinica incident.
This article is a collaboration and was originally published on PANews.