Bitcoin Private (BTCP) scam - developer secretly pre-mined 2 million extra coins

24 Dec, 2018 | Updated: 24 Dec, 2018
by David Robb
Bitcoin Private (BTCP) scam - developer secretly pre-mined 2 million extra coins

A scam involving the Bitcoin Private (BTCP) network has recently been exposed. It appears that one of the developers of the crypto had secretly pre-mined 2 million coins before launch.

Bitcoin Private (BTCP) is currently the 106th-largest crypto, with a total market cap of around $37.5 million. It was created as a hardfork from the Bitcoin network around the same time as Bitcoin Cash (BCH) was launched, in March 2017. Its code is a direct clone of the protocol for Zcash (ZEC), an earlier BTC fork.

According to a Reddit post about the scam, "Bitcoin Private (BTCP) [...] was intended to [have] an initial supply of ~20.4m BTCP, with a decaying miner reward, capping the total supply at 21m units as with Bitcoin. However, 2.04m additional units were covertly minted during the import of the Bitcoin UTXOs and sent to the BTCP shielded pool, bringing the initial supply to 22.6 million, contradicting the whitepaper and all of the materials published by the team."

300,000 of these secret extra tokens have been sent to addresses associated with exchanges, and presumably sold. Due to the limited uptake of a BTCP airdrop, these tokens account for around 10 percent of the circulating supply. Probably in response to the news, the BTCP token has dropped in price by over 20 percent in the last 24 hours

Image from Gyazo

The developer at the time the secret pre-mine went ahead, 'Rhett' (@heyRhett), has taken to Twitter to deny any knowledge or involvement. However, many observers are refusing to believe his story.

Other influential crypto commentators are seeing this scam as an example of why the crypto space is struggling, as well as a fascinating example of some network vulnerabilities.

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