Bitcoin Forum

This sits in "Securities" rather than my usual lending section thread because it is a little more aggressive in approach and not as reliable.

Based on some work I have been doing I believe there is space for this particular fund and because it is a little different labelling it Kraken seems appropriate.

Basic parameters:

• Fund commences 19 August 2012.  
• Investments may be made in multiples of 100BTC.
• Withdrawals may be made in multiples of 100BTC.
• Contributed capital is backed by my personal funds.
• Returns will be paid weekly (currently planning on Fridays) - no compounding or automatic reinvestment.
• Target and maximum return 2.5% per week. (for the ponzi people, that would be 361% annually, but it's only 130% because it is non compounding.)
• Minimum weekly return 0% - any losses will be funded personally.

You will need to request a unique deposit address and supply a unique return address.  I will have a sensible limit on the number of investors because I don't want to spend my whole life doing weekly payments.
Returns obtained over and above 2.5% are taken as my fee - that's how I can afford to support the minimum return and "insure" the capital.  If I have coins sitting idle, they don't lose money, but impact on the average return.

Obviously the question is "What am I doing with the coins?"  
If I was to provide a simple answer like buying 50 BFL singles and going mining, or putting 10,000 coins into XYZ asset on GLBSE then there wouldn't be much science in that and it would ruin the market that I am looking at.
Also, I do expect people to assume funds might simply be going into BS&T and accuse me of feeding an illegal activity.  Due to the vitriol that goes with that, this will not be an open thread because there will be no point debating that.

So what am I going to use funds for?  Some will be going into my "vulture" capital business interests, some into some long-term BTC investments I have held in real-life ventures (such as an equipment manufacturer), some in BTC assets, a small amount of futures trading, some into various risk/reward adjusted investments that are available in the bitcoin world.

Edit: Currently 25 registered users.  18 currently paid.
Edit 19Aug: The largest commitment made was 1000 coins, and that was before the closure of one of the largest (and smartest) BTC operations.  In fairness, I consider a 1,000 maximum per account is appropriate making the absolute maximum size of Kraken Fund 25,000.

Kraken Fund#2 wait list (several):
HonsetBob, Rolo TonyBrown Town, BinaryMage, aghori, EskimoBob, Onichan, LoweryCBS, coinft, Mousepotato, Goelmer, CecilNiosaki, bruiser, Gigavps, "pm page 122", Electricbees, Macboy80, Brunic, Coin.Karma, Litecoin, Simonk83, DeadTerra, mb300sd, ScottJ, REF, nave, Soros Shorts, ShadowAlexey, Cobra

FAQ:

Do I send before the 19th, will I lose my spot?
You don't have to send before the 19th.  Not anticipating people losing "spots" because this has a different profile to the restricted deposit accounts.
There is a "however" (added 18/8) - an account that has not been funded by 25th August will be closed and the spot re-offered.

When do I have to send?  Is it before the 19th?
Investments from the fund will not be made until the 19th (i.e. there will not be any income to the fund before then).  Like most deposits, I will account for the funds when received.  Initial funds should be provided by 25th August and at that stage I can assess the size and determine asset allocations.

What if you have lumpy investments that dump six months of profits in all at once?
Some assets do pay monthly or quarterly.  That would produce abnormal returns in that week.  For those occasions there would need to be a bonus payment (linked to an excess above 5% say).  Restricting the impact of any one asset on the whole portfolio should moderate those swings.

What size/duration is this fund planned to be?
It is a reasonably sized investment, but it is not open ended.  I did consider limiting it to 10k and having two or three of equal sizes, but it is easier (logistically) to keep it together for the moment.  Also, the term is related to the future and in six months time it is very unclear what the economy might be.  Not a very helpful answer, but I don't have a crystal ball.

How do we see the asset allocation?
The forum pm system is not very good due to the limits, so I intend on providing a weekly email newsletter.

Two updates:

1st: with 14 registered participants, I'll be limiting this fund to a maximum of 25 and closing it at the end of the month because there is some manual processing that goes with the weekly payments.
2nd: If there is sufficient demand, I will consider a kraken#2, but with a 2% weekly max rather than 2.5%.

With BS&T developments in the last few hours, I'm going to unlock this thread.  If it gets filled with insults, wild accusations and other bullshit, I'll lock it again.

For now, the Kraken fund is closed to new accounts.  They were provided on a first come, first served basis.

I have a couple of people that have indicated they are interested in accounts, but I want this to get up and running first.  Depending on interest, there will probably be a Kraken#2 in September.

With Pirate closing Kraken will be one of the higher yielding investments left in the market.

Might be one of the higher yielding.  Expected payouts between 0% and 2.5% per week.

Edit: Due to a short-term window of opportunity I have secured the first 100 BTC of profit using some of my own coins until the remaining funds are deposited.

Already one Kraken pass through.

Will you be allowing new investors if and when current investors exit?

Yes, but I think a second Kraken fund will be more likely.  Let me iron the bugs out of this one over the next couple of weeks and set up a few other bits and pieces.

great to be part of this, thanks Patrick for accepting my aplication

You are welcome.  Technically I don't have to do any more work on this until September as I have locked in three weeks of profits already. 

13 of 25 initial payments have also been received - thank you 

How did I miss this? Interested in any openings.

I'm interested as well.  Hit me up if a spot opens :)

You are not the only one to have missed out.  I think that if it had launched today rather than yesterday it would have been even more chaotic, and as it is I had several people inquire but not secure spots.

I don't think there will be too many spots open up, but I can run a list for Kraken#2.

I would like to preemptively register my interest in Kraken #2, assuming Kraken #2 is of similar nature to Kraken #1.

Yep, count me in for #2.

Also interested for #2

Count me in too for #2.

I am interested in #2 too.

Hi Patrick.  Can I be on the wait list for #2 as well?  Thanks in advance.

I'd be interesting in a one or two hundred BTC slot in Kraken 2 if it becomes a reality and the returns of Kraken The Original are decent.

(currently 19-Aug 16:00 (UTC+12) deposits of 2900.  income secured(approx): wk1 49.2, wk2 53.4, wk3 91.4)


Please bear in mind that creating value and returns is a tricky business.  As I explained to someone earlier today, with potentially 500k coins coming out of BS&T and looking for a new home availability of funds will be less of an issue.  Yesterday I secured the returns for Kraken#1 with 3000 of my own coins ahead of deposits, and there would also be good business buying up some undervalued BS&T accounts/bonds.  However, if I had 100k BTC, the few hundred coins profit would be spread much thinner and look like a 0.25% return rather than a 2.5% return.

I have some time over the next two weeks to look at this more seriously as I'm taking a break from my day-job and determine where some sustainable ventures for BTC might provide the stable and superior returns that BTC provides.  This time will also give me a chance to do some work on 7Seas which has been neglected over the past few weeks.

Looks like I missed the boat on fund #1, definitely interested in securing a spot for #2 with a few hundred btc minimum.

Waiting on pirate funds to roll back to me to deposit.

Throw me on the wait list for kraken#2 if having been in kraken#1 doesn't make me a shoe-in.

Didn't hear anything from you Pat. Perhaps I was asking the wrong questions.  ::) This is my update for you.

Thanks!

Patrick. I am also interested in the next availability. Please add me to the waiting list. Preferably for #1 if there are any openings/withdraws/no shows, but #2 will do. Funds are available at this moment.

Hey Patrick,

Count me in please....

Kraken 2

Hi Patrick,  sent you a PM.

Please let me know if you have an opening.

I would love a spot in any future funds, please add me to the list for Kraken#2 :)

Can i get on the wait list for kraken #2?

Week #1 update:

Paid units = 47 (4700BTC)
Realised Profit = 0.11BTC

Because of the BS&T turmoil and with limited liquidity on GLBSE the returns this week come from a small bond investment.  The other income currently locked in should still be paid in the next couple of weeks and is currently forecast at approximately 247BTC.  Due to the small profit this week, I would prefer to roll it into next week rather than doing a set of 25 micro payments.

Also, it would be useful for Kraken#1 Fund participants to send me an email address that I can use.  Please forward to patrick@StarfishBCB.com

Actually, today I've sent 0.5319BTC per unit on all the 56 units that have been paid as the first week returned 25BTC.  This is explained in the newsletter that has been emailed to fund members.  If you did not receive a copy, that is probably because you didn't provide an email address.

Received, thanks! The newsletter was great too - I'd invest in this fund just to get access to that.

The newsletter is a bit rough because it's a first version (I should have proof read it too).  I need to check the copyright on the image.

+1 to this. The newsletter is great!

Sorry, was working off the ones that were sent to me recently.  Sent now.

Hi Patrick,

I realise you're getting this up and running and figuring out some things as you go along, but I have some questions.  Clarity on these would be useful for all I think, including those contemplating investing in Kraken 2, as I assume it will be handled in a similar fashion.

Apologies if I've missed any of these being addressed elsewhere.

• I don't think you've said it explicitly, but it seems initial investors are entitled to increase their investment up to the individual 1,000 BTC limit?
• How do you handle increased deposits / withdrawals?  Is everyone done at par (100 BTC) with withdrawals entitled to their final week's income if any?
• What is your policy on lumpy returns? It seems unfair for someone who withdraws a week before a lumpy payout to not get any of it, but if your policy is to encourage Kraken to be held more as a long-term investment / funding commitment it makes more sense.
• Are you invested in this yourself?  Or is your incentive purely from the "excess returns"?  Again, curious how lumpiness is handled in light of this.

Thanks.

Yes, some things come up that are unexpected, others are anticipated.  I appreciate the questions.

1: Yes, initial investors are permitted to increase up to the 1000 limit - I had one user add 700 coins today bringing them up to their maximum.  Initially there was scope for this to be higher, but I needed to revise that to prevent a completely unbalanced situation if someone ran a 100k passthrough.  After all, the returns are allocated across units and if only 10k can usefully be put to work, the returns for the initial investors with a few hundred would be pathetic.  (I did have an inquiry for a 7000 coin deposit.)

2: The accounts are all done in blocks of 100BTC.  I do need to clarify the withdrawal policy because it's not a case where funds are expected to be lying around, so a simple queue will operate, or else other members of the funds might wish to take over extra units.  The waitlist in the OP gives a line of people that might wish to take over a spot as well.

3: The plan is for returns to be a smooth as possible, but those in the fund currently will see that is unlikely given the current asset allocation.  Therefore, there will be some back-smoothing across weeks (up to four).

4: Currently I am not directly invested.  However, you will note that I am guaranteeing a minimum 100BTC price so am exposed to losses.  I did buy a few of the Kraken pass through bonds on GLBSE for fun.

Kraken #2 will be different - already there are features in Kraken#1 that I would probably not repeat and there are parts to it that I think will be valuable to carry forward.  Issues around size of account, risk/return structures and generating income are significant issues.  Also having a clearer "investment profile" for the fund might be useful as well, allowing those after higher returns to go one direction, and those after lower risks in another.  I am also aware there are competing funds that fill the needs of different parts of the bitcoin community and I do not wish to duplicate their models as that would not be good for bitcoin overall.

There is a 300BTC space becoming available.

Newsletter #2 and a 0.5% payment for the past week have been done.

If I have the funds available I would love to invest. Hopefully will know in a day or two.

How will you shutting down Starfish Bank affect things?

It shouldn't.  The two are accounted for separately.

Thank you for the expressions of interest in the available Kraken spot - it has been taken.

It's been a couple of busy days and I'm catching up on a few things, but the time has also given some space to do some thinking as well.

First up, those in K1 know the initial asset allocation, and that included some distressed BS&T debt.  Of the accounts purchased, one was paid and provided the first week returns (a little over 0.5%).  For week two, a flat 0.5% was paid and the tentative plan is to look at making a similar payment this week.

Going forward, despite what the forum trolls like to say, there is a newer opportunity with some of the HashKing debt.  I know some about what he's been doing in terms of hardware and I talk to him every day (normally via skype) and he is part of YABMC with me and JWU42.  He tells me payments would be daily (!) but Kraken pays weekly.

There are also a number of other assets that might be worth picking up as some GLBSE prices have been trashed.  The other aspect I am investigating is transferring or offering the profits from a BTC hardware business I have a stake in to the fund (again, a lumpy revenue stream from a real world business), but I need to sort some issues out with the majority shareholder.

And finally, there are some additional spaces opened up in Kraken Fund.  Because it is not a simple deposit system, redeeming funds/units is a bit more tricky.  There are three slots covering 1400 coins, and each account is entitled to a maximum investment of 1000.

how

Tell him to keep his chin up.

Cool another scam/scam circlejerk/bunch of idiots handing out their money to a criminal (despite what his "wife" thinks). What a great day for bitcoin!

How are you making 2.5% a week, Mr. Anonymous Internet Business Genius Patrick "Pirateat40 has a AAA credit rating" Harnett?

It says up to 2.5%/w.
Lately it was only 0.5%/w.
You can see yourself how it is possible to make 2.5/w and more in bitcoin world.

Ugh

If anyone could reliably make 2.5%/w they would be doing it with their own money.

If they needed to borrow money they would use a credit card cash advance, which is actually cheaper than 2.5%/w.

Check

Mate

Its

A

Scam

Hm, putting BTC into the sceme worth 6% pulling it out at least 3%, if doing it quicker then 6%. And what will u do if btc price drops or becomes worthless?
So if u were using your credit card u would have to work first month only to get back transfer fees.
Again, it said that 2.5% is maximum, actually it could be much lower. So this fund makes much more sense to me than all other.

Look, bitcoins are already up 170% YTD. And you are so greedy that you are willing to lend them to some dude on the internet for some fictional returns? The price appreciation of bitcoin is due to market forces-- there is a real demand for them. These schemes are nothing but a bunch of hot air from an anonymous person (remember when pirate was saying "oh look everyone knows who I am this can't be a scam!").

Nobody looks like a scammer until they run with your money. And no, it is not possible to have an anonymous lending economy without legally enforced property rights. That's not what bitcoin is for.

if patrick runs with my money, I will eat my shoes, I have him on skype and talk to him every night about how things are progressing, and the weekly newsletters he gives out to kraken members is quite informative on how his business is working out.

Skype doesn't cut it. If he did run, would be you have any legal means to get your money back? Are you sure?

I probably don't, but here's the thing, anything bitcoins for me is a high risk investment. I never invested anything more than I could accept as a loss.
 I would really rather me and him work out any problems we have as I'm a reasonable guy, if there is a serious problem we can work around it, however if he does run I have the ability to write it off as a loss.

That is incorrect.

In any event, there are steps to recover funds from BS&T.

The market is only valuing BS&T debt at ~3% of face value, so Kraken is essentially carrying a large amount of unrealized losses.

Patrick guarantees Kraken investors face value.

+1, patrick will take the hit himself if pirate takes us all to the cleaners.

That's interesting. There's been an odd dearth of actual evidence of Pirate paying out despite him claiming to have done so. Insured passthrough that somehow didn't implode?

Nice to know the private newsletter is getting some circulation and that Chaang took the time to read it.  Fortunately the PPT series retains value and I am committed to paying out on those even if it takes a little time.  I am less sure of the Tygrr bonds which are possibly worthless given the additional issue of liabilities without clarity of assets to back them.  I am also pleased I didn't take up Chaang's request to take over his PPT business on GLBSE although it might have been better for his investors if I had done so (but we'll never know).

Wait, so almost all the PPT operators tried to sell their operations to you when it became obvious the situation was unsustainable?

Like rats off a sinking ship  :D

You mis-typify the PPT.x situation.  Collectively as a group (six of us) there were discussions around how to make it profitable and provide a good return to investors.  One of the things, because of its structure, was that it was quite small compared to the other passthroughs (12k vs 25k for a "trust" account and 150k that Payb.tc was assumed to have).  I didn't agree with some of the suggestions being made and thought they would be too far away from what the contracts allowed.  I could also see a use for the asset and liked how it runs, so I negotiated with the other five holders to purchase their stakes in the business.  Then BS&T closed and things were rather screwed up as I looked after the obligations at the time, and continue to do so.

Other than Chaang, I did not have anyone else ask me to take over their PPTs, but I did have a few people ask if they could operate sub accounts (three people), and the recovery efforts I'm taking aims to have them repaid as well.  Nothing particularly complicated.

are you going to divide up your pound of flesh equally among pass-thru holder?

lol

I didn't think I had implied that - but certainly working on recovery is a sensible approach.  My contact with the man himself has been pretty limited (non existent the past week), not that I exchanged pm's with him very often.

I have a legal case running in Australia currently to recover funds from someone - so I know the cost and length of time it takes.  But otherwise, my approach is not a public one as that is not how these processes work.

I was going to say I couldn't think of anyone that would disagree, but unfortunately, there are several people I can think of that want this to all end badly.

So you placed the majority of funds raised into pirate debt based on the fact your idea of what he does as a business is full of shit and you dont even know the guy personally?

So what am I going to use funds for?  Some will be going into my "vulture" capital business interests, some into some long-term BTC investments I have held in real-life ventures (such as an equipment manufacturer), some in BTC assets, a small amount of futures trading, some into various risk/reward adjusted investments that are available in the bitcoin world.



I have  a bridge to sell you.

Edit: Do you actually contribute anything at all in real life besides flush peoples coins down the pirate toilet ?

Wait, you actually think there is still a possibility pirate will pay back?
AFAIK Pirate has taken his investors to the cleaners and they have insignificant amounts of chance of getting it back.

no, I think that pirate is more easily sued than bitcoinica, however anything beyond that I don't care, its no major loss for me.

Wow, this was a great idea. Sell all your bad debt to investors whose returns you control. Use the funds you get to do whatever you want to earn money. Persue a case against pirate at 0 interest rate, and when you get some money out of him, get it in 1 lump sum. This way, you can make a hundred or so percent profit, and generously smooth it out to 4 2.5% interest payments while keeping 90% + accumulated interest for yourself.

Its pretty scammy to sell all your private pirate debt to investors since this fund wasnt advertised as a pirate passthrough. If the majority is invested in pirate Im gonna be pissed.

any newsletter + token interest payment for the week to say that your still around patrick?

Newsletter has just been sent, and about to do the payments for the week (0.4826%).

And, given the slots in the fund that were not taken up, considering reopening the fund to new members and not doing a Kraken#2.

People might be more confident in the glbse passthrough if there was the same face value guarantee or a bidwall just below IPO price.

Is bitcoin lending pretty much dead as a market segment now ?

I suspect loaning them to yourself-on-some-service as collateral might be the new "thing" to take its place;

that is, instead of loaning your bitcoins, using them as collateral to borrow other things.

That way you need not lose out on the gains in value your bitcoins make while "using" them to invest in other things.

-MarkM-

Sure. Someone could setup a service where you deposit bitcoins and can receive USD or other funny money and pay "normal" interest rates on that. Much better than trying to borrow bitcoins at insane rates plus if they default you have their bitcoins  :)

The lending segment isn't completely dead, but there is a group of people that have tried their best to kill it off because their opinion is everyone is dishonest.  I know a couple of people still doing lending, and I still get requests to finance various things.

(and seeing this post explains the question about BTC/USD collateral I've just sent a reply to.  In essence, if someone wants to deal in a real currency, make sure you have the right financial licenses/structure/compliance because that is an area where regulations do apply.)

Weekly returns paid (0.4688% for the week).

Did you use the Kraken IPO to simply offload your personal pirate debt onto new investors and what percentage of funds raised are exposed to toxic debt?

Invested funds are backed by Patrick, so this would not be a way for him to shift pirate debt to other people. If the Kraken fund were to buy up Pirate debt and makes a loss from it, Patrick would still have to pay out.

Please read the thread properly before posting.

No, there was no personal or pirate debt moved into Kraken.

I am not a ''wife'' but an actual real life wife (got the ring to prove it). Sadly I'm not feeding the trolls any more (despite the entertainment it would provide). Hence my absence from this forum of late...

Here are 2 reasons its collapsed -
Many of the depositors lied about insurance.
Most of them have defaulted, the latest being Kluge.


You cant call people trolls if they ask the remaining services if they can cover their obligations or not.

Have you used any of the Kraken funds to pay out Starfish Bank depositors ?

Kraken funds were used to buy assets held by the Kraken fund.

Can you explain what the assets are more clearly ? For example real estate being sold under mortgage distress ? Payday loans ?

Would you get an independent audit done ?

Are you an investor via a pass-through, or just asking a bunch of questions?  (i.e. why do you care)

How much pirate debt does kraken hold ?  Are you taking any steps to recover those funds ?

Im have some kraken passthrough shares. Im just trying to ascertain the risk profile and how much toxic debt is loaded into the fund.

Thought that might be the case based on your earlier posts.

The glbse fund is a bit light on as far as a product disclosure document  :P

I suppose I could ask the guy who offered the security on glbse but Im not sure if he has all the information required.

Would you be ok with sharing with him some more details and he can in turn pass it on to share/bond holders ?

Running out of time for today, and for the next few days - out of town/limited internet access, but yes - the questions are reasonable.

Quoted for later.

-"vulture" capital business interests
 -equipment manufacturer
-some in BTC assets
 
What percentage of the fund is invested in each of these segments ?

All that is fully disclosed to participants in the fund. If you're not it is really none of your business.

Good day.

If your pass through shares were on GLBSE then you have bigger fish to fry now.

I wasnt asking you.

Sure. I didnt send glbse 10 000 btc though  ;D

No he was asking me - he could have done it directly, but chose to do it here.  I've also received a request from a pass-through operator if it would be ok releasing the newsletter to their investors/depositors.

I noted the question about toxic assets and will be answering that for bitcoin.me.

Are you condoning pass throughs for Kraken then? I find that quite surprising considering the nature of the fund and the wind-down of Starfish.

he already gave his permission for the passthrough so he cant wihdraw it now.

How is the GLBSE shutdown going to effect Kraken?

I would not have been able to stop a pass-through as it is an activity run by someone else.

As for the notice that I've just read on the GLBSE web page - other than it being a monumental pain in the arse I'll need to work through the implications.

I am aware some people have provided me GLBSE addresses for repayments.  If you think the address I hold is a GLBSE address, please pm me a fresh address.

Weekly returns paid: 0.6920% for the week (last week was 0.5979%).

Is there no report this week? Always like reading it.

I was being lazy yesterday, and I didn't think that much had happened during the past week, but I'll knock one out this afternoon.

Afternoon? Right, I forgot you were from down under.

It's appreciated.

So, is this officially in default?

I don't get the Kraken newsletters, but it kinda sounds like it is.

yep, he paid back 50% of all outstanding debts and hasn't said a word (at least to me) since.

Has he said a word to anyone...or has he simply disappeared?

He will probably be back offering ASIC mining equipment.....

seeing that the BTC price is going up, it maybe worth our while to start looking for legal help in New Zealand. he owes me 300 btc = $27,000

how much does he owe other people now?????

lol, maybe he wasn't so much of a financial whizz kid

who's up for pursuing action on this guy???

The same people pursuing legal action against pirate.

I think we should seperate both accounts,

I am willing to pursue Patrick as he owes me 300 BTC = $30,000. I am going to look for a lawyer in NZ. I think that now the value of BTC thast he owes us is pretty substancial in FIAT, so it's worthwhile purshuing this guy.

Action should be separate from Pirate as he in a different country and two different types of scam

Has anybody reported him here yet: http://www.police.govt.nz/service/financial ?????

good place to start

ian

Patrick owes me 250 BTC, but I'd rather settle with with him honestly rather than going through a lawyer, I'm already burnt from bitcoinica that way.

Has anyone been able to contact him by email?

I see your point, but I think that we need somebody localy in NZ in order to track him down and speak with him, he's plainly disappeared and will probably be in hiding. I don't think he'll settle on his own accord if he isn't pressured correctly.

Whatever happens I think we should act as a community

I don't know about that, I think if we talked for a while, I think I could get him to work out a payback schedule, even if its just 1% a month of total debt, I think thats better than going through the courts.

But I agree about getting someone to NZ to have a chat with him.

The higher the exchange rate is, the more likely it is he'll claim bankruptcy. You'll want to do something very soon if at all.

How's all the legal action against starfish goin'?
Sorry about the necro, feeling nostalgic & poking around in old pirate/nefario/usagi/goat/deprived/etc., etc. threads.

I suspect it doesn't exist.  But at least this piece of shit is forever excluded from interaction in the real world, by virtue of his blatant scams.

Lets start a legal campaign to retrieve funds