Bitcoin Forum

Here, I think it wasn't clear enough.  ;)

Lets suppose the speculation is true, and the Pirate has in fact been selling large amounts of coin. Ostensibly this is to stop bubbles, but another possibility is he's gradually converting a large amount of his bitcoin holdings into fiat. One he's done that he then has the incentive to crash the bitcoin market as his Bitcoin Savings and Trust obligations are denominated in Bitcoins. For instance, suppose he's a FinCEN insider and known's that repressive anti-bitcoin measures are about to be introduced. After the crash he simply has to buy back the coins at much-reduced rates, and he gets to keep the fiat left over as his profits.

tl;dr - The Pirate has a big incentive to destroy Bitcoin itself.

Why would he have that incentive?

It seems that he does have an incentive to liquidate before getting the hell out of Dodge, because popping the confidence of his army of believers will probably drive the price down short term. But the incentive to cash out =! incentive to "destroy Bitcoin itself."

Why would he have that incentive?

It seems that he does have an incentive to liquidate before getting the hell out of Dodge, because popping the confidence of his army of believers will probably drive the price down short term. But the incentive to cash out =! incentive to "destroy Bitcoin itself."

This has indeed been the case for the last 7 months; however over the long term this is completely unsustainable. Something will have to give. The worst thing a pirate detractor can do is dismiss him as a ponzi or a money launderer, because this essentially limits the threat to his lenders and no one else.

The reason I am sounding a warning here is because I actually trust he is telling the truth.

If Pirate is using his mass of coins to hold the market down, that might be hurting the sellers and miners now, but if anything it's a reason to not sell now anyways. A good chance to pick up coins, invest them, or hold them.

If you don't want Pirate to manipulate the market, don't loan him the bitcoins.

I suppose the thing to keep in mine is that Pirate could decide to stop at anytime and either run with the coins or force any/every account to withdraw.

If there are these powerful clients of Pirate's that are willing to buy bitcoins at these elevated, but stable prices, it speaks out that bitcoin really is worth more than it is currently selling at.

Hope this isn't hurting the miners too bad.

As for the market activity and comments that are attributed to him, this is to me indicative of a bear under a lot of pressure and possibly hurting in a bull market.

The one thing to keep in mind here is that a wounded bear is the most dangerous kind of bear.

Because he is short the market. Suppose you had 2.5 million USD and a debt denominated in Zimbabwean dollars at an interest rate of 7% a week that initially was valued at 2.5 million USD. Would you close out the position. No. You let the position ride and then pick up 500 trillion Zimbabwean dollars for say 50 USD on Ebay and use it to pay the principle and interest on your Zimbabwean dollar debt. The profit is the difference between what you sold your Zimbabwean dollars short initially 2.5 million USD and what you paid to buy back your position 50 USD.

Pirate, pirate, pirate, pirate... omg. Who cares? Every sucker who invests in his trust should expect losing every penny at any moment. Investors are basically gambling against time, will they have time to accumulate enough from the interest before it all breaks down?

Pirate is insignificant PERIOD. I hope he sells bitcoins, that means cheaper bitcoins for everyone else. He has much less power than people think though. The market has other large players besides him and if the market decides we go up, his rumoured "dumps" will mean jack shit.

Er...  Let's say that this person was anonymous and could not be reached by any court.  Would his stronger incentive be to (1) hold down the value of the Zimbabwean dollar futility until he becomes insolvent, or (2) walk away with the money, in whatever currency he prefers?

This is not a hard question.  You appear to be making the fundamental mistake of believing it's not a scam.

Please think for a second about how senseless this is.  In your view, you think he needs to get more income from whatever his "investment" is, turn it into bitcoins, and pay the "investors."  So yes, in that situation he would want the exchange rate to be low.  But if he had a stack of coins to turn into dollars, doesn't that mean that he didn't actually put them into his "investment" until now?  I mean, you're supposedly loaning him money for some great investment deal--doesn't that mean he needs to actually invest the bitcoins?  If he's got thousands of coins sitting around to manipulate the prices AND more income from his investment, why does he need to pay you guys anything?  He would be self-financing at that point.

The only conclusion is that the investment is mythological.

Lets suppose the speculation is true, and the Pirate has in fact been selling large amounts of coin. Ostensibly this is to stop bubbles, but another possibility is he's gradually converting a large amount of his bitcoin holdings into fiat. One he's done that he then has the incentive to crash the bitcoin market as his Bitcoin Savings and Trust obligations are denominated in Bitcoins. For instance, suppose he's a FinCEN insider and known's that repressive anti-bitcoin measures are about to be introduced. After the crash he simply has to buy back the coins at much-reduced rates, and he gets to keep the fiat left over as his profits.

tl;dr - The Pirate has a big incentive to destroy Bitcoin itself.

To be honest, when I see "Suspected bitcoin ponzi op selling large amounts of bitcoin"
My first thought is not "oh, this must be a terribly clever way to make money semi-legitimately by manipulating the market, how clever!"

I think "I wonder if there's some way for me to short the bollocks off that fund?"

tl;dr - There's a limit to peoples pursuit of wealth.

Pirate, pirate, pirate, pirate... omg. Who cares? Every sucker who invests in his trust should expect losing every penny at any moment. Investors are basically gambling against time, will they have time to accumulate enough from the interest before it all breaks down?

Pirate is insignificant PERIOD. I hope he sells bitcoins, that means cheaper bitcoins for everyone else. He has much less power than people think though. The market has other large players besides him and if the market decides we go up, his rumoured "dumps" will mean jack shit.

Lets suppose the speculation is ....
tl;dr - The Pirate has a big incentive to destroy Bitcoin itself.

When BTCST ends, he should just propose his new business project to his lenders and I'm pretty sure a good majority of them will still invest in Pirate project. Those who don't will be free to withdraw, and that's it. Pirate will be able to raise thousand of Bitcoins for a new venture without any efforts compared to the rest of us.

Old business model:

1. ...?
2. Profit!

New business model:

1. ...? (but different!)
2. Profit!


But you are right about what a great deal he has. I mean what young savvy entrepreneur--who has supposedly generated hundreds of thousands in profits for himself--could ever pass up the opportunity a raising funds for the low, low rate of, um, 3000% interest?

Stop drinking the Kool-aid, Brunic. I think it might not be good for your health.

Please move this to speculation !

Destroy btc ? If pirate is making money one way or the other playing with bitcoin, Why would he kill it all ?
He's already invested into GPUMAX afaik, wouldn't he be sell it before ? ... Well whatever, I don't even know why people responded to this OP.
 ... a few more ignore on my list.

Lets suppose the speculation is true, and the Pirate has in fact been selling large amounts of coin. Ostensibly this is to stop bubbles, but another possibility is he's gradually converting a large amount of his bitcoin holdings into fiat. One he's done that he then has the incentive to crash the bitcoin market as his Bitcoin Savings and Trust obligations are denominated in Bitcoins. For instance, suppose he's a FinCEN insider and known's that repressive anti-bitcoin measures are about to be introduced. After the crash he simply has to buy back the coins at much-reduced rates, and he gets to keep the fiat left over as his profits.

tl;dr - The Pirate has a big incentive to destroy Bitcoin itself.

Oh, I see what you're saying.  He would have an incentive to sell enough coins to drive the value to almost zero by collapsing confidence in bitcoin permanently, such that he could walk away with the cash while still paying people back their worthless bitcoins.

That's an interesting idea, but it seems like a longshot to actually succeed.  You'd have to drive bitcoins really close to $0 for it to work, and they would have to stay at that value even as he buys several more times of bitcoins back to cover the loans.

This scheme is much more difficult to pull off than simply taking the money and running. I think you underestimate the probability of him getting away with it.

Oh, I see what you're saying.  He would have an incentive to sell enough coins to drive the value to almost zero by collapsing confidence in bitcoin permanently, such that he could walk away with the cash while still paying people back their worthless bitcoins.

That's an interesting idea, but it seems like a longshot to actually succeed.  You'd have to drive bitcoins really close to $0 for it to work, and they would have to stay at that value even as he buys several more times of bitcoins back to cover the loans.

This scheme is much more difficult to pull off than simply taking the money and running. I think you underestimate the probability of him getting away with it.

What happens in step 2 if the market doesn't fill your bid for 2.5M BTC @ USD$1, and bids at $5 start flooding the market? Finding people to sell you a huge number of BTC @ $1 might be difficult.

What happens in step 2 if the market doesn't fill your bid for 2.5M BTC @ USD$1, and bids at $5 start flooding the market? Finding people to sell you a huge number of BTC @ $1 might be difficult.

Well, you fail.

You need to finish selling the open orders of BTC down to your target price,
before the market react and successfully transfer the millions of dollars required to stop the fall into the exchange(s).

Surprise and confusion would be an advantage.

If taken by surprise, much of the market will obviously, reasonably join in and sell what they can while the price is "still above 8$, still above $7, still above $6, still above 5$".

This gives an advantage to the instigator of the crash, as he will (plausibly) get a higher average price for his sold coins, than if he were to do it alone.

I think one important aspect has been missed in this thread:

Will he leave with BTC or USD in his pockets??

Option A:

He's running a legitimate business. In this case, when he decides to quit, the first thing he has to do (in order to stay within legal boundaries) is to make sure to have enough BTC funds to pay back his lenders. He may have to buy on the market large amounts to fill potential voids. He then has to announce the end of operations of BS&T (does anybody know what notice period he has to adhere to?). Once all debts are paid off, he can either keep all his remaining BTC, USD or convert one into the other and walk away. We may see a substancial purchase of BTC in advance to his notice, which would be an indicator of his true blue intentions.

Option B:

He's running a ponzi or legitimate business but decides to scam everybody. In that case he will not give prior notice, try to vanish as quickly as possible, preferably before the whole swindle surfaces so he can pocket all the funds without paying anything back. The question now arises: Will he leave with BTC or with USD in his pockets?

1. If he is indeed running a ponzi scheme, the mayor part of his funds will be held in BTC through the influx of BTC from his lenders. To leave the country (because his identity is know) with only a huge amount of bitcoin in his wallet, that still has to go through some bank account to convert into USD is a rather flawed option (lets put any of the BTC for USD in mail services aside, because none of those would have sufficent USD cash reserves to pay out 250k BTC in mail envelopes). He would probably try to convert a significant amount of his BTC denominated funds to USD and withdraw that prior to his exit. The current MtGox withdrawal limits (https://support.mtgox.com/home) are limited to a maximum of 500k USD/month for trusted customers. He would have to give it at least 2 month time to prepare his exit to withdraw 1M USD and maybe some extra from other exchanges to have a reasonable pocket money for his livelong vacation on tropical island. We could in that regard see some 1M USD worth in BTC be sold on the major exchanges (and withdrawn).

2. If he is instead selling large amounts of BTC to an anonymous investor that uses pirate as surrogate, he could decide to pocket the USD from his big brother and default on his BTC debts, duping all his lenders as he walks away with about 2M USD in his pocket. That way the community would have no prior warning and no chance to trace pirate after he vanishes, except for international warrants (likely?). The BTC lent, will be still there, but through various laundering services probably well cleaned off their tracks.

So in conclusion; depending on the scheme he is running, one can only hope, that he is a good pirate at heart, because in both cases he could just sail away with all the money and leave nothing behind. But honestly, what pirate has ever been known for his kindheartedness?

I reason that, given he is exiting through Option B, will sell rather slowly his vast amounts of BTC over the major exchanges. Maybe take 1 or 2 month, before he finally pulls the plug. This way his returns are much (4-6 times) higher as if he would just frantically crash the market by selling all his BTC at once and drawing all possible attention to him that way. I dont know how his mind works, but I pressume he is a rather clever fella and prefers a good result over a big BANG (but then again. he's a pirate after all, right?).

With Option A he would have to announce his closure within notice period, so we would at least see that indicator coming. A market crash thereafter makes no sense (except for the delightful panic to watch)

I think one important aspect has been missed in this thread:

Will he leave with BTC or USD in his pockets??

Option A:

He's running a legitimate business. In this case, when he decides to quit, the first thing he has to do (in order to stay within legal boundaries) is to make sure to have enough BTC funds to pay back his lenders. He may have to buy on the market large amounts to fill potential voids. He then has to announce the end of operations of BS&T (does anybody know what notice period he has to adhere to?). Once all debts are paid off, he can either keep all his remaining BTC, USD or convert one into the other and walk away. We may see a substancial purchase of BTC in advance to his notice, which would be an indicator of his true blue intentions.

Option B:

He's running a ponzi or legitimate business but decides to scam everybody. In that case he will not give prior notice, try to vanish as quickly as possible, preferably before the whole swindle surfaces so he can pocket all the funds without paying anything back. The question now arises: Will he leave with BTC or with USD in his pockets?

1. If he is indeed running a ponzi scheme, the mayor part of his funds will be held in BTC through the influx of BTC from his lenders. To leave the country (because his identity is know) with only a huge amount of bitcoin in his wallet, that still has to go through some bank account to convert into USD is a rather flawed option (lets put any of the BTC for USD in mail services aside, because none of those would have sufficent USD cash reserves to pay out 250k BTC in mail envelopes). He would probably try to convert a significant amount of his BTC denominated funds to USD and withdraw that prior to his exit. The current MtGox withdrawal limits (https://support.mtgox.com/home) are limited to a maximum of 500k USD/month for trusted customers. He would have to give it at least 2 month time to prepare his exit to withdraw 1M USD and maybe some extra from other exchanges to have a reasonable pocket money for his livelong vacation on tropical island. We could in that regard see some 1M USD worth in BTC be sold on the major exchanges (and withdrawn).

2. If he is instead selling large amounts of BTC to an anonymous investor that uses pirate as surrogate, he could decide to pocket the USD from his big brother and default on his BTC debts, duping all his lenders as he walks away with about 2M USD in his pocket. That way the community would have no prior warning and no chance to trace pirate after he vanishes, except for international warrants (likely?). The BTC lent, will be still there, but through various laundering services probably well cleaned off their tracks.

So in conclusion; depending on the scheme he is running, one can only hope, that he is a good pirate at heart, because in both cases he could just sail away with all the money and leave nothing behind. But honestly, what pirate has ever been known for his kindheartedness?

I reason that, given he is exiting through Option B, will sell rather slowly his vast amounts of BTC over the major exchanges. Maybe take 1 or 2 month, before he finally pulls the plug. This way his returns are much (4-6 times) higher as if he would just frantically crash the market by selling all his BTC at once and drawing all possible attention to him that way. I dont know how his mind works, but I pressume he is a rather clever fella and prefers a good result over a big BANG (but then again. he's a pirate after all, right?).

With Option A he would have to announce his closure within notice period, so we would at least see that indicator coming. A market crash thereafter makes no sense (except for the delightful panic to watch)