Bitcoin Forum

I believe, to the best of my knowledge, that given the absence of any public financial disclosure and an extremely high rate of return that the Bitcoin Savings and Trust is a Ponzi scheme.

I'd like to make this a forum-based petition of bitcointalk users who agree with this.  I don't want to do a poll, because I want people to commit their user name to this statement.

I'm interested in seeing how many people agree with me.   I'd prefer to have any debate over this issue in a separate thread.

My theory is that if you want to develop community, then you need to figure out who to trust and what is a scam.  Bitcoin has suffered from too many scams.

So if you agree, reply and say "I agree".

Can you please explain what your knowledge of this petition consists of to make this accusation.  Some proof will be helpful here before you make your self look bad by trying to make a very reputable forum member look bad.

Is this your way of asking for a New Account referral from an existing member ?

You clearly have no concept of the actual scope of his operation, or just how much BTC people currently have invested with him.
People know who he is in real life. Due to the amount(s) in question, defaulting, for him, would essentially mean either 1 of 2 things..... Jail or Murder.
Why would anyone with public ties risk that ?

lol - must have a big chip on shoulder - been arguing against people making returns for a while.

http://www.campusactivism.org/blog/node/351#comment-711

Actually, a doom-sayer from way back.


Maybe, he lost his $100 in bitcoinica, or got $10 stuck at GOX.  

Oh, it gets better with the advice: https://bitcointalk.org/index.php?topic=42267.msg531684#msg531684


This really is funny.

LOL....

subed.

Well, I'm committing my username to the statement, "Pirate's BTCST is not a Ponzi scheme."
Also, please state your opinion on GPUMAX, a nontrivial piece of work with a nontrivial amount of hashes behind it.  Please state your opinion on, as previous posters have mentioned, Pirate's publicly known identity and address. 
Have you considered that if Pirate made it clear exactly what he was doing, everyone would be doing it?  What financial disclosure, specifically, do you want from him? 
Note that even mining gives 10% monthly returns (and more, if you use Pirate's wonderful GPUMAX service).  The Bitcoin economy is a high-yield economy.

Some people seem to find this concept hard to grasp.

He only want's access to all the addresses he uses... and the people he does business with... and his bitcoinica positions... and a small commission... and his Mt. Gox password... and his private keys. :P

Sig worthy!

I agree.

And "then don't invest" is a shoddy excuse, because it ignore the debasement of the forum and bitcoin's reputation, as well as unsuspecting investors who aren't savvy enough to realize their money is being used to steal from future investors.

Absent an explanation of how Pirate generates such profits, ponzi is the most likely explanation. Quantitatively, it's obvious from just a glance that his alpha relative to his beta against any standard benchmark puts him way beyond the Madoff level in terms of incredulity. Am I the only one that considers risk? Either Pirate is the greatest investor who's ever lived, or he's going to teach people a tough lesson in finance. Remember that people do actually make money in ponzi schemes, and that they can last for years. But they all end the same: disaster. As I mentioned in another thread, revealing the strategy of one's investing technique does not reveal the actual investing process or "give away" any substantive information. Revealing that one's fund engages in spatial arbitrage or out-of-the-money options or equity straddles tells investors nothing about how the fund allocates capital, but it does give them deeper understanding into the process.

Extraordinary claims require extraordinary proof.

And it shouldn't be hard to demonstrate if it's legit.

The OP brings up a good point, because the reason we ask tough questions is because people actually get ripped off and wiped out by so-called investments that have numbers commensurate with Pirate's numbers.


Bitcoin has incredible potential. I don't want to see it sabotaged before its time and have its reputation sullied by a few dodgy "investment funds."

Nor do I want to see bitcointalk degenerate into a HYIP forum.

Satoshi developed something incredible, but these "investments" are what you all settle for?

If Pirate really is as good as claims, then he should be able to explain, at least in general terms, how he generates profits.

And if he does demonstrate that he's not running a ponzi scheme, then I'll humbly apologize.

I also fully believe this is a ponzi scheme.

Bullshit !


You got turned down for an account.....I was THERE in the thread....LOL
https://bitcointalk.org/index.php?topic=50822.msg658272#msg658272

;)

If I believed he would default or run off today, I'd have bought Meni's anti-pirate bonds. There is still money to be made here if you play it right, but in the long term, it's a ponzi. I'm fairly certain.

Would you like an Account Referral ? ;)
I'm in good standing.....

I hope you realize I am screwing with you.

Remember me ? I started the 'Free TerryTibbs' from scammer status campaign.....lol

I never saw 'Optional Cocaine Payments Coming Soon' in Pirate's BTCST Thread, but I still have my fingers crossed ;)

Dare to dream Arnold.....Dare to dream (if you are not Western Canadian, you will have no idea as to the reference)

By actually demonstrating he knows what he's talking about. If he can do that, show backdated examples, and explain his models, then I'll get him a six to seven figure job working for a hedge fund. I know a few quants that would pay top dollar for his legitimate trading strategies.

Local transactions? Seriously? Market arbitrage? Private loans? That can mean anything. Here, watch me take a 100 dollar bill from one pocket and put it in my other pocket. Why not Unicorn Arbitrage?


What Pirate fails to understand is that his returns are outliers relative to all other legit investments. How many standard deviations does it take before this sinks in?


I'm sure Pirate will continue to show great returns and make people money, but those profits likely come from the people who lose everything at the end.


You can lead a horse to water......



Money laundering and cocaine...yeah, that's much better than a ponzi scheme.  ::)

More reliable, I suppose.

But a red herring nonetheless.

Not that I care what other people do with their free time. To each his own, but am I the only one that wants to see bitcoin succeed as a currency that's actually used in everyday commerce, not just shady transactions? Go ahead and launder money and buy cocaine for all I care, but here let's focus instead on what Pirate actually claims.

And why should I bring proof to the table, when I'm not the one claiming such absurd investment returns?

God forbid someone should ask questions about a smoke and mirrors investment fund!

Something in this direction would be nice.
https://bitcointalk.org/index.php?topic=79298.msg881737#msg881737


http://randomosityblog.com/wp-content/uploads/2012/03/seems-legit.jpg


Okay, I've made my point.

At the end of the day, people are free to invest any way they wish.

Only Pirate can answer that question. Without knowing what Pirate's actually doing, there's no way to know how he could demonstrate it wasn't a Ponzi scheme.. It depends on precisely how what he's doing is different from a Ponzi scheme. Presumably, something about that difference would be provable. If it's literally impossible to prove it's not a Ponzi scheme, then it's a Ponzi scheme. If two things are indistinguishable, then they're the same thing.

I'll quote Joel's post just because it's valuable- I''l read it again later.  (mega respect attracting his attention to this corner of the world)

Ever think Pirate or (fill in blank - I know who he is, but you ass is too lazy to work it out) enjoys the speculation.  I've paid serious coin for fun, 1% would be worth it.

Friday night - good quality vodka (paid for by coins), and P@40 is just one of many schemes in the game.  Get a life - it's just small - many more out there, but people too stupid to look.

(disclaimer - the Starfish blah blah vodka blah)

Yes, Must be good vodka.....considering it's actually Thursday night.... ;)

Thank you for enlightening me. I had no idea. Any other words of wisdom? ::)

I was talking about paying for stuff like pasta, piano lessons, paperback books, picture frames, and anything else people regularly purchase without fear of being discovered.

Does that also apply to bananas, bikes, boating safety courses, big block chevys and beer ?

These people dont want to risk their own coins on this happening - They just want a way to say "I told you so " if it does.

I don't feel like rewriting an explanation.


tl;dr - FPS&T growth is dependent upon Bitcoin's growth and is extremely unlikely to fail until Bitcoin stops growing, even if it is a Ponzi scheme.

OP, put your money (http://betsofbitco.in/item?id=349), if you have any, where your mouth is (http://betsofbitco.in/item?id=349) or just STFU...

And believe me, this ^^ is good advice. And I'm giving it for free when I should charge for it :D

Defaulting is bad I believe, owing people. Even if there is a slightest chance, why are people buying into this?

Edit:
I've been lurking at the BTC saving & trust & the pirate thing.

Whole situation feels eerie.

On the 14th, I'm even pulling out from IneedAUsername, as I pm'd him multiple times and have not got a reply yet.

Beats me. I don't bet, but the OP, believing as much as he does it being a ponzi scheme, should bet.

Detractors are making it seem as though pirate is teetering on the brink of insolvency. Bitcoin is a growing ecosystem. You could run the most horrid service with cooked books galore and still have a decent chance of profiting handsomely. Growth can cover up a lot of issues.

Meanwhile, the opposite of that is the existing fiat monetary system. I'd be more concerned about default in that arena than anything going on with Bitcoin, pirate included.

I think we've all been so conditioned to expect fragility due to contemporary weaknesses that it's being extrapolated and projected onto everything Bitcoin.

Case in point:


As for the situation feeling eerie - it always helps to understand an approach. If you don't see how it works, there's no shame in staying away.

Did you forget I'm on UTC+12?

You can't make money out of jealous dead beats who can't even afford 100BTC to have an account with BTCS&T ;)

Someone more creative than me should modify the form below and release a Bitcoin version of it
http://lafinjack.net/images/random/form.jpg

For the record, I have not defaulted on any loans from pekv2 yet (or defaulted on any other obligations).  pekv2 will confirm this.  I have contacted him regarding the PM.  I fully intend to repay pekv2 and my other lenders.

Also, for the record, I will not default on loans just because you do not PM me, or just because I miss PMs.  They are recorded in a spreadsheet, by username and bitcoin address, with multiple backups.

Yes, I confirm that I have received a pm as explained to me there were technical difficulties with the personal message system that was suppose to send out mass notifications that I never received.

Please forgive me on both parts of me taking it in public as I didn't want to send more pm's that I already had to you inau.

I've PMed you again, hopefully bringing this matter to a close :)
Sorry for not responding to your many PMs.

Confirmed. Everything is all cleared up.

Thank you.

>>lol - must have a big chip on shoulder - been arguing against people making returns for a while.

>>http://www.campusactivism.org/blog/node/351#comment-711

>>Actually, a doom-sayer from way back.


Note: At $18, I correctly predicted that BTC was going to crash and wrote about it in my blog.  I shorted it down from $6 or $7 to $2.20 on bitcoinica (once it became available).  I sold out at very close to the bottom (20 cents from the $2 bottom).  My predictions and trades were dead on. 

Currently I've got a very small short of BTC which I started at $6.

The most I've lost on a BTC trade is a couple cents from my test trades.  My BTC trading record is one of a little skill and luck.  Mostly I haven't taken major risks because I don't trust the websites that do options (I spent over a month getting my money out of bitoptions.org - where I also made money, ask Peter.)

I'm a critical thinker. I'm now more positive about the possibility that BTC could succeed than back in June 2011 when it was surging through the roof and looked like a big boom/bust cycle, however there still are other competitors that could trump it (eg. a better effort than what the Canadian mint is doing with its alternative electronic currency) -- so I'm cautious.   

Instead of picking on BTC in general, I'm focusing on Bitcoin Savings and Trust.  I haven't posted much, but I've read 1000+ posts on this forum (I like the drama!) and have seen the BTC economy experience a ton of scams.



I missed where Pirate's identity is given.  Please provide a link.


If I was trafficking drugs or laundering money, I'd reinvest my profits (which would be substantial - otherwise I wouldn't be taking the risks).  I wouldn't need additional capital from people on the internet as that would expose my illicit project to too much attention and increase the odds of getting busted.   

I could understand asking for startup capital, but he is asking for startup capital AND for growth capital so that he can pay out 33.5% per month on additional capital AND make more than that so he will actually grow his operation (and not just pay it all out to investors). 

I'd bet against Bitcoin Savings and Trust in US dollars.    I don't want to earn BTC because I think it could lose value when Bitcoin Savings and Trust fails (and I'm slightly bearish on BTC in general).

I'm risk-adverse, so I'd want a longterm bet.  I'd bet it will fail by Jan 1 2013.  I'm also worried about bitcoin sites stealing my money, so ideally I'd like a trusted third party to hold us to the bet.

Sorry dude, people here only deal in real money... BTC or GTFO.

Also, if you really were risk adverse you wouldn't take any bets, you would stay the hell out of Bitcoinica and from any kind of exchange market...

Your shit doesn't fly, sorry...

For the record, I am also of the mind that Pirate is going to collapse. If it's not a ponzi, it's drugs or money laundering (both of which would make him enough money). For all we know, this could be how Silk Road is able to safely hedge orders, which would explain the need to grow. No matter what, though, this means that it could collapse at any moment - the only question is when.

Lest my comments be misinterpreted, I'll clarify I'm not taking a side in this debate.

That's exactly what a person running a ponzi would want you to think.

At what odds? If it's anywhere near 1:1, I think nobody would take that bet. Even for someone who is 100% sure Pirate will default at a uniformly random time between now and Jan 1 2013, investing some amount in his program is an economically sound decision (maybe not legally/ethically) - let alone someone who believes he will not default in this time period, who would rather invest funds in pirate than offer collateral for this bet.

About the USD denomination, that even further complicates things, and you should consider instead hedging against currency risk by extending your short position on Bitcoinica.

This looks exactly like a HYIP to me; I'd be pretty surprised if it turns out to be legitimate. I have purchased some PPT bonds, though. With the extra insurance, the odds of winning seems reasonable.

The insurance is a gimmick. Buying X bonds with 25% insurance at Y BTC each is equivalent to buying 0.75X uninsured bonds at (4Y/3 - 32/75) BTC each. This means that, all else being equal, buying X PPT bonds at more than 1.07 BTC each is dominated by investing 0.75X BTC in pirate at the same MPR.

The bonds in general are good for people who can't invest in Pirate at all, or too little to enjoy the higher interest rates; but assuming everyone is rational, the insurance shuffles some numbers around but it ultimately has no effect on who should buy them and what they gain for it.

Edit: Actually, I've neglected the time value of money in this calculation (which I think is fairly insignificant as far as BTCST investments are concerned). A more accurate decomposition is: Buying X bonds with 25% insurance at Y BTC is equivalent to buying 0.75X uninsured bonds at (4Y/3 - 32/(75(1+r))) BTC each and investing 0.32X/(1+r) BTC in 100% insured bonds with a return of r. If there are no other investment opportunities and money has no time value, r=0 and we go back to the previous case.

Ah, interesting. I was just intuitively thinking that a lower-risk asset would be more desirable when I want lower risk, despite the lower return.

You just got a free lesson about marketing and why it works ;D

In general, no matter how risky an investment is and how risk-averse the investor, as long as it has positive expectation, it will be attractive if scaled down enough. Insurance can serve a purpose when it is impossible to scale down the investment (and in some other cases), but simple uninsured pass-through bonds can be scaled down.

Details: Utility is generally considered to be fairly accurately modeled as the logarithm of the total net worth. If the initial net worth is T and the gain from an investment per BTC invested is a random variable X, then the expected gain from investing a is

E[log(T+aX) - log(T)] ~ aE[X]/T - a^2 V[X]/(2T^2)

This is maximized when a = E[X]T/(V[X]). The approximation requires that E[X] is relatively small, so may not be applicable precisely to the problem discussed.

http://en.wikipedia.org/wiki/Utility is a good place to start, as is http://en.wikipedia.org/wiki/Decision_theory. The usage of a logarithmic utility function is just common sense (it basically means that a person worth $100K is as excited to gain $1K as a person worth $1M is to gain $10K) and was suggested as early as by Daniel Bernoulli; the formula given is just a straightforward calculation (second-order Taylor expansion of log combined with neglecting of E[X]^2, then optimizing the resulting function) (I reproduced the calculation from memory and I had a small error which I now fixed).

Since the approximation only deals with small deviations anyway, changing the utility function doesn't materially affect it, but it does change the effective value of T, which corresponds to the risk-aversity.

Essentially, what you're suggesting is that he may have some source of money that's so lucrative or so enormous that he can afford to give money away. This argument works the same whether it's some absurdly successful retail business or he won the lottery and "it's his money and he needs it now".

How is he supporting Bitcoins exactly? If you assume that he's not a legitimate investment but a gift (which is what you're suggesting) then he's probably driving legitimate investments out of the market. How does that help?

In other words, again, it's a gift. That's certainly possible, but as for a reason why -- I've yet to hear one.

Because people operate irrationally.  Perhaps that's why charities survive.

Hahahaha! A+, would read again.

I just think that to draw some real money you need to have a reasonable percentage. For bitcoin where you can loose half of your investments becouse of a rate drop there is not a big deal to pay 30% a month, just to keep money with you, because who would invest 20k $ if with in a month you can end up with 5? I do think that percentages from 8-30 a month are reasonable, for bitcoins(it all depends on btc\$ rates). Just think about a fact that some people in real life are ok to pay 1% a day for money they take, then why should rates be lover here when you dont give any identity, only your history matters?
The main idea of any ponzi should be easiness of investing...

I have access to 1% of the Bitcoin resource pool and can earn a 50% return in the USD resource pool using Bitcoin resources. If I offer part of that 50% return, I can still make a profit while gaining access to 10% of the Bitcoin resource pool. As long as the USD pool is larger than the Bitcoin pool and has room to shrink or shed wealth, it can flow into Bitcoin - even at ridiculously high rates that would be inconceivable if remaining exclusively in the USD pool.

This is parasitic arbitrage at the most fundamental level of financial system foundations, eroding the USD (and other currencies to an extent) while enriching Bitcoin.

Question: assuming an inevitable decline of the USD, and pirate understands this process, why would he kill the golden goose when it still has so much to offer?

Trust in those who appear to be acting irrationally are the hallmarks of the less-subtle Ponzi schemes. Solid businesses are based on rational actions, not irrational ones. Benevolence is not irrational, but giving money to those who extend trust to people who appear to be acting irrationally and driving out legitimate investment schemes is.

I don't see that he's spreading the use and interest of BTC. All he's doing is associating Bitcoin with something that appears to be a Ponzi scheme and driving out legitimate investment opportunities.

This is the classic argument in defense of a Ponzi scheme.

I have no idea what you're talking about. How do I lose in that scenario?

Which are? I've yet to hear the example.

Sure, but that's because the investors are taking very high risks. Are you suggesting that's what's happening here?

I cannot think of anything else it could possibly be other than a Ponzi scheme, sheer insanity, or something very, very risky for some other reason. That could, of course, mean it's something so strange that I can't think of it. But I know of no other explanation that makes any sense.

watching...

Right, but there I make 1% and the next time, you don't need to borrow any money from me. So this would be a one-time thing that makes a normal profit.

We know Ponzi schemes exist. We know how they work. We know that they do work. Your argument boils down "maybe there's some conceivable way it could be something else, even though I can't quite imagine what it might be". That was the argument made to investors during pretty much ever Ponzi scheme since the first one. Madoff, for example, claimed to have some kind of unusual investment strategy. He claimed no risk. He paid extraordinary interest. If this isn't a Ponzi scheme, it's something else nobody can think of that looks exactly like one.

(By the way, I'm completely open to the possibility that it's something bizarre that I can't imagine. Honestly, from what I've seen, that may actually be more likely than that it's a Ponzi scheme.)

Is a piece of art (http://www.heraldsun.com.au/news/more-news/iconic-painting-the-scream-set-fetches-us1199-million-at-sothebys-new-york-auction/story-e6frf7lf-1226345699614) selling for USD$119mm indicative of a Ponzi scheme? Why or why not? How is it different or similar to the Bitcoin lending environment?

The difference is that nobody is being falsely told that they're investing in something when their money is actually going to pay the cash outs of previous investors. The difference is that real assets are held with a fair market value equal to the total of all amounts invested. While a legitimate investment scheme may look somewhat like a Ponzi scheme from the outside, the insides are totally different.

Yes, I (and several others) pay 1%+ per week to people.  Some have scarcity, and the return is far above a normal return.  QED I am running a ponzi because it is too good to be true?  No.

If Pirate wasn't at the top of the heap, then someone would throw stones at the next one in line.  Just because people are not smart enough to work it out, it's like the good old days - may as well burn him at the stake for being a witch.

You mean this? http://MYBITCOlN.COM

I'm not jealous. I have no skin in this game. I'm not associated with any Bitcoin investment of any kind. My total holdings in all things Bitcoin-related are worth under $50.

No disrespect but you don't know who Joel is, he is one of the best regarded cryptographers around, see stackoverflow.

JoelKatz is making cogent and informed statements, yet it seems they're cast like pearls before swine. Reading this thread, I'm beginning to wonder just how much real financial experience some members have beyond the excitement of bitcoin. Seems like not much.

Mysterious bonds sold via an irreversible currency by a mystery person who goes by the name Pirate? Caveat emptor.

+1.

http://univ-pau.academia.edu/MarcArtzrouni/Papers/444230/The_Mathematics_of_Ponzi_Schemes

http://bear.warrington.ufl.edu/ritter/ForensicFinance.pdf

http://www.businessweek.com/magazine/harry-markopolos-how-to-spot-a-fraud-09222011.html

http://images.nymag.com/news/crimelaw/madoff100614_1_560.jpg

I shouldn't have been so generous. Some members here, such as Pirate and his apologists, use financial terminology like 'bonds' in an attempt to give legitimacy to their cause. Show me measures of convexity or any coupon correlation, and then I'll believe that said bond is an actual bond. Until then, reread JoelKatz's points, because they're spot on.

Yes. I'm a fund manager. It's my job to know this stuff.

I'm not the author of that paper. Don't hold me to it, and don't be so defensive. I don't necessarily agree with everything there, but I linked to a few articles in an attempt to show that there is institutional and academic interest in the gravity of financial fraud, and that such things should not be taken lightly, and in fact, should be taken seriously for good reason.

We have absolutely no verifiable evidence that it is a debt issuance against anything at all. It's a guy asking to borrow money over the internet. You think that's a bond?





Don't question the man behind the curtain.
http://www.goodfoodworld.com/wp-content/uploads/2012/02/wizard-of-oz-man-behind-the-curtain11.jpg

Same as Madoff. Madoff often didn't accept everybody and frequently told people no. Read the article I linked to.

Very, very well put. This is the heart of the issue.

I would add a footnote that fraudulent investments, such as ponzi schemes, can actually distort price discovery, which can hurt growth in real terms (vis-a-vis nominal terms), create bubbles, and add undue volatility to monetary velocity.

And PPT is what exactly???

We're going in circles now.

I can issue a bond UNI.A, an issuance against Unicorn Notional Investments. But so what? It doesn't mean it's a real bond.

We're really talking about loans.

But moving on, I don't see this debate progressing much further.

JoelKatz explained it all incredibly well.

No one is arguing that you or anyone shouldn't be allowed to invest your money however you see fit.

But it's also perfectly reasonable for one to question an investment that bears the hallmarks of fraud.

I think it's very likely a Ponzi scheme.

If you put a gun to my head and asked for a yes or no answer, I'd say yes.

I could be wrong, but whatever it is, it's not what he says it is.

If not a Ponzi scheme, then it's something similarly risky.

The level of risk is not being properly conveyed to the investors.

I don't care if someone runs a pyramid or ponzi scheme, or a fund based on trafficking illicit goods, or whatever––as long as they're upfront about the risk.

Even in those very rare instances when genuine market growth can temporarily sustain such incredible returns, the growth is never sustainable. The risk is in the bubble.

Ponzi? Yeah, probably.

No.  :)

I and others have offered an opposing interpretation of perceived risk.

That's sufficient for me.

I hope to have made people think about their money and their investments in a more critical way.

Again, people are free to invest however they wish.

Also, I'm attempting to get the bitcoin community to take seriously things such as investments, because the greater level of sophistication and legitimacy we can bring to bitcoin the better.

I know of several prominent firms and individuals that are considering supporting bitcoin in a large way, but are concerned that is may devolve into just another HYIP and laundering currency. Sure, all currencies have that aspect. But Satoshi's ingenuity has given bitcoin a potential greater than its predecessors and competitors.

I'm not an expert on financial instruments.

But based on my understanding of sources such as Wikipedia (http://en.wikipedia.org/wiki/Bond_%28finance%29), a bond is pretty much just a publicly traded loan. I think you're using a very narrow definition of what a bond is, and I don't see anything that makes things like TYGRR-BANK not a bond.

Good question. It's typically assumed that bonds can be verified by an independent third party and the issuer can pass an audit, or at least have the proper accounting records to submit to an audit. (Who does the audit is another can of worms.)

I don't follow a strict Wall Street definition of financial terminology and think there ought to be flexibility and creativity in economics (hence my support of bitcoin), but there has to be some way of substantiating someone's claims when it comes to handling other people's money for investment purposes--- or at least a general sense that they are who they say they are, and they're doing what they say they're doing. Once that's established, then it's pretty open. That's my opinion. It's up to the individual.

Nah, I would settle pressuring Pirate to have his business audited by a trusted third party. It shocks me that people are investing in him without this.

Remember, it is not our position to prove that he is a Ponzi - it's his job to prove that he's not.

...unless you live in the US. In the US, as long as you can demonstrate that you had a good-faith reason to believe what you said, no one can do anything to you. This would most certainly qualify.

Completely ignorant comment and therefore
irrelevant in the context of bitcoin.

Basic securities law doesn't differ that much from domicile to domicile, and my comment applies to most major financial jurisdictions. I've worked in many countries including Hong Kong, Cayman Islands, Switzerland, and other financial hubs, and their respective laws are all very similar to those of the United States. In fact, this applies to most countries without much deviation. There are differences here and there (Dodd-Frank, Basel accords, etc), and even differences like Napoleonic law versus English Common law, but overall, the basic foundations of securities laws are the same. Simply put, you have to prove you're not lying about what you're doing with other people's money. That's pretty basic stuff.

I'm not a lawyer.

And we're starting to veer into pointless minutiae.

Attack me all you want, but don't say no one warned you that Pirate is running a ponzi scheme.

[Edited to remove unnecessary sarcasm and invective.]

Fixed that shit for you...

What are these other things that can explain the situation? Because I don't know of any. Other than a Ponzi scheme or demented charity, I know of no way to explain the rate of the return and the claimed lack of risk.

I don't deny that it's possible that it's something I cannot think of. In fact, I think it's more likely than not that it's something so strange that I haven't thought of it. But it's not like there are other possible explanations out there. Right now, it's simply unexplained.

Who claimed lack of risk, Joel? You?
Don't go around putting words on other peoples mouths.
I'm pretty sure that any of Pirate's depositors is well aware of the risks(and accepts them) and doesn't need you fear mongers to tout it around relentlessly...
The fact is: Most people with a vested interest in whatever scheme Pirate runs don't feel the need to ask or spread FUD about it, so why should any of you feel that need? Butthurt?

Actually, I had a specific citation in mind for that claim, and when I went to get it, I realized that I had misread it. I retract my claim about any claimed lack of risk. However, I don't think anyone has any idea what the risks are.

If that's true, that's coming from secret information that hasn't been shared with others. So far as I know, nobody but Pirate has any idea what the risks are.

That's typical of many Ponzi schemes. That was, for example, exactly what people said about those how criticized Madoff. http://www.sequenceinc.com/fraudfiles/2012/02/red-flags-pointed-directly-to-madoff/

The only risk is getting away empty handed, like all of you say.
You really think any of the depositors is not aware of that and doesn't accept it?
It's not like he's taking money right and left from any sucker on this forum, because he isn't...

You're missing my point entirely.

You're the one that brought up US-centric, ok? Not me. I was simply explaining to you how these financial systems presently function, and how it's a global system, not a US-centric system.

And I do NOT agree with the present system. Don't shoot the messenger.
Why do you think I support bitcoin? Because it has the very virtues to which you allude––virtues that are decentralized and beyond the 'slimy fingers' of the system, such as a debt-based creation mechanism and governmental regulation.

Irrespective of any monetary ideal or the way things ought to be, there's a point where language and terminology does matter, simply to make sure we're all in agreement. You can't change definitions of words willy-nilly and expect to be taken seriously.

What if I agree to sell you ten apples, but I only deliver nine pears? When you object, can I claim you're wrong because I call this fruit an apple and this quantity ten? Sorry, but there are no refunds. These are apples whether you like it or not.

Try altering the meanings of the operands in a math equation and see what happens. Or try it with a programming language.

I don't know why anyone is even bothering to argue about this. Investments that aren't illegal or ponzi's have basic disclosures of activity. Show me where any of these disclosures are for any of the investments in Bitcoin? I'd say at this point 100% of the so-called investment schemes in Bitcoin are ponzi-like.

Vladimir's the only person I know so far (let me know if anyone else has done this for investments as I'm not sure how many others there are) who's actually taken things to the next level and gotten a formal investment disclosure in place for the ASIC bunker. This is the kind of crap that reflects poorly on all of us. Nobody talks about how the value of Bitcoin has risen since inception. Nobody talks about Bitcoin's usability. They talk about all the retarded, repeated scams and gullible suckers who will defend their investments in shady and opaque operations "because bitcoin".

We've had mining operators run out with the hardware or others claim that they got stolen, we've had online wallets claim to be hacked, we've got downright ponzis pretend to be arbitrage only to build half-assed arbitrage after-the-fact in order to save face. I've said this before during the BitScalper fiasco and I'll say it again:

Do we really want to support shady, anonymous and opaque shit as a community? If so, please provide a list of benefits of doing so, because in the world I come from, it only represents risk.

Nice link. To quote one particularly relevant paragraph:

Red Flag No. 4: Cheaper to borrow

Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.

The people that are heavily invested in the pirate and his derivatives will defend their position to the death and  most others will defend the the other(ponzi) direction ( or else they would feel stupid in not investing in this).

Whatever the truth is the pirate must be smiling from ear to ear while reading this thread ....

My personal favorite is imsaguy. What's yours?

There's so many basic lines of logic that BTCST fails; the least of which is the smell test. Then you got Occam's Razor and the "If it sounds too good to be true..." thing. I dunno guys.  Just be careful.

Secrecy towards investors is nonsensical. "Here's a paycheck, don't ask where it came from."

Aren't they usually transparent? I'm at a loss for how this is related to telling investors how they are earning money on their investments.

So let them remain anonymous, but tell everyone that someone contributed. Saying "This money is here and don't ask how" is not a confidence builder.

I guess indirectly I have too, like if someone used their profit to buy a Bitcoin magazine or something, but that doesn't mean the investments are safe or that I would personally approve of investments that don't disclose details of the investment.

I agree, but I still say this level of opaqueness is visible only in the mafia.

Of course we do not want to support shady, anonymous and opaque shit as a community. It is for that reason that I did not invest in bitscalper. Bitscalper refused to reveal his identity  while running an arbitrage service where he held onto large amounts of bitcoins. This was quite clearly a scam. Pirate on the other hand has willingly given his identity to his customers. Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges. As a customer I am perfectly happy with this explanation. I do not require a detailed audit of his transactions or a play-by-play run down of everything he does in order to trust him with my bitcoins.

The problem here is not with pirate - who has for 6 months provided exactly the service he claimed he would, paying all interest, answering all questions his customers have, and not blowing his top over slanderous threads like this. The problem is with a small number of people in the bitcoin community who insist on calling PONZI PONZI merely because someone is paying out 1% interest per day. Sorry but that is not proof of anything other than the fact that pirate's business model has been moderately successful. To make matters worse, most of these people haven't even bothered to read the Bitcoins Savings and Trust thread before they start slinging mud. Case in point:


1. Pirate does not, and has never, offered bonds. You are thinking of a seperate program set up by some of pirate's customers to 'rent out' their space with Bitcoin Savings and Trust.

2. Pirate is not a 'mystery person.' I and several other BS&T account holders have stated on numerous occasions that we know who pirate is.

3. Reading anything into the fact that he named himself 'pirate' is foolish. It has been said on numerous occasions that this is a reference to Warren buffet.


Furthermore, you are ignoring at least half the facts in this whole debate. Any theory about Bitcoin Savings and Trust needs to take into account GPUMAX as well. Pirate makes something like 10% on every purchase of hashing power made on GPUmax. I don't know exactly how many purchases go through GPUmax every day (perhaps one of the miners could clarify this) but i believe it to be a substantial number. People are chomping at the bit to get in to GPUMAX and get in on some of this action. My question to all the naysayers - why would somebody start both a ponzi and a legitimate business from the same bitcointalk account? If pirate runs off with customer funds, he loses something much more valuable. It doesn't make financial sense for pirate to do that. Hence, he is not running a ponzi.

Thank you for the information. I was not aware that Pirate had already disclosed details of his operation and am now beginning to think the people calling it a ponzi are just jelly.

Matthew, I have to say that for a 4,000+ Post Member of this forum, I find it difficult to believe that you have never attempted to find out who Pirate actually is....?

All of his personal information is quite readily available to anyone willing to do the legwork if not satisfied with the basics.

Did he give one, or has his identity actually been verified?


Unfortunately, I dont see how that makes any sense. It would be way cheaper for Pirate to buy bitcoins - if needed with borrowed money. At least initially, but if his business is as profitable as his payouts suggest, he would need less and less loans. At this point, he shouldnt need any really. Moreover Pirate pays his lenders in bitcoins, so he needs to buy more bitcoins than he sells anyway, its not like he can avoid exchanges, so whats the advantage for him?

Its interesting to point out two parallels; First Clipse, who made the same claim initially to explain why he paid 115% on his pool. That explanation made even less sense than Pirate and after being thoroughly debunked, he withdrew that claim and instead mumbled about a secret business model. Now unlike Pirate, Clipse doesnt hold a lot of coins of others, and more importantly, his business model is easily explained by poolhopping, forwarding to gpumax or both. Done properly, that should allow him to pay 115 (or now 105%) easily, and make a nice profit on top of it. There is no big mystery as far as Im concerned. Quite unlike Pirate. But the story about selling coins locally was a big fat lie to cover up something else.

The second parallel is the quote I wrote above:

Red Flag No. 4: Cheaper to borrow

Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.

Pirate is paying FAR more than 12% annually.  But I guess you would have been happy with Madoff's explanation too.


I completely agree.


Recently Ive tried auctioning shares of a 80GH consortium of miners, not unlike gpumax, but I didnt get anything like what GPUmax is getting price wise. The same goes for just about anyone else who tried. When is the last time you saw short or medium term mining contracts sell for >140% of expected revenue anywhere else as on gpumax? Youd be lucky to get 110%.

So how can GPUmax find so many buyers for so much higher prices, when at the same time, it offers less flexibility than most other mining contracts?

The only plausible explanation I can think off, is that the main person buying at gpumax is no one else as Pirate himself. And that would also answer your question about why a ponzi would be completely complementary to GPUmax, and not a contradiction.

Im not claiming to know to how it all fits together exactly or what the end game would be, but I can see some possibilities for trying to combine a ponzi with a huge double spend attack. If anyone can come up with sensible alternatives that explain both his trust and gpumax, Im all ears.

At the rates Pirate pays, anyone can get a loan. If even Pirate is one of the only people on earth who wouldnt be able to get any credit card loans or personal loans and has nothing to mortgage (in which case, would you really trust him with your coins?), even then Im sure plenty of "shady characters" would be willing to lend pirate money at rates far lower than what he pays. Have you calculated the compound interests? Not even loan sharks ask that much.

Speak for yourself ;)

Ah, indeed, I quite agree. But then, if he is selling coins for cash at huge markups, how could he ever default?
See, if you follow your own logic, clearly Pirate thinks what he is doing is much more likely to go south than what your explanation would imply.

Next.

I've stayed far away from lending/investments/alt coins/gambling on this forum until recently.

So what is the nature of what he appears to be doing? Selling bitcoins?


Okay, I apologize. Its just that Ive read a gazillion posters dismissing the possibility of Pirate running a ponzi by arguing things that make no sense. Ive yet to read a credible explanation for either his trust, or gpumax, let alone one that explains both, other than it being a elaborate scam.

Perhaps Ill be proven wrong one day, but until I hear a better explanation, Occam's Razor applies.

Why doesn't everyone just leave it alone and let people do whatever they want ?

Because people are wrong on the Internet!

My silence is not a requirement of your freedom.

And, one more time, while I think it's possible it's a Ponzi scheme, I think it's more likely something other than a Ponzi scheme. But I have no idea what, and I don't think very many other people do either. As a result, the risk is completely unknown.

How about that, some one is willing to send money to payback, he is OK to over pay for doing it, he buys this amount from pirate with rate about(7 or even 10).
This is reasonable when you want to send BIG sum(over 300k$), because when you will buy it on gox the prise will go up(see gox chart) to unknown plus gox has limits and likes to ask questions,and then you dont know how to handle it on the other side. And then pirate just buys the mined BTC for this money, slowly, over a month, taking in to account BTC inflation this shouldnt be a problem. It can work all over the world, all what u need is BTC enough to fulfill the request, because now you can buy e-money for cash everywhere and the rates are flat .

Why not go straight to the source and PM Pirate, rather than smear his name and reputation here ?

....pissing in the wind much ?

Every one of the Debbie-Downers in this thread needs a new hobby....

The price will go up no matter what, because Pirate needs to refund the lenders and the miners with BTC and he got paid in fiat. He has no alternative to buying at an exchange. Lending money from investors can delay that, but it doesnt solve the problem, in the long run, it exacerbates it.

GPUmax is the same, assuming Pirate is the main buyer, again he can not possibly mine as many BTC as he needs to pay the miners (let alone his customers), and he does pay them in BTC, not fiat,  so he again must convert fiat to btc at some point.  He needs to convert considerably more than the initial deal was to pay back both his lenders and miners. So it doesnt help, it makes it worse.

Joel already repeated the main argument against this, it doesnt really help Pirate to have a large fund of BTC, he needs to convert fiat in to BTC anyway.

The other thing Id like to add, is that his fund is what, almost 6 months old now? I havent heard anyone being told they need to take their coins out of the fund  because Pirate has no more need for it. Has he not made a dime of profit all that time while paying out ridiculously high interest rates? I think now is a good time to start worrying if you werent already.


A lot of people far more clever than me were conned by Madoff.

Stop, he needs to refund 30% of deposit a month (i think that BTC inflation rate is about 35%/year or 3%/month?), everything else can be done when some one(I assume that the person who receive the BTCs will want to spend them) will be selling his btc.

Have no Idea about GPUMax, because hashing is only applicable if you want to brute-force some ones RSA key or smlr. That`s the only thing that comes to my mind.

Good point. It comes down to risk and reward, with the former being unknown and, absent further information, unknowable.

Well, I have heard of someone who had his funds forcibly withdrawn to his address.  Goat, please confirm that in January, Pirate returned some funds he could not handle back to you.  (Public proof is already in Pirate's thread.)

I doubt that he is handling both sides, because i dont believe that there are so much interested in btc in Texas, and I think that they would find them each other long time a go) May be they got the system all over the world, then it would be possible, but in short term i think that it is one way)

Again, this doesnt make much sense to me, Im sorry. If he is doing both sides, he would have even less need for a large buffer, and it makes even less sense to pay these kinds of interest rates. What you are saying boils down to Pirate paying extremely high interest rates in BTC, to have a BTC buffer and thereby avoid having to convert cash in to BTC... to pay those interest rates with?


Thats not a big risk to investors. At worst his business would dry up, but it wouldnt make him default.

But doesnt it strike you as... odd, to put it mildly, that Pirate somehow finds those large bitcoin buyers (and possibly sellers) willing to pay extreme prices for bitcoins, and then also find buyers willing to pay similarly insane prices for bitcoin shares on gpumax?  When no one else seems to be able to find either?

Im sure he is clever and talented, but I just cant believe the two are not related, and the explanations given so far dont relate them.

In short; I dont buy it. The trust and gpumax are part of one and the same operation, and its pretty tough to come up with sensible explanations that covers both and does not involve a scam. Im open to the possibility, but wouldnt bet a dime on it.

You think whoever is pouring 1000s of btc in gpumax does it because of its.. marketing?
Its not just me, Ive not seen Giga or any of the other well known miners get anything like gpumax prices.

let me put it this way; whoever is buying at gpumax, could just PM giga and 2 other large miners and get a few 100GH pointed anywhere he wants for a fraction of GPUmax cost. Why isnt anyone doing that?  You think Giga would say no to a 120% offer?


80GH may not be enough for stress testing a pool, but I dont think anyone seriously believes stress testing pools is more than a tiny fraction of gpumax purchase.

Not just me. Everyone else.
As for the equivalence, indeed its not. GPUmax doesnt let you time your purchase, not even to the day; it restricts the pools you can point it to, and charges a premium thats at least 50% more expensive than what most miners and miner consortiums would accept. But I guess they have great marketing...

 
You cant get a decent ROI if you dont even know what day your leases will run. If you claim you can get a decent ROI out of a non timed 150% PPS purchase, you can buy our 80GH at a bargain price and make a real killing. PM me.

Oh, this is priceless (I'm catching up on the trash that has been written).

Do you people actually know how to borrow money?  Do you know how banks decide to extend a loan (either in business or personally).  The basic formula is you give them 120% of what you want to borrow, and they might consider it.  Show then the assets!!

Interest rates on debt might be lower, but if availability is zero, that's irrelevant.

That's how I made a decent chunk of money out of bitcoins (and still do).

Its a question often asked asked. There seems to be no impact on the networks global hash rate when gpumax is running or not, so it seems very unlikely its not producing bitcoin blocks in some way. If those hashes can be used for something else as well simultanously, like merged mining does, well that would be big news to me. Its not impossible I guess, but without explaining what the side product would be, its not something I consider an adequate explanation,  particularly when none of the crypto experts seem to have thought of it so far.

Your time must be expensive. 80GH is >1600 BTC per month. If you can break even on 150% PPS, that means you could make >500BTC per month by renting our machines. I find it hard to believe that would not be worth your time, while posting in threads like these is, sorry. 
Nice story, but Ill believe when I see it.

And we have a winner!

 ;D

It's really this simple: You can't pay off extraordinarily high interest rates reliably unless you have an astounding source of income. If you have an astounding source of income, you don't need to borrow at extraordinarily high interest rates. This could explain a small number of loans over a short period of time to jump start some kind of amazing opportunity, but it can't explain a sustained endeavor.

A reasonable explanation would have been that he needed the money to finance a drug deal or two. But you don't keep borrowing money at high interest rates to finance drug deals unless you're planning to run off with the money.

You went straight past the point without even looking.

The "red flag" that they (Madoff was the example given) were paying higher than they could borrow at assumed you could borrow in the first place.  Even the most basic business models knows that the cost of debt and equity are different, and that the ability to borrow is linked less to income than assets.

There are other simple ways to pay high interest rates, but obviously the mindset is that rates must be low.

The above point was about the bad logic that goes into "why XYZ is a ponzi". 

Like some religious witch-hunt, reason left this thread a long time ago (probably around the first post).  Your "he's going to do this or that" argument doesn't stand scrutiny because you're just repeating the same misconceptions again and again (like good religious people do), rather than testing different theories (the more science end of the spectrum).

Have you actually looked to see if Pirate is actually taking more and more coins?  or is that just made up like most of the other "facts"

btw - I have factored in 100% loss of my deposit into my risk profile, the same way I have several other loans/deposits/investments also fail.  Having money in a real bricks and mortar business is also not guarantee that you won't lose your money either.

You're ASSuME-ing a few things that may not be true:

1.  Is he really taking in "more and more" bitcoins?  His books are not open, you have no way to know
2.  Are all depositors receiving 1%/day?  No, he requires 2k BTC on deposit to get that rate.
3.  Maybe he does want to fund it from profits, but can't.  Profits may not be as high as you presume; if he's arbing coins, it may move the market too much; he may require a relatively high level of funding to operate.

I've run (and been involved in a few other) businesses that could reasonably turn every dollar into two, all day, every day.  But payments typically came net 45, creating cash flow and scaling issues for many months (in one case years).  One biz had little control over demand, it would always try to meet it because it was ultimately profitable to do so, regardless of temporary cash flow issues.  An 8 figure (USD) credit line would have solved this, but was denied by the banks they asked.

I also could not have convinced any one else involved in those businesses to pay 7% weekly for capital (I'd have been laughed at), however, the quick math shows it would have been profitable to do so... the caveat is that it would have put a serious hurt on overall profitability, and after expenses it would have taken a couple years to build enough of a capital reserve to end the arrangement.

Before you label me a pirate fanboy: I do not have BS&T or Gpumax accounts.  Invites have not been forthcoming, which adds to my point #1 above.

Reeses hit the nail on the head when he said (albeit less kindly) that people who know how to make money, aren't going to tell you how to copy them. 

What everyone here seems to forget: You're dealing with an open pseudonymous accounting system! EVERY transaction is public, you only have to find out which are the ones by pirate!

Has anyone actually tried tracking a few input transactions to pirateat40 and finding out his combined BTC holdings and money flow? Unless he's really smart by using the CoinControl branch and very careful not to mix private keys in wallets, sooner or later it might be possible to link all or most of his accounts together... this might then give better ideas on how he operates actually and we could also see money flows to several known sites (Bitcoinica, MtGox...) - if they are there.

Also it could show if he really uses mainly funds to pay out investors (warning: he probably will pay some investors from funds, that isn't proof it's a ponzi though! Bitcoin works that way...!) or something else (like mining income, coins coming from MtGox...).

Edit: It might be an interesting topic for researchers (like http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html) to graph pirate's money flow(s)... just saying!

The first "ASSuMption" is pretty safe. Goat was quoted as the single example of someone turned down, as per his post, it turns out even he has been increasing his position substantially. More over, read the forums, everyone and their dog is offering pirate pass through bonds nowadays. Those end up at pirate in the end. Its hard to see how his position could not be increasing.

The second point is of little importance; even the smallest interest rate is HUGE, at 218% annually.

As for the last point, its worth pointing out all other bitcoin arbitrage bots so far have been proven a scam. Arbitrage is of course possible, and when done right, perhaps even profitable, but it wouldnt require anything like this level of funding, nor would it provide those kinds of returns.

As for pirate having trouble breaking even; the sensible thing to do would be to lower his interest rate, even if by 1%, and that problem would vanish and 6 months later its hard to see how he could not be self sustaining, or at the very least no longer needing additional funds.

Let me note,that in this case NO one is prommising you that he will be using your funds for that long, this might end up in very short time, all hi will do is just withdraw your funds back.
At last point, how much money do you think he is capable of sending to some one, even with lets say 50k btc? Now it is only 250k dollars, that is not much and much lower that needed in some cases, and daily volume of gox right now is about 71k, so assuming that he is doing it with 50% fee 5 times a month, he gets very good percentages, and all he need is BTC to work with.
All pirates need to get more is just to increase of exchange volumes.
And i do assume that people who are interested in it are doing something illegal, but that`s their choice.
Remember we are dealing not with billions of dollars, all this amounts are small in terms of some businesses.

Well, to sum it up what I've read here so far:

Pirates's income sources are at the very least unclear. They could come from selling BTC offline at a premium, be nonexistant (= interst comes from deposits --> ponzi), from GPUMAX customers, from money laundering/drug trafficking/other illegal stuff, selling goods other than Bitcoin at a hefty premium, from his private money ( --> charity), lending Bitcoin to others and charging high interest, day trading on some exchange/Bitcoinica, investing in another Ponzi scheme that pays even higher and is still running (e.g. the russian Mavrodi one).

What makes it likely that it's a ponzi:
* Huge interests, far above even the BTC inflation rate (which is also not small...)
* Source of income is unclear
* He could borrow these coins cheaper than the interest he pays
* People say it is

What might speak against it being a ponzi:
* Even though a lot of people are begging to throw money at him, he doesn't take it all
* He owns GPUMAX, a site that pays out real money to miners and that's nontrivial to operate
* He (supposedly?) gave his personal information to people investing in him, so he would be easy to find and prosecute
* People say it isn't

Nobody has yet published a money trail or tried to get the list of adresses pirateat40 actually owns or controls (by tracking payouts from BTCS&T, GPUMAX, payments to both services...), all of this here is pure speculation as only pirate knows what pirate does.

Or an echo subforum. When it's all been said before, but you just want to hear yourself say it over, and over, and over...

Yes.  I have done some of that.  What I found is that the total (realistic) maximum of all coins sent to Pirate (based on some non-public information) is actually pretty small.

If you look through the blockchain, you regularly come across 10,000 coin wallets, and of the two largest active wallets I noticed one had over 300,000 coins sitting in it, and the other I suspect was an exchange wallet that had turned over more than 4M coins.

Judge, judge! This man stole my virtual internet monies!!!

While people are trying to guess his business model, here's my 2 satoshis - he has a/multiple clients who wish to amass a fat stash of bitcoins & don't mind paying through the nose in fiat $ for it, guessing 10 - 15 - 20% over spot & they buy regularly like say once a week or 2, this is because they have a big constant inflow of cash that they wish to move around the world outside of the banking system, where every they move it they have the means to change back from bitcoins to their preferred fiat or merchandise, quite a few enterprizes could fit this bill (hi Wal-Mart.mx)

Lets say that after Gavin's presentation to the CIA they saw the advantages of a company fund, maybe to use for entrapment, to pay anon informers, bribes, prepagardo 'ho/s for the president's security detail, wanted dead or alive rewards (Fahd al-Quso hello, well that's goodbye actually*), a host of other nefarious purposes spring to mind & being spooks they wish to have no paper trail & plausible denialability so they dip in to their black ops cash slush fund & head to downtown Texas, or it's virtual equivelent, where Pirate is happy to oblige them & becomes untouchable to LE in the process, just one small op could account for this 6 months past funding - it could even be LEO themselves getting a healthy float in an off the books manner for whatever they would like to mess with, I mean people do buy, sell & do illegal stuff with this currency so if they're going to sit at the table & act like a player then they need a stack of chips first

disclaimer, I have an active imagination but also a lot of coins with Pirate - I'm so patriotic  ;)

* edit: that's 1,000,000 bitcoins fiat equivalent was offered just for Quso's GPS loc & you can bet that if their Brit mole had demanded payment in small denomination, used bitcoins then that's what he would have got - who'd want to trust those leaky old Useless Banks of Switzerland nowadays anyway, so last century

I expect that if the FBI are treating bitcoin thefts, scams & frauds seriously then judges would do so too

http://www.scribd.com/doc/92797476/FBI-Bitcoin-Report-April-2012

Care to send me the hashes of a few transactions to or from pirate addresses? Doesn't even have to be public. It would be nice if you could label them like "to GPUMAX" "from GPUMAX" or "to BTCS&T" etc.
This goes of course for anyone here who wants to know more about pirate's operations - just collect transactions + public addresses of him and then do the research in the chain.
One could also start to do research about the payouts of dividends each monday (just link forum posts and donation addresses in signatures here with users and check who sent them BTC on monday morning) to find more accounts even without getting any data from his "investors".

Also please give an estimate of "pretty small"...

I personally believe he just invests in the MMM Ponzi. Payouts there should be enough to leave him with even some profit after the crazy rates he gets here, and as long as they pay (which they currenty do) he'll pay as well.

What this means is that if it is a Ponzi scheme, most likely we're still very early in the scheme. If that's true, people who are in now are pretty safe and will likely have plenty of warning when it's time to get out. This is one of the main reasons I'm *not* one of the people screaming "Get your money out now, it's a Ponzi scheme!". I don't really see how it could be a Ponzi scheme that's about to bust, because if so, it was very badly run and didn't achieve anywhere nears its potential for the effort expended.

It hasn't been shown to be a hoax yet but the spergy bitcoiner party is eating it up like pancakes without a single verifiable clue afaik.

Such a depressing community we have here. Hey guys! The president just emailed me and he said Bitcoin is the new currency! Trust me! He read it in an anonymous PDF!

This.
Although, a ponzi can collapse at any moment, and not necessarily when Pirate would have planned it. If too many people start worrying and demand their money back, it could unwind very quickly.

Anyway, more thinking out loud; if this is not a ponzi sensu stricto, and pirate is actually earning as many or more bitcoins as he is paying out, its more than likely someone else is losing out, bitcoin being a zero sum game. So I keep wondering, who is losing? I dont see an obvious answer, but perhaps we are all losing if Pirate manages to manipulate either mining difficulty or bitcoin exchange rates somehow. The former would almost certainly be related to gpumax, though I fail to connect the dots. The latter could be related to bitcoinica, although once again, someone smarter than me will have to connect the dots.

Just thinking about it if he is running the MMM ponzi scheme. If he does he would earn a 20% profit even when paying out 20%. In 5 months all the money someone else invested would be his profit. So if he gets the money out every month and the MMM ponzi scheme collapsed. He will be be able to payout a lot of ppl if he wanted to. All the money who is in longer then 5 months is full profit for him.

The economy isn't a zero sum game. Value can be created. Even if someone pays Pirate and "loses" bitcoins, he presumably gets in return something of value to him (which could be a product, a service, money imported from the fiat economy, etc.).

I don't think there has to be anybody on the losing end. Say someone has a unique opportunity to turn $100 into $150 (say by buying something wholesale and selling it retail). So they borrow some Bitcoins, sell them for $100, turn the $100 into $150, buy $110 in Bitcoins, give those Bitcoins to the lender and pocket $40 in profit. Who is the loser here?

You're forgetting that he has to get the "profits" he pays out from somewhere.

There is no "profit" in a Ponzi scheme. Deposits are neutral -- someone gives you $100, you owe them $100. Payouts are neutral -- you pay out $100 to someone, you owe them $100 less. And, of course, accumulated interest is pure loss. If someone deposits $100 and I now owe them $105, that's a $5 loss. Ponzi schemes only accumulate losses. The difference between how much money they hold and how much they owe can only grow, and it grows with every passing day.

The borrower lost $10 of his profits on the bitcoin deal, and you could argue whoever bought or sold the wholesale something lost $50. At least they missed a $50 opportunity. This becomes semantics quickly because you may just as well say reselling those products created $50 of value to the customers, but the question regarding Pirate then remains roughly the same.

Currently MMM does pay out, if you request it. The only question is - how long? It might also be that pirate is "investing" in a different ponzi scheme, but to me personally either money laundering (pay GPUMAX customers your dirty silkroad coins and get freshly mined anonymous ones) and/or ponzi investment makes the most sense.
The MMM scheme is based on "currency conversion" after all, with some russian funny money that is worth more and more USDs per month. This could be called "market arbitrage" or "day trading" in a broad sense and would be consistent with pirate's wordings (he might even sell the one or the other BTC to a friend at a price above MtGox, who knows?) about his operations so far.

The deal wouldn't have happened if he hadn't borrowed, since he wouldn't have had the funds to purchase the widget. Without borrowing he would have stayed at 0, with borrowing he gained $40. He profited $40 from the borrowing.

Same for the retail customers - without the borrowing they wouldn't have a widget, with the borrowing they have a widget, they paid $150 but it's worth more than that to them.

Again, the whole concept of commerce relies on the possibility of two parties to enter a mutually beneficial agreement where none of them loses. In our example both the lending and the retail sale are such agreements.

I just spent two hours searching the internet trying to figure out his identity.    The best thing I came up with is an IP address from an old bitcoin-otc chat log, and a picture which I don't know if it is real (do a google img search if you want to see it).  People say it is easy to find out his identity, but don't share or tell us how.  What is his identity?

What if the borrowed/invested BTC were actually the widgets in question ?

Profit Breakdown of XY:
x% - buy more BTC to replace member-invested BTC & pay interest.
y% - LIVE OFF THE REST OF THE PROFITS LIKE A NORMAL PERSON WOULD DO ASSUMING BITCOIN IS THEIR PRIMARY SOURCE OF INCOME OR JOB.

Fuck, is it REALLY that difficult for everyone to understand ?

PEOPLE HAVE TO EAT....and NONE of you so-called GENIUSES EVER MENTIONED OR CONSIDERED THAT.....HENCE KEEPING 3RD PARTY BTC 'INVESTED'.

Ponzi, Sky is falling, tin-foil hats....FUCK ME.
Get a life.

It seems all the detractors simply forget that Pirate is the 8th most rated seller at Bitcoin-OTC lol

Morons...

The previous two posts must be the most stupid and unreflected ones I have read in this whole thread.

bitlane: use all of his huge profits solely to maintain an incredibly expensive lifestyle? Get serious.
psy: An appeal to authority as actual reasoning? So if I have 29381093 ratings, It is impossible for me to scam anyone? Cool story bro.

Congrats, you both have earned yourself the additional ignore. Oh, and for the record, I am betting with my money that he does not run a Ponzi, so this is not even coming from a detractor as you two will surely accuse me of.

edit: I apologize, I just don’t like the hostile tone you guys employ. I think we could and should remain civil here.

Who said anything about scamming or not scamming? It was only a pointer for the morons who try to guess what does Pirate do with the bitcoins to maybe put their brains to work and think that he may just be selling them...
No need to guess when it's on plain sight ;)

So, if you are not a detractor you must be a moron. Those were the only 2 types I referenced in my post, and if it got to your nerves you belong to one of those 2 types of persons for sure.

Thanks for the Ignore.

His info listed on his domain registration has been confirmed to be correct.

I heard that he made enough money to buy Miami... but he pissed it away so fast.

This was never meant to last.

Like the username says, it's not you lol

I'm not using whois.  But "Don Shrents" is a sort of anagram (I think that's the word anyway) for his actual name.  The point is, it's not like he's making a huge effort to hide his identity or anything.

Takes about 5 mins to get his real name. It isn't Don Shrents, which does looks like an anagram.
 
edit:

wtf is this though. you need to know the name to look up

http://www.co.midland.tx.us/da/hotcheckwarrants/list/?lname=sz

What does O/20 U/500 mean?

yep. Over $20 but under $500

Looks like "over 20 under 500 [dollars]"

Well, I'm sure we've all made mistakes in the past.  I'm the first one to call someone out for being a scammer (check the Lending section if you don't believe me lol), but Pirateat40 seems to be legit IMHO.

Kiting for bitcoins? Hmmm....that would be very profitable indeed.

Can his identity be conclusively linked to a name on the DA's list?

This a very curious development.

According to my research, his real name is most likely one of the following:

Ends Thorns
Dents Horns
Tends Horns
Sends Thorn
Sends North
Shorn Dents

Most likely?

Joel is not being serious, or else has not looked at the list.  How likely are any of those names - Mr North maybe, but who would call their kid Sends?

I'm pretty sure he isn't Don Schrents.

What are the consequences of listing a fake name on domain registration?   My limited research shows that it makes it more likely that you'll lose the domain in the event of a domain name conflict (eg. a trademark dispute).


Are people saying that his name is on this list?
http://www.co.midland.tx.us/da/hotcheckwarrants/list/?lname=sz

If so I'm not sure how I am meant to find it.   It could based on age and estimate that he is 40 years old when he joined the forum (so born in 1970 or 1971), but that is highly tentative.  He might just like the Pirate At 40 song by Jimmy Buffett.


In other news, the size of the pass-through bond sales are growing and the partnership is even offering derivatives based on them (so you can share in their profits from selling bonds).  They also continue to make a large profit on the offering (so long as there is no default).  They are auctioning the bonds for a final price of 1.10, so people are getting a 15% monthly return on them - which is shockingly low by ponzi scheme standards =)

Actually, 15% per month is high or about right by ponzi standards. See what Madoff's monthly returns were and you'll be shocked. I'm not going to debate this topic anymore, but I do not want to see any more misinformation than is already in this thread.

I'll wait for all the angry "Pirate's not paying! I lost 4000 btc!!" threads next year.

If you do invest, I'd say manage your money *as if* it's a ponzi scheme ( i.e. assume a default will occur at some point in the future ), so you win no matter what happens in the end.

However, be wary that greed has a way of blurring your judgement; somehow many of those Madoff investors who even knew it was a ponzi lost money - they just kept thinking it could last "just one more quarter". Even investors who got out early were hurt due to clawback - but of course in the bitcoin world there is no clawback. When you think about it, bitcoins are the perfect instrument for ponzi schemes in a way... with sufficient anonymity, the perpetrator can actually enjoy their winnings on a beach in Jamaica when it all falls apart.

Note that I'm not claiming it's a ponzi; I have absolutely no proof nor evidence either way. I'm just saying be prudent with your hard earned bitcoins. Money easily gotten is often easily lost.

Not in this case.  He's far from anonymous.  But then again, neither was Madoff.

I don't consider a class of shares in an enterprise a derivative, however, there were some others attempting derivatives including that MPOE-PR thing and Meni had his anti-pirate bonds.

However, it is an interesting idea to provide some derivatives off PPT.  Put and call options anyone? 

If that is the case, then I completely retract that part of my statement - but the larger point I'm trying to make is still valid: it's probably a good idea to periodically take profits from any successful yet inherently risky investment endeavour, no matter what it is. It is true for all forms of investing in my opinion. I do not wish to spread FUD here so I appreciate the above correction.

Agreed, that is why I have limited my exposure to BTC overall, and as a subset, exposure to Pirate.

wheeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee


Pirate bank = fail proof.. UNLESS>>> dun dun dun, the market is closed up by the gov. in which case we're all doomed...



if you knew what his biz model is, selling your placed coins at almost 76% markup then you would not start threads like this.


and who gives a shit who he is irl??



cheers

ROTFL

Shouldn't you guys be slipping on your tinfoil hats and heading back over to crucify zhoutong and Intersango for stealing Christmas ?
I recently came across information that points directly to Intersango being the 3rd gunman on the grassy knoll as well as zhoutong knowing about 9/11 BEFORE it happened.....and may have remotely flown one of the highjacked planes (the one headed for Santa's Workshop, but never arrived due to the passengers fighting back).

You should all hurry over there NOW !


I must admit however, it is nice to see equal opportunity trolling on this forum....never putting all of your 'flames' into 1 basket.

Good job guys !

subed.

If anyone knows how to sell bitcoins for a 76% markup, I figure they'd be doing just that themselves, rather than lending pirate money. So Im assuming anyone depositing their money at Pirate doesnt have a clue either.

And if pirate knows how to sell seemingly unlimited amounts of bitcoins at a 76% markup, why does he still need to borrow? He will have to buy those bitcoins back anyway, since you say he is selling the coins he borrows. Surely he wouldnt sell other people's coins without replenishing them at some point, right?  So whats the point of borrowing? It only means he has to buy many more coins on an exchange or otherwise and waste a massive amount of profit on paying interest fees.  Unless of course, he is replenishing his sold bitcoins by borrowing more. Thats a business model I do understand.

I like cheese. =)

Dont you miss a point that it is difficult to get funds, because bitcoin is unstable and there are others who want to borrow funds at your "normal" rate?
And if you can get more by having more btc available for sale?
It all depends on how much btc are people ready to buy in bulk and how much does Pirate have. Any way even if he is running ponzi I dont think that he is not investing in something like MMM, thats how he can get profit without any trouble,but we should be ready for everything,or hope that Pirate one day will provide info about his exchange with some details to check.

aye, they all know that as it was covered extensively when he was first asked why the need for garunteed available funds.  people are quick to forget.


and stop pming me to ask zomg, how 75%.. hehehehehehehe ask him.  :-*

RAWR RAWR   ;D

So, referring back to the OP, what was the count of those that agreed BS&T is a ponzi?  It's at least 5 (out of 55000 members).  Even Ross Perot polled 18.9%.

This might not be completely accurate, but here's what I've seemed to find in this thread:


Ponzi:
nrd525
MarketNeutral
terrytibbs
Maged
theymos
JoelKatz
Matthew N. Wright
P4man
curious
Sukrim

Not a ponzi:
bitlane
ineededausername
PatrickHarnett
coin_toss
reeses
exahash
Otoh
psy
Tomatocage
sadpandatech

Neutral:
Meni Rosenfeld
jcpham
cytokine

Unknown (leaning towards not a ponzi):
hashking
BurtW
imsaguy
znort987
splatster
johnthedong
farfiman
miscreanity
ShadowAlexey
Chaang Noi (Goat) ช้างน้อย

Unknown (leaning towards ponzi):
pekv2


So, out of the people that had some kind of opinion, approximately 30.5% of posters here believe that it is a ponzi, 61.1% think it's not, and 8.3% are neutral.

Wow, that took some counting. 

By the way Imsa, I'm not sure it's not a ponzi, it's that I don't have a reason to believe it is one.  It might still be, I don't know for definite.  Certainly when I opened my account five months ago I considered it, but the concern most people have is if it simply disappears (ponzi or not). 

Maybe it's simply a good way to channel presidential campaign funds - vote Palin - the world needs a good laugh.

To be a bit more precise about my position, I don't think it's a Ponzi because it doesn't fit the pattern of a Ponzi very well -- at least, not yet. However, I cannot imagine anything legitimate that it could possibly be.

Update: Also, I can't imagine it being wise to invest in something when you have absolutely no basis on which to estimate the level of risk involved.

Woah Maged, I don’t want to be on record having explicitely said it is not a ponzi. Put me in the unknown camp that leans towards not ponzi. I pretty much share the opinion Patrick and Joel just expressed in the last two posts.

I would never recommend anyone to invest with him since even if it is not a ponzi, it might be risky, or invest in anything for that matter, not even Bitcoins.

Everyone should make his own bets, and my personal bet right now remains the same, though it might change as I continue evaluating things.

Even if it's not a ponzi, I can't see how it's not a high risk endeavor. Pirate pays out 3300%EAR, it stands to reason his rate would be a higher or he isn't making any money. There aren't a whole lot of safe ways to make that kind of return. Granted I don't know much about his operation as I have very little exposure to his operation, but I wouldn't be surprised at all if my PPT bonds became junk because Pirate got shot or ended up in jail.

Bitcoins aren't illegal, but if this isn't a ponzi, it most certainly involves something illegal - most likely the drug trade.

That not entirely true. It all depends on the way the law is interpreted (especially when looking at anti-money laundering laws). Its a grey area at the moment.

Good point, but then the thread title should be renamed to Is BS&T a Ponzi?

Mega lol - tell that to JP Morgan.  $2B (or maybe three billion- they are not sure yet) They don't know how to estimate risk either.

Exactly. If you can't estimate risk, don't invest.

It's come to a point now that BS&T has been running for so long now that if it is a ponzi (which I don't think it is) and he is planning on running away with the funds, I'd honestly have to give him credit for being able to put together such a long lasting and elaborate scheme.  Don't get me wrong, I'd still want my money back, but I'd have to say that he had me fooled pretty well if it was a ponzi.

The point you're trying to make is that... if he's a scammer, then he's a really good scammer?

Gee, thanks splatster!

It hasn't really existed that long. Most Ponzi schemes last at least a few months. Genius Funds lasted more than three years.

What I'm saying is that the amount of effort he'd have to put in to be running a ponzi like this would be insane.  Ever for the short period he's been running BS&T, it'd be too much for most to be running a ponzi.

The only alternatives to a Ponzi are a legitimate business or some other illegitimate business. Of those three possibilities, a Ponzi probably takes the least effort and provides him the highest potential reward. I would love to hear what you think would be an alternative explanation to a Ponzi scheme that takes less effort.

I can think of several, and it just takes a bit of effort for the book-keeping.  But I'm not going to disclose what I'm thinking of or doing, because that's not how the world works.  You want to get rich, use your resources effectively, and don't give them away.

Edit, while sitting and thinking of some variations, there are systems that might not work in all jurisdictions, and some places will have better results than others.

I'm sorry, I can't just take your word for it. It's entirely possible that I can shoot every suggestion you make full of holes. Or it's possible some of your suggestions are solid. But "I have secret knowledge that shows you're wrong" is basically worthless. I know of no explanation simpler than a Ponzi scheme. Essentially, a Ponzi is the least effort because all you have to do is find investors and keep them happy to run a Ponzi. Every other scheme requires at least that, plus you actually have to make money. (With a Ponzi, all you do is take loss. You never have to make anything.)

I honestly can't conceive of anything simpler than a Ponzi scheme.

So therefore, we are limited by your myopia?

I vote that it is, for reasons I promise not to go into. It is also making me money.

That was the point I was trying to make in a couple of places, but that sums it up nice and bluntly.

And if you want an example of how to make money pushing it around in circles, why don't you try shifting money back and forward between two (or more) trading companies that wish to save on the transfer fees that the banks charge for currency exchange.  I've done that and benefited by several hundred dollars (probably less than a grand) just for personal use.  If I was still running cross border businesses, it would be worth a lot more to me.

Another idea that works is to pick on jurisdictions where purchase power parity is out of alignment and move currency/goods to take advantage of the arbitrage.

Yes, exactly. When a person makes a claim and doesn't support it , the claim is invalid unless we already have some support for it. Since we have no support for it already, the claim is in fact limited by our myopia.


I'm arguing against this claim:

And my point is that I know of no way it could be true. The person making the claim can, of course, explain some way it can be true. But until then, it's implausible because we know of no way it could be true. It implicitly assumes there is a simple way that requires less effort, but doesn't explain any such way.

"I know of a secret way that I won't tell you" doesn't cut it. It's possible, perhaps even likely, that this secret way is also implausible. You can keep your ideas secret, but then you can't present their existence as evidence to bolster your arguments.

http://25.media.tumblr.com/tumblr_m4dzsyrkz91qfrvjzo1_400.png


Taken from here:

http://www.bitcoinmoney.com/post/23499116232/glbse-stock-market

Where's the support for your claim that he is a ponzi?  High interest rate isn't enough.  Do you have evidence of pirate failing to pay any returns? Has he been late (longer than say an hour)? Has ANYONE been screwed by pirate?  In short, until you provide solid evidence, you're just a bunch of FUD.

I never said that he was a Ponzi. What I did say is that I don't know of anything else it could possibly be. I freely admit that that means it could be something I don't know of or can't think of. I've invited others to make suggestions in this thread, people have, and I've explained why none of those suggestions actually make any sense. (Did you somewhere mention something other than a Ponzi that it could possibly be? If so, I missed it. Please, I'd love to hear any other theories you have.)

I honestly believe it is more likely that it is something other than a Ponzi, that I cannot think of or do not know of, then that it is a Ponzi. But what this means is that it is impossible to estimate the risk. I submit that anyone who invests in something where the risk cannot possibly be estimated is an idiot. Further, they are an immoral idiot because they have no idea what the consequence of their actions are -- they don't know what they're funding.

If you want to cite specific claims I've made that I've failed to support, feel free to do so. But you've just made a list of claims I haven't made and then claimed that this somehow refutes the arguments I did make.

Jesus.  Pirate is Jesus.  We can't prove nor disprove.  Satisfied?

I'm pretty sure you're joking. But of course I can't imagine any way that could be possible. If you're trying to suggest a possibility, you have to explain how it is in fact possible.

The issue is not proof or disprove of the truth of the claim. The issue is proof that the thing claimed is possible.

How is it not possible that pirate is Jesus?

The burden is on the claimant to show possibility. But for one thing, Jesus died a long time ago.

That's what they want you to believe.

i keep waiting for luke jr. to show...

Id like to point out that most backers of Pirate were claiming he was involved in money laundering and/or other (drug related) illegal activities. Pirate has recently categorically denied this. I wonder if those people are calling Pirate a liar or if they are now as clueless as the rest of us about his actual business model.

Hey hey, he might just be selling coins, why not?
And pls give a link to his post.

Because he pays people their interest in coins. So he must, on net, *acquire* coins. I have tried to imagine how such a system could work where he obtains his investment in coins and also pays out interest in coins. I couldn't do it. If you have an idea, please share.

What stops him from buying coins on birges?
Daily volume of gox if 62kBTC,how much do you think he needs to buy daily?)

Well, he's said previously that he's selling coins locally to groups of buyers. So if you accept that, all he does is sell coins at a markup to people for cash, deposit that cash to mtgox, trade for btc, pay interest to depositors, and whatever is left is his profit.

Thats the point.. why would he borrow at an insane interest rates if he has to buy coins at exchanges anyway. All that changes is that he has to buy even more.

My guess is having access to bitcoins instantly is important to his buyers, so he needs to have a large capital of bitcoins readily available. Here's my reasoning why he borrows instead of uses his own coins: https://bitcointalk.org/index.php?topic=82849.msg916286#msg916286

So he can buy them beforehand. After all this time, if his business works only half as well as he claims, surely he has the capital required and then some. Yet for some reason he seems to need constantly more, not less.


Sounds like a very expensive way to hedge against a BTC price collapse. Going short on bitcoinica would make far more sense. Not too mention he could just cash out his profits in $.

Effectively, you're saying that it's a huge gamble that the price of Bitcoin will go way down. He wants to sell people's coins today and pay them back with coins tomorrow, when he expects that they'll be worth less. But that doesn't work for two reasons:

1) It incurs huge, needless risk. If he's holding lots of investors' coins and the price of Bitcoin goes way up, all those profits belong to his investors, not him. If he holds 15,000 Bitcoins that have been invested and the price of Bitcoins doubles, he's much worse off. He now has to acquire Bitcoins to pay back withdrawals at twice the price. You don't hedge by holding an asset.

2) You don't need to pay 10%/month to short Bitcoins.

He's not shorting bitcoins. You should read this thread: https://bitcointalk.org/index.php?topic=82849.180

The thread says he's shorting Bitcoins.

The thread says:

1) He borrows Bitcoins.

2) He sells them.

3) Later, he buys Bitcoins to pay back those he borrowed from.

That is basically the definition of shorting.

http://en.wikipedia.org/wiki/Short_%28finance%29

Normally when you say short sell, you are talking about selling at market price and buy back in the future hopefully at a lower price. He's not doing this. He's selling bitcoin at a higher than market price and try to buy the bitcoins back at a price around market price when he sold the bitcoins.  And he hedges bitcoin price rising.

So in normal short selling, you only make money if prie goes down. In his case, he should make money either way if his hedging is done correctly.

After consideration, I'm pretty sure Pirate is trading to take advantage of volatility in the market. If he can make the 'buy at x-0.10', 'sell at x +0.10' cycle (4% increase) a few times a week he easily hits his mark. It's the only legal approach that seems to fit the pattern. My guess is he has some code to help with his trading. His main risk would be a rise in bitcoin price while he's on the 'sell' side of the pattern, so he probably has a band above the sell band where he would buy back in and ride it until volatility returns.

I explained why this makes no sense -- he takes a 10% loss on the borrowing, takes extra risk in case the price of Bitcoins goes up, and gains no benefit by doing so because he could get the same protection on downside risk (without the unlimited upside risk) just by short selling. It's completely irrational.

You *are* essentially arguing that he's paying 10% to short, taking extra risk in the bargain, and losing 100% of the upside potential of an increase in the value of the coins he holds. That makes no sense.

Less likely - tracing the coins and transactions does not lead to an exchange like Gox (at least on my looking at the money flows).  I concluded it doesn't hit the main trading pages months ago because it would show up quite quickly.  Also, if you talk to people trying to extract a decent number of coins or dollars from Gox, you would find out how difficult that is - and why many people avoid it.

He's obligated to pay interest back in bitcoins, so difficulty/slowness of trading to USD doesn't factor towards his liabilities. I'm curious how you were able to track transactions, I'm guessing you're an investor so you were able to follow your own coins, but how can you differentiate a mtgox transaction from a non-mtgox transaction?

I could easily be wrong, its just my current working hypothesis.

-bgc

Even people shifting large numbers of coins have faced Gox problems, it is not a simple USD/BTC issue.  Plus, if you believed BS&T was simply manipulating Gox, they would dominate the exchange with the number of coins that would need to be traded.

Might pay for people to re-read the BS&T thread, there is some interesting stuff in there, and you will find my posts from December when I opened my account.  So, yes, I can trace my own coins, and also some others.

http://news.yahoo.com/back-oblivion-russian-fraudster-pushes-scam-062530584.html

MMM-2011 is crumbling. Guess we shall soon see if that was the main source of income.

Bets of Bitcoin: Bitcoin Savings and Trust will default before the end of 2012 (http://betsofbitco.in/item?id=433).

So... what was wrong with this one? http://betsofbitco.in/item?id=349

The date. Clearly money is still flowing in through all the passthrough bonds, I cant see it default very soon even if it is a ponzi. However, I will be betting some coins on the longer term bet, if for no other reason as hedging :).

Oh, I get it. It's like those guys who say every year that their sports team will win. Eventually they'll get it right.
Swell.

May be pirate will just close his bank and drawback everything to us?

figure I otta keep an eye on this in the event someone has something real and factual to say.

shortstop.

Bump, somehow missed this thread before.

I agree.

Pirate does have an island :P

I agree / started my own thread pointing them all out

we must at least contain these ponzis outside the marketplace > lending category - it's making BTC look foolish

I wish you didn't start another thread.  We have a million of them already.  Do you think by starting another thread you did any good. 

How does this bet work if pirate defaults before the bet deadline?  What prevents everyone from piling on bets on the winning side until the the deadline date?  Does betsofbitco.in have a system in place to invalidate all bets after an arbitrary date?

There's a feature called the 'time weight'.

The weighing will help reduce the effect of people putting on large bets after the result is known, but such behaviour would still significantly harm the return on winning bets placed in advance, especially if the default happens significantly before the deadline of the bet.

I would hope bets placed after the default became apparent would be cancelled, but I don't see anything about this on their site.

Assume that pirate defaults half way to the deadline.  It isn't fair that someone can put 10k btc on the default side after a default is confirmed and be at least half as effective as anyone who bet when the outcome was unknown.

The betsofbitco.in system is much better for events with known dates and unknown outcomes such as sports or elections.

Bets of Bitcoin ends bets once they are determined.

Just made another shorter-term bet for those who are interested.

Going on last summers crash.... if it's a ponzi, the price fluxuations might scare people away. Not sure :).

Bitcoin Savings and Trust will default before the end of September 2012 (http://betsofbitco.in/item?id=521)

Bet deadline: Sept. 28, 2012 end of day Eastern Time
Event date: Sept. 30, 2012 end of day Eastern Time

Thats what makes these bets so pointless.  Set the deadline short and the event in 6 months, and you might an interesting bet.

Good point, although, afaik late betters receive less %.

I may make a 2nd one default before end of October, with bet close end first week of September, this might drive more interest?

this thread that I started:

https://bitcointalk.org/index.php?topic=94900.0

is for different reasons than this thread:

1) list ALL ponzis & ponzi derivatives
2) list All BTC scams of any sort I find here
3) start petition to get these threads of out the Marketplace > lending category.  "speculation" won't do either - these are scams, not risky investments.  no possible winning outcome for 90+% of investors.

BST isn't an investment. We know that.

And Joel was so close!

Trendon Shavers = Servants Horned