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Our contract (Negotiated in private. Some bits were edited on the grounds they're both irrelevant and possibly embarrassing, but the whole log isn't very long and can be published if necessary):


Public confirmation thereof (from #bitcoin-assets):


Not lots, the man says.

What happened here was this: PatrickHarnett advertised a depositing scheme, recallable on demand, paying 5% a month. He then unilaterally changed the interest rate to 1% (or below that, in steps, something like that). This in itself is a breach of contract, as he wasn't also simultaneously repaying holders on demand, but we'd have let it slide.

Then, he converted deposits into unrecallable paying ~1% a week. So basically what PatrickHarnett has done was transform an interest bearing recallable deposit into a sort of miner bond, where he pays "some" interest and the principal can never be recovered. This is not acceptable.

Scammer tag, please. Patrick Harnett is Peter Lambert v2.0.

If he is genuinely stopping you from withdrawing the 500 plus all accrued interest to date, then that is outrageous.

It's up to him if he wants to change the interest rate and you can take your money back if you don't like the changes (and of course he should inform his investors of the changes) but he can't just change the structure of the investment from withdrawal on demand to a non-liquid mining bond without your consent.

If true then he is a thief. End of story.

Give the piece of shit a scammer tag. Always hated that bastard.

Not sure what you mean by genuinely, but the addresses are up there in the quote, can be easily checked. 500 BTC (http://blockchain.info/tx/f43d9df0129ce0fa1c06e8afa5f890a8ad7342dbb7cdd7fab58081eafad5882c) going in. Not coming out.

Have you told him that you've outed him like this?

Harnett: why aren't you defending yourself?

Admins: When are you going to apply the scammer tag?

Mods give patrick a scammer tag? like thats going to happen. Just as likely at theymos getting one

If I borrowed 500 coins from someone and then refused to give them back, saying that it's a mining bond now and therefore not a repayable deposit anymore, then I'd get the tag.

If that is really how it went down then so should Harnett.

It's weird the lack of attention that this thread is getting.

Perhaps...

It has been a few days and the alleged scammer (an extremely frequent poster) has not responded to the accusation...

What does that mean?

Patrick rates these accusations AAA-

lol.

Interested to see how this pans out!

What exactly is to "pan out"? It's already panned.

Please explain why this is relevant.

You should get in touch with his employer

http://www.srgexpert.com/patrick.html


I'm sure they'd be interested in this lapse in integrity.

His employer, his professional association, his district attorney, the works.

Who watches the watchmen?

It is incomprehensible that not the entirety of pass-through operators are labelled as scammers anyway.

The government!!!

This, frankly.
Apparently, being complicit in a $5 million fraud isn't enough...

+1

And the people who labelled them as scammers before the scheme collapsed should get anti-scammer tags.

This is an idea I can thoroughly get behind  :D

There's no evidence this was a scam. In fact, everything I can see suggests that it was simply a common mistake. As the transcript shows, the agreement was based on the common understanding that he had no or limited Pirate exposure.

This turned out to be incorrect. It's not clear that this is Patrick's fault. This fault is equally on both sides of the agreement. At the time, the only evidence that Patrick had significant Pirate exposure was the common sense realization that it was likely that people were borrowing from him to invest in Pirate and lying to him about it.


Here we see both parties making the same mistake. Both parties had substantially the same information and made substantially the same mistake. Why is this Patrick's fault? Patrick has stated in another thread that he is paying this debt back the same way he is paying back similar debts. He is taking responsibility for his share of the common mistake and his lenders should do the same.

Any idiot could see that these arrangements were scams from the outset. Now the schemes are in default and it is time to deliver the scammer tags.
If you don't assign a debtor in default a scammer tag, then what are scammer tags for?

You are arguing that Patrick and MPOE are idiots. That may be the case. Regardless, the defaulted debtor should get the scammer tag.

Ahh, okay.

So you are arguing both Patrick and Mircea should get scammer tags?

He's not a debtor in default. He's one party to a contract partially invalidated by a common mistake. A scammer tag would be for someone who uses fraud or deception, not for someone who makes a mistake where the other parties to his agreements equally make mistakes.

I am not arguing that. You are. You are the one who said, "Any idiot could see that these arrangements were scams from the outset."

I disagree. I don't think either party realized that there was significant Pirate exposure. The premise on which this agreement was made was false due to no greater fault on either side. The parties mutually should bear the cost of their common mistake. Patrick is making partial payments as he is on other similar debt he has.

There's no evidence this was ever a scam. There's no evidence of any fraud or deception. Patrick has admitted this mistake and is attempting to rectify it as best he can.

Enforcing a contract as agreed, when that contract is based on a common mistake, is inequitable. If the mistake is not due to one party's fault more than the other, then both parties should bear the costs of their mistake.

As have many scammers in the past who went on to scam again.

There should be objective criteria for assigning a scammer tag.

Debtor in default -> Scammer tag until debt is paid off.
Not in default -> No scammer tag
Not a debtor -> No scammer tag

Without objective criteria, the tag will just depend on who your friends are. As it does today.

It's not clear he's a debtor in default. He's a debtor in default if it's equitable to enforce the contract as agreed. But because the contract was based on a common mistake -- that Patrick's loan portfolio did not have significant Pirate exposure -- it's inequitable to enforce the contract as agreed.

Say you and I both believe that you have part ownership a particular car. I agree to pay you $5,000 and you agree to transfer to me your ownership interest in the car. If it turns out that you don't own the car at all, it's inequitable to insist that I still pay you the $5,000 in exchange for your zero ownership interest in the car. I wouldn't be a "scammer" because I broke the agreement, even if it technically appeared to say that all you had to do was transfer to me whatever interest you had, even if that was none at all.

Here there was a common mistake underlying the contract. It's inequitable to enforce the contract as agreed.

By the way, I doubt there are any courts that would enforce a contract of this sort. The usurious interest rates pretty much assure that the contract can only be kept by fraud or coercion and virtually assures this kind of outcome. Blame for that goes equally to both sides, IMO. Anyone who is legitimate and likely to pay back won't borrow at such high interest rates. The only people willing to pay such ridiculous rates are people who don't expect to have to pay back out of their own money.

Both sides deserve equal blame for this outcome, and I see no logic to applying a scammer tag to a transaction where both sides are at equally at fault.

I'd be open to an argument that Patrick is imposing an unfair portion of the default costs on his lenders. They should be shared.

Now that Standards & Poor has to pay back investors for their false ratings, it should be pretty obvious to require Harnett to pay back pirate investors for his false ratings.

Nobody has yet admitted publicly that they relied on those ratings. If anyone does, we can try to figure out whether we should laugh or cry.

Scammer tags are issued in the public interest. Blame is irrelevant.

Borrower in default gets scammer tag -> signal "this person is in default don't lend to this person"
Creditor gets scammer tag -> signal "meaning ???"

Obviously the latter signal is useless. Therefore, scammer tags are only assigned to borrowers in default.

Regardless of whether Patrick is a good guy or whatever, there may still be idiots who would agree to lend him more funds.
The scammer tag is intended to protect these idiots from their own stupidity.

Well I could claim for example that I borrowed you money and provide forged evidence to support my claim, which would make me a scammer.

Meaning that person is a scammer and you shouldn't borrow money from them. (See the post above me for one way they could abuse this, but there are many others.)

I don't agree. If Patrick's portfolio had consisted of deposits from people with scammer tags, people might not have so easily underestimated the risk.

It's not clear why that would be stupidity. He might want to borrow funds to finance his debts better. There's no evidence he would mislead people about the circumstances. He has no history of doing so. If he wants to borrow money so he can settle his debts with those he had to force terms on and instead owe money to people he freely negotiated terms with, why should that be discouraged? (But that's the best argument I've heard so far. If that's the reasoning, I wouldn't consider it particularly unfair or unreasonable -- just a bad idea.)

Am I the only one who after reading the transcript, does not understand what is wrong other than the allegation that a deposit has not been paid back in a timely manner.     Could the OP please summarize what is actually the issue so we can weigh the evidence.  Just posting some logs out of context and having someone passionately arguing with the OP using Pirate references is not enough. 

I want your argument so I can weigh it.



Appreciated,
Dalkore

That turns out to have been a lie, and hardly an innocent one.

I believe after reading what he has said after the Pirate default, is that he under-estimated the exposure people who were his borrowers,  to Pirate, but that he did not have prior knowledge. 

A bank counts debt is holds as assets & liabilities.   Unless you have more evidence, I am not sure this alone should meet the bar.   I have been visiting his thread in another section and so far, he has been slowly paying people back in regular intervals.


 

If he didnt know, he shouldnt have said it categorically like that and mislead potential investors.
As for him paying back slowly; so are a few other labeled scammers. Im all for removing the tags once they paid everything back.

I'd say there's a bit a difference between PH who's paid back half the money and is making reasonable progress towards getting it all paid off and someone like Hashking who's paid a couple percent of his debt, has said the rest will take at least 3 years, and demands people be nice to him or he'll just cut and run.

It wasn't a lie. It was a mistake. It was a mistake made by both participants in this deal. Each side had substantially the same information and made substantially the same mistake.

Patrick made a genuine attempt to vet those who borrowed from him to ensure they weren't just borrowing from him to invest in Pirate. Unfortunately, they lied to him. In retrospect, this is 100% predictable.

But if you think for just a second, it's quite clear that if Patrick had any suspicion that this would have happened, he wouldn't have lent money to them. Think about it, it would have made no sense. Patrick would have just lent to Pirate himself and would have made a greater interest rate. (And, in fact, I was arguing with Patrick and those who lent money to him at the time that it made no sense.)

This was a common mistake underlying the contract, made with equal fault on both sides, and it makes it inequitable to enforce it as agreed.

He thought he did know, as did the people who lent money to him. This wasn't a mistake that he alone made. This was a mistake made equally by both him and those who lent money to him.

The difference is that the others paying back slowly and labeled scammers, like Hashking, are in default. Patrick is not. He would only be in default if it was equitable to enforce his contracts as agreed. It is equitable to enforce Hashking's contract as agreed because his deliberately misrepresented his Pirate exposure. There is no evidence Patrick did so.

In any event, if we were to try to do that, we'd have to figure out how much of the loss equitably belongs to Patrick and how much belongs to the lenders, so we can decide when he has paid back everything he is responsible for. That's a remarkably subtle judgment for the community to make and would take effort collecting evidence and making subjective judgment calls. A scammer tag is way too coarse a mechanism for such a subtle process. It's for fraud, theft, lies, and stealing -- not for complex deals gone bad due to outside facts with all sides acting in good faith to make good.

Those who loaned money to Patrick at usurious interest rates are just as responsible for this collapse as Patrick is. There is nothing more foreseeable than the inability for a business to consistently produce outrageously unrealistic profits. Yes, Patrick was an idiot. But so were the people who loaned money to him. I have yet to see a single such person take even one shred of responsibility.

Can a mod confirm that they're looking into this?

Fine, then give the people who lend to scammers a "Lend to Scammer" tag. I agree, this would be informative.

I don't think that the 'we both made a mistake' idea is helpful here. Obviously they both made a mistake.
When, I lend to someone and 'we both made a mistake', it is the debtor's responsibility to take the hit for the creditor.
If I make an equity investment and 'we both made a mistake', then the investor takes the hit.

Is there some evidence that Patrick has declared bankruptcy / liquidated his possessions? Do you feel that he shouldn't have to because incurring the debt was a 'mistake'?

If so, I have some 'mistaken' student loan debt to clear. Is there a court of JoelKatz available somewhere?

I'll have to disagree with you here JoelKatz.

The contract was made on assumptions that Patrick made, sure.  But that doesn't mean he can back out of his contract scot-free just because his assumptions were wrong.

If the bank loans me $1,000, and I wanted to use that $1,000 to invest in a business that I assumed to be risk-free, but it turns out the investment DID have risk, and I lost the $1,000, would the bank just let me off the hook?  Nope, they'd still want me to pay back the loan, regardless of what my assumptions were and how those assumptions turned out.  Would they hit my credit score when I failed to pay the loan back?  Of course they would!

We're hitting Patrick's Bitcoin community "credit score" because he failed to hold up his end of the bargain.  It doesn't matter that he didn't realize he was investing in BS&T passthroughs - that was a failure on his part to do due diligence, and it is his responsibility to own up to that mistake and still make payments according to the contract.

Now, if he had worded the contract with a clause something like "If my investments fail, then your investment with me is worth nothing," then I can definitely see a case for NOT giving him a scammer tag.  Otherwise, this is nothing more than him failing to hold up his end of the agreement, and he should get the scammer tag until he makes good on the promises made to those he contracted with.

If they both made a mistake, and that mistake caused a loss, then they should split the loss.

No, that's not so. If the creditor makes a mistake, the creditor is responsible for the harm that mistake caused the debtor.

It depends who makes the mistake.

If both you and the entity you borrowed from made a common mistake that caused the loss, then you should split the mistake. It doesn't matter if it's student debt or not.

They're not "assumptions that Patrick made". They're beliefs that both parties to the contract had, without which neither of them would have entered into the agreement. And I never said he could "back out of his contract scot-free".

Right, because that's not a common mistake. That's a mistake made by only one party. I'm talking about a common mistake. (Please see my example of the contract to purchase a partial interest in a car.)

That's ridiculous. Those lending to Patrick made precisely the same failure with precisely the same consequences.

The contract couldn't have had such a clause because neither side believed that situation was possible. The contract simply doesn't say what happens in that case. There is no equitable reason Patrick should take the entire hit. It is only equitable to split it. Both parties are equally culpable, both parties made the same mistake. The contract doesn't say who bears the costs because neither party thought that would happen.

If there's evidence that either Patrick or his lenders believed this outcome was reasonably possible, then my argument doesn't work -- it's not a common mistake. But it's quite clear that Patrick would not have loaned money if he believed this was possible. It's idiotic -- he'd just invest in Pirate himself. And similarly, his lenders would not have lent to him if they believed this was possible -- they'd just have invested in Pirate themselves. Both parties were victims of dishonest borrowers.

PM-ed Patrick to let him know the existence of this thread. It should be made mandatory that the parties involved should receive a notice by the form of PM/email after making an accusation thread.

I still completely disagree with you Joel.  It doesn't matter what Patrick's plans with the money was - he agreed to pay back at a certain rate for a certain period of time.  He failed to do so.  He broke the contract.  That's all that matters.

Joel. I'd be fine with this if it was always transparent who made a mistake. However, courts cannot figure this out in most cases. Thus you make simple, predictable rules that assign responsibility independent of who is at fault. That is what civil law should be about (I think).

In other cases, courts can figure out who made a mistake. Then the court can assign blame. That is what criminal law should be about (I think).

In clear-cut cases you assign blame, in vague cases you default to simple, predicatable rules.

The simple predictable rule here is that the debtor is always responsible for his debt (at least before bankruptcy law)

Taking a more abstract point of view, I hope this thread highlights it's a bad Idea to hand you're irreversible digital currency over to even arguably the most trusted "i'll take care of ya money men" on this forum!

I'm shocked that more people on this forum desperate to make 1% a week on their money haven't heard of a site called betfair where you can lay really shit horses and get 1%. Personally I think this is a terrible idea, but it's certainly would give you much better odds of a return than any of the joke investment opportunities on this forum.

As Joel's explained borrowing money at crazy interest rates to people at insane interest rates isn't a sane business model, at least it kind of makes sense that a really a shit horse is likely to lose!

It absolutely does matter when both parties to a contract assume a particular state of affairs and that neither party would have entered into the contract had they known that their common belief was incorrect. This principle is a very narrow one, but one required by equity. Quoting Lord Acton, "A mistake will not affect assent unless it is a mistake of both parties, and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be." This is exactly what we have here, a mistake that affects assent because it is a mistake of both parties and it is as to the existence of some quality that makes the thing different from what it was believed to be.

His agreement to pay back the loan at a certain rate for a certain period of time was clearly dependent on the shared belief that his loans were independent of Pirate exposure. Both parties discussed this common belief and relied on it when they entered into the agreement. It is absolutely inequitable to make one party to an agreement bear the full cost of a shared mistake made equally by both parties.

That's not helpful. The challenge is figuring out what "his debt" is. See my example of the payment for partial interest in a car. Sure, the buyer is responsible for "his debt", but the question is whether he in fact owes the payment. That's the same problem we have here. When a promise to pay is predicated on a belief shared by both parties and without which neither party would have entered into the agreement, figuring out how much is owed is not simple. You can't just look to the contract.

Here's a trivial example: Both parties to an agreement believe a truck contains 5,000 pounds of cherries and both believe that $2/pound is a fair price. They agree to sell the cherries for $10,000, based on their common correct belief that cherries are worth $2/pound and their common mistake belief that the truck contains 5,000 pounds of cherries. If it turns out the scale was broken and the cherries actually weigh 4,500 pounds, how much is "his debt"?

The argument would be that you can't look to the contract because the contract doesn't say what happens if the cherries weigh 4,500 pounds. Everything written in the contract is based on the assumption that the cherries weigh 5,000 pounds. (Unless it contains some clause about the weight, of course.) Here, it is clearly unjust to enforce the contract as agreed because the agreement was predicated on the shared belief.

The problem with simple rules is that sometimes you don't have simple cases.

So PatrickHarnett should either refund 50% of the loan on his own funds or get a scammer tag, because right now, I see only one party bearing the cost of what you argue (and which I do not argue one way or another) is a shared mistake.

A 50% refund would certainly be one equitable resolution of the mistake. It's not the only one.

Patrick claims he has been making reasonable payments on all his outstanding debt. I have no idea how much debt he has outstanding or what kinds of payments he has been making.

I agree that a scammer tag would be completely appropriate if Patrick has been making unreasonably small payments on any of his outstanding debts, hasn't been open about his repayment schedule, hasn't been keeping his repayment schedule, or has proposed an unreasonable repayment schedule.

It's entirely possible that Patrick can't, or won't, cover his fair share of these losses. Whether that's due to intentional fraud or just lack of resources despite his best efforts, I absolutely agree it would justify a scammer tag.

No. It was based on Patrick's representation to that effect. Your attempts to represent this as a "common mistake" are unseemly and quite frankly are doing a lot of damage to your own credibility.


If I offer to sell you a house and you pay me money, except my house doesn't really exist would you say that the fault is equally on both sides of the contract? Because in that case I have a bridge....


Bullshit. "The same way he is paying similar debts", what's that even mean? You make a contract, you stick to that contract or else you are in default. Nobody cares and it makes no difference that you "are doing it differently now". What is this Patrick, the Government of Bitcoin?

Frankly, Joel, I think you just enjoy taking the contrarian stand. That's fine, but just put a label on your stuff "I'm only stating this nonsense because I enjoy trying to make impossible arguments".


Deposit was made, as per an agreement. Deposit was not returned, as per the agreement.

Exactly. The problem here is that he's not even making enough payments to cover interest.

Here's his scam in simple terms:

I. Do the Peter Lambert thing: pretend like you know what you're doing, give out ratings, all that jazz.
II. Take deposits, recallable on demand, at a reasonable rate (1% was, back in August, pretty much tiny).
III. Refuse to repay deposits.
IV. Make a "best effort" repayment of about .9% a week.

This is an out and out scam. Better designed than pirate's, sure, but just as much a scam.

The only other way you could look at it would be "How to sell miner bonds without any miner gear, and without the risk of difficulty dropping". Also a scam.


To date, he's paid less than half the interest or something like 3% of the money. Do the math eh?


No, seriously, what are you talking about? How does each side have substantially the same information?

At this point, what exactly is your relationship to the scammer? Are you being paid to shill?


Quite willful ignorance from someone who's contributed half the words to this thread. The numbers are staring you in the face: 500 BTC going out from lender to borrower. ~15-20 BTC coming out from borrower to lender, two-three months later.

500 * 1.01^14 = 574.7371066; 20 / 574.737106619 = 0.034798519. Was that so hard?

And finally, to the scammer himself, who "is not going to fan the flames": fuck you, asshole.

Still, you did not provided the evidence required.

Where is the contract that you both signed to a third party verify the legitimacy of your claims?

Except for

(https://bitcointalk.org/index.php?topic=50822.msg854918#msg854918)

I expect an apology, JoelKatz.

The legitimacy of the claim is not disputed. Heck, the scammer is not only taking the Nefario route to PR, but moreover the address was listed in his list of depositors that he himself maintained for the entire interval.

What information did Patrick have that others didn't have that would have changed the conclusion they drew?

It might or might not be equally on both sides of the contract, that would depend on the example. But if it was in fact equally on both sides of the contract, then it would be inequitable to enforce the contract as agreed. (I gave two examples that clearly show this. You are welcome to address them. But you can't just create an example where there isn't a common mistake, show that there's no common mistake in your example, and then try to argue that has some relevance to a contract that does have a common mistake.)

The problem is that the contract doesn't cover the case where the loans have correlated risk.

Both Patrick and those who loaned him money understood his business model and the rates he charged. They both equally understood that he asked people whether they were investing in Pirate and made clear that this was unacceptable. It's not like Patrick had evidence of correlated risk that he had from his investors, at least not the we know of.

Right, but the agreement was predicated on a mutual understanding that the loans didn't have significant correlated risk.

As for your quote from another thread, I can't quite understand the relevance. Are you saying you were aware that there was a high probability that Patrick's loans had significant correlated risk due to exposure to Pirate?

I very strongly dislike Patrick. If he was willing to pay me to shill, I'd happily take his money, but he has not yet made such an offer.

I've expressed no opinion on whether his repayment schedule is adequate or not. Roughly speaking, if he's on track for 50% within a year, that'd be reasonable in my view. As I said, I'd really like to see him committing to an amount and a schedule and sticking to that commitment.

That's immaterial. What proof do you have the lender had exactly the same information as the borrower did?


Yes, it does. That's exactly why the negotiations start with "do you have correlated risk X". Had the scammer answered "yes" or even "maybe" the contract would never have happened. He did neither, he answered "no". Living up to that "no" is upon him.



Nothing of the kind. The agreement was predicated on a mutual understanding that the lender lends and the borrower repays with interest.

The quote from "another thread" has the relevance of pointing out that we were both the first and for a long time the only to clearly state that Pirate is a scam. As such, proposing this theory whereby "nobody knew" that Pirate might have been a scam is ridiculous. The entire point of that agreement is squarely against this.

I never said they had exactly the same information, I said they had substantially the same information. I even explained what information they both had.

Part of my argument is that Patrick in fact made that mistake. To respond by saying Patrick made that mistake doesn't make sense. I agree that both sides believed that Patrick's loan portfolio had no, or minimal, Pirate exposure and for substantially the same reasons.

So the agreement still would have happened even if Patrick said "Yes, I have significant Pirate exposure"? Bullshit.

Somehow we must have some kind of a disconnect somewhere. Of course both knew Pirate was at least very likely to be a scam. That's the whole reason this agreement was constructed the way it was -- to protect against Pirate exposure. The common mistake was the belief that Patrick's loan portfolio didn't have significant Pirate exposure when it actually did.

Both parties willfully ignored the obvious gaping holes in Patrick's business model, despite being repeatedly told what they were. Honestly, I'm somewhat disgusted at the righteous indignation of the usurious lenders who refuse to accept any responsibility for their significant role in this fiasco.

"Substantially" bs. We all have substantially the same information to some imaginary post-hoc standard. There's no whitewashing this, if the scammer didn't have a privileged position with respect to his investments then the contract would have made absolutely zero sense to enter into. Think about it for a moment, your retarded argument can be used to try and weasel out of any agreement ever.


Your argument boils down to: Patrick made a mistake so he shouldn't have to honor contracts (because you presume, without any proof, that everyone else "would" have made the same mistake, and further presume that this amounts to a "everyone else did in fact make the same mistake"). This is just a way of saying Patrick is god. Patrick isn't god, and therefore your entire line is invalid.


Fuck you. The agreement would NOT have happened if the scammer admitted at that time what we now know to be reality. The fact that you do not know this speaks about your ignorance, that's all. What do you think, someone who had zero pirate exposure since the very start, someone (the only one) who turned down pirate's slimy advances in an ultimately doomed bid to protect idiots just like you and made a point of it suddenly changed his mind, and decided to buy a 1% a week pirate passthrough when the 7% real deal was still available?


This is not a common mistake. In fact, Patrick's portofolio was neither discussed nor at least considered. The money was lent on Patrick's name and word, nothing else.


So you're against lending, btc business, money, whatever. Your problems, I don't care and they don't amount to arguments against contracts. Seek help.

looks like Hartnett took the loan, and thus the obligation to repay.  further, he misrepresented his exposure to his creditors.

mistake is his.  scammer/default.

Assuming you mean a buyer and a seller by "both parties," the number of cherries wouldn't make a bit of difference unless mentioned in the contract.  If the buyer didn't do his due diligence in verifying the number of cherries on the truck, and didn't add wording specific to the number of cherries he was receiving, that was his problem.

In the case with Patrick, the number of cherries WAS specified.  Well, the interest rate was, anyway.  And Patrick failed to hold up to that interest rate.  It'd be like the seller of the cherries writing in the contract that he was selling 5000 pounds of cherries, but he only brings 4500 pounds, using the excuse that someone must have stolen the other 500 pounds out of the back of the truck last night.  That doesn't make a bit of difference - the buyer bought 5000 pounds of cherries, not 4500, and unless a new contract can be established (likely with a reduction in price), the seller is in the wrong, not the buyer.

You stick to the word of the contract no matter what.  That is what is enforceable by law.  Assumptions DO NOT MATTER.

Seems odd that there is even an argument. PatrickHarnett is supposed to have paid back some Bitcoins and has not. I am sure there are reasons for this but that still does mean he is in default. Paying back little bits of what he owes doesn't change that.

Or, do Bitcoins operate on a different set of logic?

I think you're missing the point. The point is that in the minds of both parties, the agreement was an agreement about what to do with 5,000 pounds of cherries. If 5,000 pounds of cherries don't actually exist, there is no actual agreement.

Suppose the contract isn't written, but there was a mutual understanding that the truck contained 5,000 pounds of cherries. Does the buyer have to make the truck contain 5,000 pounds of cherries? Or does the seller have to settle for however many pounds of cherries are in the truck? You *can't* enforce the contract as agreed because the agreement is based on a false premise -- that the truck contains 5,000 pounds of cherries.

Why didn't the seller sell 5,000 pounds of cherries, not 4,500?

The problem is that in cases like this, it's impossible to do that. The words of the contract refer to things that don't actually exist. The "cherries" spoken of in my example contract don't actually exist. Whether the contract said "5,000 pounds of cherries" or not, if that's what "cherries" meant, then it's speaking about a non-existent thing. There's no way to enforce it as written. (Unless it had some kind of clause that addressed this case.)

This case is similar. The loans the agreement was premised on turned out not to exist in the form both parties believed they did.

By the way, I now have looked at the amounts outstanding and the repayments, and I think it's inevitable that Patrick will default by any equitable standard, if he hasn't already. Even with absurdly generous terms (like repaying 40% of premiums, with no past or future interest, over three years) I don't think Patrick and his wife will make the lifestyle sacrifices they would need to in order to pay back debts that are likely not enforceable in any court of law. If he's not presently willing to negotiate, and stick to, some kind of reasonable repayment terms and schedule, he deserves a scammer tag now.

Did you read the thread you are responding to? The agreement by which he was supposed to have paid back some Bitcoins is not enforceable as agreed due to common mistake.

Of course they do. Otherwise the agreement would be void because of the usurious interest rate.

Why does a "common mistake" matter? Anyone lending/giving/investing Bitcoin probably believes that the other side can live up to their end of the agreement but when they don't it's the fault of the person receiving the Bitcoin who is then unable to pay back what they owe.

That's certainly a breach, but not even the biggest one. The main problem here is that Patrick failed to repay the principal on the commonly agreed due date, not that he failed to repay interest as agreed.

So to use your cherries example: someone agreed to sell one truck with 5k lbs of cherries to be delivered at a specified location at a specified time, and someone agreed to buy same. The buyer paid the seller on the spot. At time of delivery, seller informs buyer that a) there's only 4500 lbs of cherries in the truck and b) the truck is "somewhere in Argentina" but will be making it towards the specified location "as best it can".

Well duh.

Joel, your arguments are absurd.  If a seller agrees to sell 5000 pounds of cherries, but only delivers 4500 pounds, that is on him.  He either needs to make things right by delivering an additional 500 pounds, or renegotiate the contract (i.e., agree with the buyer to only sell 4500 pounds at a lower total price).

The contract in question with Patrick wasn't an agreement about "what to do with X number of bitcoins", it was an agreement whereby the buyer would give Patrick a particular number of bitcoins, and Patrick would "deliver" 1% per week back to the buyer, plus the principle at a certain date.  Just like an agreement where a seller agrees to deliver a particular number of pounds of cherries to the buyer.  It wasn't contingent upon whether Patrick's investments panned out or not.  If it did, the contract would have stated as much.  NOWHERE does Patrick and the other party agree that, if Patrick's investments default, then Patrick can default without giving his investors recourse.

Anyway, I'm done debating about this - we're just rehashing the same thing over and over.  I'll just say that your arguments are fairly silly, and would not hold up in any court of law.

Joel's arguments are really dumb. Patrick was acting as a bank. Charging higher interests for loans vs paying deposits, with the assumptions that the difference would more than make up for defaults in the loans with a little profit left for him. The fact that Patrick loaned out money to people who were investing in pirate is not anyone else's fault but Patrick's, he should have either been more careful with who he was loaning to or charged a higher interest rate. You don't expect your bank to pay you half of your usual percentage rate on a CD or savings account because more people foreclosed on their homes than the bank suspected?

Because when there's a common mistake, the contract is about something that doesn't actually exist. For example, if both the buyer and seller believe there's 5,000 pounds of cherries in a truck and agree to sell the 5,000 pounds of cherries in the truck for $10,000, the contract is void. There's no way to enforce it because its subject doesn't actually exist.

The issue is not that one side can't live up to the agreement. This issue is that the agreement was about a loan portfolio that both sides believed had particular attributes it didn't actually have. The agreement was about something that both sides believed to exist but that did not actually exist.

That's correct. However, don't forget that this assumption was shared by those who loaned money to him. Read the transcript.

Somehow, I think we're talking past each other. Please re-read what I wrote. If you don't understand it, perhaps I can find a way to make it clearer. Your response reflects a complete misunderstanding of the clear meaning of my words. My whole point is that both sides believed there was no significant Pirate exposure in the loans, and had either side believed otherwise, the agreement would not have happened. I think you agree with me on this, right?

Nope, I'm just against idiocy. Lending at usurious interest rates using contracts that can't be enforced in a court of law with people who have no ability to repay the loan other than from the expected profits of an implausible business is idiocy. Without that idiocy, none of these fiascos would have happened.

If I were to take Bitcoins from someone and told them I was going to put those Bitcoins in my special MoneyMultiplier™ and they agree that is fine and lend me the money then it turns out I have no such thing and don't have their money anymore because my MoneyMultiplier™ ate it and never multiplied money in the first place, it's a common mistake because they believed me when I said I had a working MoneyMultiplier™ therefore the contact is null and I'm not considered in default when I can't repay them like I agreed?

I did, so your saying that you shouldn't expect to be able to withdrawal your money from a bank anytime you want? You can easily look up the most popular us banks and see that they loan out your money 10 to 20 times their deposits, so they are just as risky if not more than Patrick. But you don't question being able to make a withdrawal from your checking account. By your ideas there wouldn't be any secured deposits with bitcoin as bitcoin won't ever have a "federal reserve". All investments have risks that's why banks make a profit is to calculate risks and remove them from the customer. Patrick basically said it was a secured loan, when he said he had money to cover it if pirate would fail.

The blame the victim mentality here is getting ridiculous. We don't blame women when they are raped so why do we blame people for getting thieved. Everyone takes risks in life they regret and misjudges others' characters, I'm sure even Joel has done it. It doesn't make them an immoral person

There's nothing wrong with blaming the victim when the victim is in fact at fault. The error in blaming the victim is when you attempt to use blame for the victim to excuse or reduce the culpability of the perpetrator.

If you walk through the worst neighborhood on a dark night with $100 bills sticking out of your pockets and get robbed, you're an idiot who deserves some blame for the robbery. However, the robber certainly can't use this to reduce his culpability. There's no "he was asking for it" defense to robbery.

Nope. I never said that.

Well, I don't because my checking account is insured by the government. If it wasn't, banks would likely make provisions to cover runs in their deposit agreements.

No, there are other ways to secure deposits. It's kind of complicated to discuss in the thread, but so long as there's sufficient equity, you can protect against a liquidity crunch. It's hard to protect against an equity crunch though -- if a large number of loans go bad, then lenders will lose money. So far as I know, there's no fix for this other than specifically buying insurance. Even then though, of course, if things get bad enough, the insurer can go broke, as happened during the recent global economic collapse. If don't know how to fix that.

That's correct. That was Patrick's mistake. And I agree that gives him partial culpability for the loans going bad. However, those who loaned Patrick money also believed that his loans had little Pirate exposure and not because Patrick said so, but because Patrick explained his business model.

Then what exactly are you doing here in the robber punishment thread?

Explaining that the failure that resulted in the loans going bad was due to a mistake made jointly by both parties and thus not equitably allocatable entirely to one of them. Patrick is as much a victim here as those who loaned him money -- assuming he eventually makes some kind of reasonable settlement for a portion of the principle.

Well I think he just admitted that patrick should not have his liability decreased just as a robber would not, so he deserves the scammer tag. Now that that's settled, I'm wondering why Joel cares about bitcoin at all. The only way to have a totally secured loan is with a central bank, you could secure it with a car, home, precious metals, but all could collapse in price. So I guess bitcoin is doomed to fail.

That doesn't mean that a "scammer" tag is what is needed.  It sounds like we have another label and needs to be invented for things of these nature ("In Default" tag, etc...).   There was risk involved when you put deposited your money.  He is making a solid effort to pay people back and keep is creditors apprised of the current situation.  Scamming in my book is a very specific thing that has facts surrounding it that show the person's true intent. 

Intent is the most important aspect of giving this tag out.  We need to make the distinction on someone one intends to do something and someone who doesn't.   If you think otherwise, I would like to see reasoning what else is more important.  Don't mentioned, be broke his word, that isn't scamming per say, externalities do happen and when it did happen in this case, he didn't disappear like a scammer, he is putting real effort forward to make good. 

Another use of the word "default".

I propose a "Default Tag" be used for this type of situation until the principle is paid.  The defaulter could apply for removal and we could have a 1 week comment period where if people who are actually owed principle and dispute the request with hard evidence only.  If all disputes are settled or none of the known creditors come forward, then the tag is lifted.

That's a bad analogy. Patrick Harnett had full control over who he lent to in order to reduce correlated risk. He had information on what exactly applicants claimed to be using the money for and the ability to demand as much evidence of this as necessary. Based on this evidence, he falsely assumed that his borrowers weren't exposed to Pirate and got screwed - that's the incorrect belief that's the problem here, and the people who loaned Patrick money didn't have this information! They had to rely on Patrick's promise that he was competent to vet applicants and that he'd made sure not to lend money to people who'd just invest it in Pirate.

A closer analogy would be if one party entered into a contract in which they gave another party money which the second party was to buy a lorry-load of cherries with, and they'd split the profit from reselling them. If the second party then goes and buys off the back of a truck in some parking lot and gets crates full of rubble instead, which party should be liable?

You are making no sense. Are you living in the vicinity of a strong reality distortion field of some kind?

1) you ask me for money,
2) i ask you if you're a reputable, honest member of the society, with a steady income,
3) you say yes,
4) i lend you the money, we sign a contract agreeing on the interest rate and date of return,
5) you gamble 1/3rd of it, waste 1/3rd on hookers and snort the last 1/3rd
6) you fail to return the principal
7) you fail to pay the interest

In the JoelKatz world, that means we're both equally guilty. And it's a "common mistake", whatever that means.
Here's how the above sequence of events looks like in the real, grownup world:

4) i lend you the money, we sign a contract agreeing on the interest rate and date of return,
6) you fail to return the principal
7) you fail to pay the interest

THERE IS NO SUCH THING as a "common mistake" in contracts. Contracts are an if-then thing. IF i give you X, THEN you return X+Y. IF you fail to return X+Y, THEN you default. That's all there is to it.

First, your last sentence is factually untrue. They did not have to rely on Patrick's promise. They could have asked for any evidence they wanted. Second, it wasn't a "promise". It was Patrick's statement of his belief. Lastly, this smacks of the same "due diligence" argument rightly ridiculed regularly in this forum. You can't fault someone for not doing the impossible.

Exactly. In this case, the loans that formed the basis of the contract turned out not to be what both sides thought they were through a failure shared equally by both sides.

You would find it a more productive use of your time to spend the five minutes it would take to understand what a "common mistake" is rather than showing off your ignorance to the world.

A "common mistake" is when a contract is predicated on a belief that both parties shared without which they would not have entered into the contract and wherein the incorrect belief is not due to significantly greater fault on the part of either party. In essence, the parties made an argument that is about something that does not exist. In that case, it may impossible or inequitable to enforce the contract as agreed.

Simple example: Two parties both believe a truck contains 5,000 pounds of cherries. They make an agreement that one party will buy the 5,000 pounds of cherries in the truck from the other party. Due to a mistake equally attributable by both parties, the truck actually contains 4,500 pounds of cherries. It is now impossible (or inequitable) to enforce the contract as agreed -- would that mean the buyer must put 500 pounds more cherries in the truck? Or would that mean the seller must accept the 4,500 pounds of cherries?

There is no "thought" in a contract.

On the contrary, that's *all* a contract is. A written agreement may be evidence of what the agreement was. But the agreement itself is purely thought. A "contract" is a meeting of the minds.

Great. Except none of that applies. Which is why i've made the remark i've made.
THERE IS NO common mistake here. The contract was simple.

A lends X to B
B is obliged to return X+interest to A

That. Is. All.
Everything preceding that has no bearing on that contract. Can you understand that?

There was a common mistake that Patrick's loan portfolio did not have significant correlated risk due to Pirate exposure. If not for that mistake, neither side would have entered into the agreement.

Did you read the transcript? The agreement was not as simple as you make it seem, it was specifically a loan to finance a particular lending strategy. Neither side would have entered into the agreement if not for their mistaken common belief. The lender specifically wanted the assurance that the loans were backed by the strength of Patrick's portfolio. The agreement ties one to the other.

Aug 10 08:06:54 <mircea_popescu>   hey. your deposits still bs&t free ?
Aug 10 08:07:21 <patrickharnett>   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39 <patrickharnett>   that's what the market wanted
...
Aug 10 08:10:17 <patrickharnett>   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett>   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56 <mircea_popescu>   well that works. i'd like to put 500 bitcoins with you

What do you think "well that works" means here? It's right before the offer.

Joel - show us an example where your thoughts regarding "common mistake" are upheld in any court of law.

It's unfortunate Patrick doesn't want to tell his side, cause the available information doesn't look very good for him.

This is what Joel is talking about. http://en.wikipedia.org/wiki/Mistake_%28contract_law%29
I don't think I agree with his conclusions though.

See any case involving "common mistake". Couturier v. Hastie (5 HL Cas673), Galloway v. Galloway (30 TLR 531), Copper v. Phibbs (LR 2 HL 149), Davis v. Pennsylvania Company (337 PA 456), Cooper v. Phibbs, Great Peace Shipping Ltd v. Tsavliris Salvage, and on and on and on. "Common mistake" is a concept of contract law, it's not something I made up.

What do you think courts do when two parties enter into a contract and then discover that some element of the subject matter of the contract doesn't actually exist due to fault attributable to neither party or substantially equally attributable to both of them?

That appears to be more like someone asking pertinent questions before handing over their money than part of the contract between them. That he lied or misled in his answers knowingly or unknowingly would put him more in the wrong.

Patrick's Kraken fund might be an even more clear cut case that Patrick deserves a scammer tag. Patrick guaranteed those deposits, and it is clear that Patrick knew the Kraken assets were correlated and risky.

Approximately 75% of the assets in Kraken are bad Pirate debt via Payb.tc, PPT.A, PPT.B, and PPT.E (as later disclosed in his Kraken newsletter on October 14, 2012). This Pirate debt was purchased after Pirate had already defaulted. Joel can't argue that Patrick didn't know his Kraken assets were correlated, because Patrick specifically chose to put a significant portion of the fund in bad Pirate debt. Joel can't argue that Patrick didn't know the assets were risky, because Pirate had already defaulted.

Is there anybody that invested in the Kraken fund that has requested a withdrawal and hasn't been paid back in full? This might deserve a whole new thread since Kraken was a different fund.

https://bitcointalk.org/index.php?topic=100913.msg1102858#msg1102858

Patrick guaranteed pirate debt....and he did so after knowing pirate had defaulted. What a lowlife.

I 100% agree. From what I understand about the Kraken fund, there is no excuse for Patrick not repaying principle to anyone who deposited in this fund. (And I strongly fear this fund may be 100% scam.)

I believe that the Kraken fund was only supposed to invest in things that Patrick 100% knew had nothing to do with Pirate or any similar kind of risk. So there should be no reason it shouldn't be able to return 100% of principle. (Other than perhaps a liquidity crunch or the like that might slow repayments.)

Update/Correction: The Kraken fund did make risky investments, but only after Patrick 100% knew precisely what those risks were, and he 100% personally guaranteed repayment of principle.

There's no evidence he lied or mislead. In fact, he explained the factual basis for his incorrect conclusion and those he spoke to drew the same incorrect conclusion from the same facts.

Patrick didn't say, "trust me that X" or "I have secret knowledge that X". He said, "Because of facts A, B, and C, I conclude X". The facts A, B, and C were true. However, the conclusion X did not follow from them. If Patrick is responsible for the damages this mistake caused, so are the other parties who made the very same mistake and made the very same damages occur, drawing the same incorrect conclusion from the same correct facts.

Both parties had facts A, B, and C. Those facts were correct.
Both parties concluded X from A, B, and C. X was incorrect and did not follow from A, B, and C.
Both parties acted on X, jointly causing a loss.
Thus both parties are responsible for the loss and should share it.

He's the one left at fault without the money he owes though because he was the one taking money and trusting in those things so that he would be able to pay back what he agreed to. Therefore he's the one holding the bag, the one at fault. He willingly opened himself up to this position by partaking in these agreements and being the one taking the money which he agreed to return with interest.

The other people made a mistake but he's the one who made the mistake which caused him to apparently lose a bunch of money he soon owed back to the people who left it with him. That other people may have made the same mistake with the same data he had doesn't change that at all or make it any more ok that he can no longer pay back the money he now owes. He then did some sort of renegotiation of the terms for repayment without any actual negotiation with the people he owed money to.

You are saying that people made a mistake, the same mistake he made. That seems to be true, yes and I don't think anyone disputes that. However, he is the one who owes money and is in default over it, unable to pay it back as he agreed to.

As an aside, it does seem like the scammer tag is not always ideal but it's all we have on this forum? Some other tag for borrowers/invesments which fall into default should have their own special tag, perhaps with a default count or color based on severity.. or perhaps based on if they managed to repay what they owe eventually.

So someone could default, they get an angry red DEFAULT tag. They repay half or so and it turns yellow. They repay it all and it turns green. So they had defaulted in the past but repaid all their debts. Could even be like a badge of honor, if someone stuck it out like that and made their mistakes right people might be more likely to do business with them in the future.

Just to clarify here, the scammer tag is not given out based on civil law, but on criminal law. Thus, this applies to us:
If we had a "default" tag, that would be a whole different situation, though. For sure, that would be based off of civil law.
Agreed. So, if Patrick doesn't want a scammer tag, he should either pay back as originally agreed or renegotiate in good faith.

The important point here is that intent can only be established by examining deeds. Nobody is in a position to posit what intent "is" or "really is" other or outside of what is supported by facts.

You claim (with no basis) that "he is making a solid effort". I show, clearly and so far indisputably that he is not: ~20 BTC coming out in three months on a 500 principal + 100-200 interest deal is neither solid nor effort.

You claim (with dubious basis) that he is keeping the creditors appraised. This is false: he has not been in contact to negotiate beg for a new agreement, as his position behooves him to do. In fact, he has not been in contact at all.

Finally, let me quote myself, maybe on 2nd read it sinks in:


There's no grounds for you to posit innocence or anything else about some vague "intent" when the construction the facts bear is scammer. Sorry.


This is something we have no knowledge of whatsoever, not being involved in that. However, if indeed the quote is correct I would like to include this by reference to further illuminate why Darlkore's claims above hold no water. If it quacks like a scammer, it can have a scammer tag at the very least until he stops. It's not like these scammer tags come with a beheading, he can earn his way back out of it just fine.

At any rate, the notion of a "default" tag, while maybe appropriate in general, is not appropriate here. It would seem to imply no blame and no wrongdoing, whereas blame and wrongdoing is exactly what we're showing. The man made false representations, which is a polite way of saying he lied, in order to steal money. That's all there is, we're not arguing against the general unfairness of the world and why oh why did our cherry tree not make any cherries this year. We're arguing against the very specific fraudulent behavior of one person who lied and misrepresented themselves for profit.

Has there been a shift in applying the scammer tag? In the past, as long as the "offender" was in regular communication and working to pay back his debt, he didn't get tagged. Now, it seems that issuing the tag happens immediately and is removed after repayment. Also, doesn't the term "scam" imply malicious intent? Something which cannot be easily proven here.

When was the last time you contacted Patrick?

exorors

Yes,  I would have to agree.  Unfortunately there seems to be three things going on in this thread.  

MPOE-PR is trolling/rabble rousing as he is wont to do around these boards.  Why?  Your guess is as good as mine.

Joel is having a very detailed debate about contract law.

And Patrick Harnett is maintaining his dignity by not bothering to respond.

IF augostocroppo would do an analysis of MOE-PR's posts as he has with CharlieContent he would probably identify similar attributes.  Members trolling these board for their own humor and amusement while really adding nothing to any meaningful conversation.

So the owner of Bitcoins only really existing stock exchange is a "troll" now?

And the user that was shilling for usagi for months and egging her/him/it on with trying to discredit as trolls those who were asking valid questions; that user is now a valuable "analyzer of posts"?

Good to know. I'll update my files accordingly.

*opens documentation to replace "unlikely scam target" with "troll" as well as "likely fraudster" with "honest businessman" and vice versa *

greyhawk

I don't understand you post.  If you are vouching for MOE-PR.  The please do so.  Looks like this guys could use some friends around here.  I have no idea who he is or what his business is, but based on his posts I would put money with Zouh Tong  and Bitfloor before I'd allow this knucklehead to have one satoshi of my BTC.


Thanks

Basically he runs this: https://en.bitcoin.it/wiki/MPEx

He's also one of very very few people here who actually behaves like a businessman, instead of just imitating being a business man like most cargo cult followers here.

An assholish, ruthless, opportunistic businessman, I'll give you that, sure, but that IS in huge parts what is needed to BE a businessman.

I think people just don't like him because he also runs an image board, where Romanian escorts and other "erotic service partners" advertise their services.

Who are you again?

Point to something you actually did. Absent that, point to at least a few smart things you said to counterbalance all the plain idiotic things you said one could point to.

Being able to create a forum name does not automatically make you someone.


You know, I actually am a girl.

I didn't know about his escort service.  Nothing wrong with that.  I'll have to check that out.
[snip]assholish, ruthless, opportunistic businessman[/snip] is fine to, but maybe he should to hire someone to be a little more pleasant to be the face of  his business.  He is certainly not winning any friends and influencing people with him many abrasive and agressive posts all over these boards.  But then again maybe he's not interested in growing his business.  

Anyway good to know.  Thanks.

It seems like Kraken may have started out with good intentions, but it was likely also used to buy worthless ponzi debt from the main "starfish" scheme. At least, that's what makes the most sense...

Starting to sound more and more like Usagi.

That was my concern when it first started. It seemed to me like Patrick knew he had a lot of worthless debt owed to him and a lot of legitimate debt that he owed to others. I feared that his plan with Kraken was to have it buy all his worthless debt and give him the cash to pay people off. But the strange thing is, he *guaranteed* Kraken -- explicitly, after knowing the issues with the debt it was holding, with his eyes fully open. I can't see how that makes sense unless he was planning to run it as a Ponzi, using the initial funds to pay off previous investors in his other funds so preserve his reputation. There seemed, at least to me, to be no plausible way it could ever return principle, much less make a profit, and thus the guarantee of the principle from his personal funds makes it seem like the only plausible business model was 100% scam.

If there's another explanation, I can't think of it.

Right. So the next question is who is responsible for this situation and how to hold them accountable. Patrick is certainly one of those people, but he's not the only one.

1) Patrick's business suffered an $X loss.

2) Why did Patrick's business suffer an $X loss? Because two people made a mistake for which they can be held accountable.

3) Patrick is one of the people who made that mistake, thus he's responsible for some portion of that loss.

4) The people who loaned Patrick money also made that same mistake and thus they're responsible for some portion of that loss.

I'll give you a real world example of this same principle. A few years ago, a doctor examining my daughter noticed that her pediatrician had noted a heart murmur in her records but that he didn't hear it. The physician felt that she might have grown out of it, but the only way to be sure was to run a test. He assured me my insurance would cover the test. We had the test, and my insurance didn't cover it.

I refused to pay. The physician argued that I had signed a contract saying that I was responsible for any amounts my insurance wouldn't pay. He argued that our contract clearly stated that I was responsible for any amounts my insurance wouldn't cover. I agreed with him, but then pointed out that because I was responsible for any amounts my insurance wouldn't pay, his mistake in assuring me that my insurance would cover the costs damaged me. And he was responsible to me for the loss his mistake caused me, a loss that (because both are between me and him) offsets my responsibility to pay him for the test. He actually checked with his lawyer (I think more because he was curious than anything) and he agreed.

It's substantially the same thing here. It's precisely because Patrick promised to pay that money back that the mistake made by those who loaned him money caused Patrick damages for which they are responsible. Because both mistakes are between the same two people, the losses one party's mistake caused the other offset the losses the other party's mistake caused.

Irresponsible lending is just as much a problem as irresponsible borrowing. We wouldn't have had the Pirate fiasco if not for irresponsible lenders.

This is getting more ridiculous by the day. Where the fuck does your stupid little poor man's anecdote figure into this? Did Patrick express doubt as to his ability to repay and MP assured Patrick that Patrick will be able to repay just fine? Damages caused to someone by lending them money? Was it like, poisonous or something? Are you off your meds or somesuch?

Other than that, you are trying to paint as "irresponsible lender" a lender who is in fact the paragon of responsibility in BTC lending. Again: at the time PatrickHarnett got 500 btc at 1% the market rate was 7%.

Irresponsible forum posting, especially when it purposefully and repeatedly misrepresents fiction as fact and idiocy as sense is quickly becoming the top and only contribution you're making to this community, such as it is. Not much of a problem, but just in case you care.

The point is that reasoning is not like a bus. You can't choose your stop and get off. You have to keep going.

No. In fact, Patrick expressed an erroneous lack of doubt. That is a mistake Patrick made and for which he should be held accountable. But other people who made the same mistake and jointly caused the same losses should also be held accountable.

You can recast any complex argument to make it seem invalid by showing its conclusion can't follow from just one of its premises. The damage was caused by the particular way money was loaned. The money wasn't poisonous, but the usurious loan was. It forced a business model that both parties should have known could not have worked. The collapse is jointly the fault of a mistake made by both parties -- both parties making the same mistake.

The market was horrifically broken. Measuring the sensibility of this loan against that market is silly. It's time to look at these things objectively now. There was no realistic way this loan could have made sense for either party, and both parties should have realized that.

You're much better at insulting people than you are at responding to the arguments they make.

Did the loan harm Patrick? Was the loan based on a mistake on the part of both parties?

Absolutely no forcing involved. Absolutely no "common mistake" involved. Market is always more "objectively" than Joel Insanikatz. Your bus has sailed long, long ago.

Patrick harmed Patrick, much like Joel is harming Joel. But carry on, by all means, after all in six months' time when I'll be quoting this trainwreck of a nervous breakdown against any attempt on your part to represent yourself as sane or even vaguely intelligent you'll probably be explaining how it was our common mistake, ie you were being an idiot and I was making fun of you, and so I caused you harm and so we should be jointly held responsible for you being an idiot.

Sounds legit, especially given that the Internet not being like a truck and reasoning not being like a bus, you gotta keep going.

I am relatively certain the only one who agrees with Joel in this thread is Joel.

FTFY

You can usually get the best measurements of something's value or cost from a healthy market. But the lending market at that time was completely infected by such widespread fraud that it was basically meaningless.

If you had a situation where a person could sell a car but keep the car and no law or government would do anything to stop them, the market might show a price of $500 for a car. In that unusual situation, the market is not real, and the $500 price is not a measurement of the value of the car.

The Bitcoin lending market was a market of that type. People could borrow money and avoid paying it back with substantially no consequences. As a result, interest rates got bid up to ludicrous levels by borrowers who had no intention of ever paying people back. Those interest rates were not a sensible measure of any price or value, it was just a broken market.

Broken markets really can happen, just not usually for very long. As soon as people understand the particular breakage, it likely will never happen the same way again. The real estate market got inflated this same way. The securitization of mortgages lead to a broken market where the lenders had no incentive to make sure the mortgages were solid. This caused buyers to overvalue them. As a result, the market gave values for homes and mortgages that were nonsensical. Now that people realize this problem, it is self-fixing. Nobody will buy or value securitized mortgages ever again (or at least, significant numbers of people won't) without making sure the value is based on the actual strength of the mortgages.

With luck, this same problem will never happen in the Bitcoin lending market again. But the first step is recognizing the problem and those who caused it taking responsibility. You should strongly consider whether you really want to continue to oppose that process. I'm still presuming you are acting in good faith, but it's getting harder and harder. Perhaps you are profiting from the widespread fraud and theft?

A well. We all make mistakes.

Good thing this isn't a popularity contest.  I don't agree with Joel either but you've made a terrible and worthless post.  The goal here is to get to the truth and not stroke each other's egos.

If so, that would be a terrible shame. It would mean the Bitcoin community learned almost nothing from the Pirate collapse and is likely doomed to repeat it. When people can make mistakes and harm others with no consequences, markets cannot function.

It seems like the best way to make everyone happy here is to introduce more tags.

If there were an "in default" tag, we could all agree that Patrick deserves this tag. Unlike the term scammer, there is no question of blame here. It is a simple fact.
If you introduce a tag like this, you allow more leeway for people like Patrick. The "in default" tag might not satisfy MPOE, but it would probably satisfy almost everyone else.

If one tag seems unjust, there could also be an "imprudent lender" tag. There is no question of blame here. It is a simple fact that the MPOE's loan to Patrick was imprudent.

Readers could draw there own conclusions about which tag is more meaningful.

Joel, would you support the use of those tags?

That just seems kind of ugly to me. But I do agree that the current system has at least one major problem -- the term "scammer" strongly connotes intentional fraud. But I think we all agree that a person who borrows some Bitcoins fully intending to pay them back but then can't pay them back (say they lost their job) deserves a scammer tag. The point is not to pass judgment or act like a court but to provide some kind of useful indication of who you cannot trust to keep agreements.

Honestly, I'd say getting rid of the scammer tag would be preferable to a plethora of tags. A broken trust indicator may be worse than none at all.

Why not just a tainted tag? 3 colors

Something like the Ignore but possibly a little bit more BOLD....



Say I borrow 120 BTC... 2 weeks later I get robbed or my house burns down........ I would be unable to pay right away until my life got back together.. Would that make me a scammer?

It would make you "in default."

Yeah yeah, right. Stop trying to present yourself as some sort of thought leader of a process (https://bitcointalk.org/index.php?topic=106391.0) you have - to the best I can determine - absolutely nothing to do with.

A much more intellectually honest approach would be to present your crackpot theories somewhere apart (such as in the Offtopic forum, which pretty much exists for this very purpose) and allow the world to ignore them on their own merits rather than trying to interject yourself in discussions between the adults and trying to piggyback them on actual issues of actual import.

We get it, you feel you're one with the whole, you think everything's the same and all are the same one thing and bla bla bla. It doesn't work in the real world, it's not interesting in the Bitcoin world, it has no merit, no value and no importance. Stop wasting my time with it.


You are very much mistaken. This thread is not asking of "the community" anything at all. This thread is telling the community a simple fact (ie, that PatrickHarnett is a scammer, and that it's unsafe to take him at his word from now on), is presenting to the community the proof for that fact, and is asking the moderators to enact this fact into the little symbolic representation they use in this particular venue to sum such facts up.

The community is, jointly or severally, perfectly free to ignore the facts. The net results of ignoring the facts are never going to be a "common mistake", they will be their mistake, wholly owned and quite personal, and the results theirs to bear entirely.

The moderators are perfectly free to ignore the facts too. All that'll do is make the symbolic representation a little less relevant.

None of this discussion has any impact whatsoever on whether PatrickHarnett is a scammer or not. That is something you can't vote, either as a "community" or as a congregation of moderators or as anything. Only PatrickHarnett can make himself a scammer. Unfortunately for him, he has done this already.


Again, that PatrickHarnett is in default is not the point of this discussion. PatrickHarnett is a scammer, aka a liar and a thief, not an honest businessman in default. The last thing scammers, aka liars and thieves need around these parts is more leeway.


Simply stating that makes you an idiot, are you aware? How exactly is loaning to the most respectable (at the time) forum "bank" at rates a degree of magnitude under market "imprudent"? No, never mind, don't answer that. Just get lost.


This is not at all what happened here.

What happened here was that PatrickHarnett took some money from some people at fixed rates, looking to make a profit. He made some bets that, contrary to his expectation and contrary to his high regard of himself, turned sour. Instead of manning up to this failure of his, such as for instance by skipping a month's discretionary expenditure in his life, putting that money into BTC and paying out he went the classical Peter Lambert route: played double or nothing with his customer's money (in this case by buying discounted pirate debt with money he represented as not exposed to pirate - also a classic).

All through this he felt no need to kneel before his intellectual superiors, those people more intelligent, more competent and more versed in these matters, present his stupidity which he thought was "a plan", be told it's a stupid idea and not a plan and obediently (as the intellectually inferior are held to do) given up on his stupidity which he thought was a plan. Because oh why don't you know, PatrickHarnett is such a smart financier, even better than Kludge the Bancoclerk, and he can pull off things.

If it had panned out he'd have made 50-500% on the capital, paid 2-3-5% to his investors and counted himself a great businessman. Since it didn't pan out he doesn't want to sell his house and move into a shelter where he belongs, because he figures (correctly) that the forum is full of idiots anyway and who cares about what they think.

This used to work just fine but then Mircea Popescu happened and pretty much that meant the end of this sort of bullshit. You're welcome, and fuck you.

You need to take a step back and realize that the people who loaned Patrick money made precisely the same mistake Patrick did.

People like Patrick, Hashking, and Pirate will always come along. So long as there are idiots willing to lend money at criminally usurious interest rates on the most ridiculous and implausible business plans, and who then feel they can deny any responsibility when the shit hits the fan (as it *always* will, that's the one certainty) this will keep happening over and over and over.

But keep those insults coming. If you're good at something, don't waste it. (But stop the self-righteousness. You're not very good at that.)

And by the way, I basically agree with you. Patrick hasn't, and likely won't ever, make the lifestyle sacrifices he and his wife need to make in order to pay back their fair share of the losses. So he'll almost certainly deserve a scammer tag at some point, if he doesn't already. If he isn't even on track and committed to paying back 40% in 3 years, which is ridiculously little in a very long time, I'd say he clearly deserves to be branded a scammer.

You transferred 500 Bitcoins to Patrick and did not require a signed contract to secure or to determine both parties obligations? Is that the way you handle your stock exchange business?

If you think an IRC log represents a legitimate contract, you have completely failed.

How do you expect a third party to trust in your claim if Patrick alleges that your claim was not a mutual agreement? How could a third party be sure that no other agreement was settled between both parties?


I recommend you look at the thread where the user MPOE-PR requests a scammer tag for Theymos. If you compare that thread with this, you will realize that evidence is a concept outside the scope of the user MOE-PR. That and this thread are just claims...

http://oxforddictionaries.com/definition/english/claim?q=claim



False statement. I never have been "shilling for usagi for months" and I never "discredit as trolls those who were asking valid questions".


A user which is unable to require a signed contract is not businessman...


I fully support JoelKatz arguments, which are very reasonable and based on factual data.

Yeah, not sure why anyone would of had any faith in Pirate after he had lied so often......... ^ sorry to hear you lost some coins...... 500 btc? would you really want someone to sell there house over 5 grand?....

Where I am currently living, bankruptcy is publicly announced and divulged in any job application (killing your career forever). For someone in Patrick's profession, bankruptcy results in legally-mandated termination and permanent ineligibly for future employment. The societal attitude, if anything, is that this punishment is much too lenient.

Whether you think Patrick should fork over his house or not depends on cultural values.

So why on earth doesn't Harnett then?

I thought your argument was that Harnett's lenders are equally to blame for any problems they have experienced due to his default because they should have done more due diligence before lending to him.

Surely that would apply in this case too?

In my opinion, a person who borrows a handful of coins and then can't pay them back due to unforeseen circumstances is much more deserving of trust, compassion and leniency than someone who starts up a commercial enterprise that is based on borrowing coins that goes into default based on poor investments

It's Harnett that should be called to account for his lack of due diligence. He was in the business of lending out other people's money for his own profit, and therefore should be held to a higher standard.

Must depend where you live....

@ MPOE-PR - Bottomline, you need to prove the intention of scamming you.   If you calling for a Scammer tag because two parties took "risk" in trusting each other and the debtor made bad choices with an investment, DOES NOT mean it is a scam.  You may not like the decision but at the time you made the deposited the coins, you trusted that person judgement.   Nothing you say, even with insults changes that fact. 

Yes he is in "default" at this time but you continue to claim something much more nefarious.   If you want that to stick, you need to come with more proof and is verifiable in some manner. 


Public Disclosure:  I do not or am not owed any debt to PatrickHarnett.   I have talk to him once offline about a business project I was working on that was un-related to any lenders or securities that are in default.

You need to read up on contract law then.  Anything written can count as a valid contract.  Heck, even a verbal or handshake agreement can be a contract, and enforceable in court.  The only thing that needs to be done is the contract has to be proven.  IRC logs can server that purpose, as can emails, recorded telephone conversations, etc.

The only thing an official signed contract does is makes it easier to enforce, especially when it comes to the nitty-gritty details.  But from what was said in IRC, this is easily an enforceable contract in which Patrick promised to pay back interest on a loan, and has failed to do so.

Unless Patrick repays the loan, he absolutely SHOULD be called a scammer.  He has an obligation to pay, because he said he would.

http://common.laws.com/contract-law


http://signaturecapture.com/laws.htm


http://www.legalmatch.com/law-library/article/writing-and-signature-requirements-for-a-valid-contract.html


http://www.australiancontractlaw.com/law/formation-formalities.html

Cool - I can play that game too.


http://www.legalzoom.com/business-law/contract-law/oral-contracts-do-they-carry


http://www.allbusiness.com/legal/contracts-agreements/2378-1.html#ixzz2BfGZbzPE


http://www.askdavetaylor.com/are_verbal_contracts_legally_enforceable.html

I rest my case.

Well if all you can do is go to court... Then go blow 10 grand to recover 5......



Seems like you should put this effort in to working something out with Patrick vs. crying about it in the forums....

Right, all I have is circumstantial evidence. That happens to be all we'll ever have, in this case and in absolutely any other. Not like someone's going to uncover PatrickHarnett's signed confession.

For the record, there's still people who believe pirate was a stand-up guy and "it wasn't proven he was a scammer". And there's some brainies chipping in to buy Nefario flowers.

What can I tell you....


In fact it has been long established legal practice (where "long" means > 100 years) in both civil and common law that any exchange which shows agreement between businessmen of the sort they would normally employ in the usual course of their trade is sufficient and binding as a contract. These aren't retail investors dealing here.


You're aware the guy ran off with about 20k btc right?

WhO? Spongebob or pirate?

I have been looking through a lot of old threads, being newish myself here. I had read the forums a bit while I read the technicals about Bitcoin before actually signing up though.

Seems like PatrickHarnett gets some special consideration among all those called into question, a few others have too. Seems like there is some sort of inner circle action going on here...

Is it because he has been around and operating for so long? It seems like there is a long history with this community continuing to trust someone even as others cast founded suspicions and doubts upon them and their actions. As the many suspicious things pile up until they ultimately disappear from the community with a large wallet of Bitcoins and then all the people who had defended them before lament that they never saw it coming and how surprising it was.

This appears to be fairly self destructive. Or at least, a self-perpetuating atmosphere of scamming even if those in question did not set out to scam anyone in the first place since as the issues pile up it becomes better to just grab everything and run as there is never any penalty for it other than a very late "scammer tag" on this forum. They probably just come back under a new name to start a new business too because why not? No one ever finds out they are a dangerous business partner until it's too late.

I think it's because it's black and white for some people, while white and black for others, which makes for a heated, lengthy thread topic.  Nothing special about Patrick - the situation he is in is just special.

I don't understand the logic of "let's negotiate with the scammer". What's the value proposition, does it go something like

What sense does that make?!


No, I fully agree with Zeeks. There's a little sewing circle, Nitwits United or something like that. The benefits of social media.

For the record, he hasn't been operating for "so long". He has just been slimy, that specific sort of "bro"-ness that has the respective nitwits all enamored. Pirate did the exact same thing. In fact, pretty much all the people that fucked "the community" in the ass with a piece of raw pine did exactly the same thing. Buddy-buddy pays for scammers.

Rest well, because all you did was not to provide any evidence which indicates that IRC logs are accepted as direct evidence to determine that a contract was signed, even less that any court of law have relied on IRC logs to determine the legitimacy of a contract.

All quotes you posted does not substantiate MPOE-PR claims.


You are clever only to do claims. As I had already admitted, you fail to understand the meaning of evidence. Since you only have a IRC log, that does not count as contract, but as evidence for a mutual agreement. Without a physical or digital signature from both parties, there is not a method to determine if both parties have changed the contract after the initial agreement. That means you or Patrick cannot prove which party is providing the legitimate contract.

Do you like old books? I suggest you read this before you send another 500 Bitcoins to an Internet user:

Handbook of the law of contracts (Open Library)

http://www.archive.org/stream/lawrencecontracts00clar#page/n3/mode/2up

The only point I was setting out to prove is that any agreement, with or without signature, can be upheld as a contract in a court of law.  That includes handshake agreements, verbal agreements, and written agreements (and yes, IRC logs as well, since they are "written").  Proving identities might be tricky, but as long as that is done, any written agreement (which this certainly qualifies as one) can be upheld as a contract.

I actually have an old book on contract law, and yes, I love old books, being that I own quite a few.  You would be surprised what you can get for under $10 on Amazon if you know what your looking for.  

In regards to this, we need to understand that we have no regulations other than this forum and people's personal knowledge of different events.  Kinda like a social credit rating.  I read the response above from the OP, thank you for your reply.   I understand what you are saying and if you feel that strongly about the issue then I can see why you think the "Scammer" tag is appropriate.   I did not know his debt was that large (BTC20K ~ can someone verify this?).   I have been doing some reading on here and at least from what I have seen, there is no doubt he is in "Default" and the mods should have this tag available in conjunction with "Scammer".  

I still don't think the bar has been met to apply the latter.   It just doesn't seem that much of a no-brainer....at this point.   If it was a slam dunk, I mean he has truly disappeared or didn't immediately starting paying back debts, I would agree with you.

Outstanding Question in my mind:  I would like to hear more about Patrick's deposit guarantee, what stipulations it had and what "his" explanation why he got so leveraged that he didn't keep up with his deposit guarantee.   I will say this, why I was looking at all the offers out there, that guarantee was the most attractive offer available at that point, he did seem to have his s**t together, I knew there was risk though, because I knew he was speculating & lending and I figured some of the people were not the best of character.   What I also figured is that he knew what he was doing and he was the least risky of the bunch, but if you had to ask me what his rating was that would make it the highest at that point... rating:  BBB-

Well no.. But something is better than nothing. no?

And the people who paid them to do it bear no responsibility whatsoever, right? The people who loaned Patrick money made precisely the same mistake Patrick did. (Assuming Patrick is telling the truth about his default problems, which is plausible but not confirmed.)

No.  The people who loaned Patrick money made the mistake of trusting Patrick.  And Patrick made the mistake of trusting whoever it was claimed to be a PTT.

The people who loaned Patrick money did NOT have a choice of where it was invested.  Because Patrick chose how to invest it, and because he offered a risk-free contract (i.e., a set payback amount and period, not a payback based on whether his investments panned out or not), Patrick is liable to his investors for the FULL amount that he promised he would pay.

Patrick could have said "if the investments I am investing this money in default, then you will not be repaid", but he made no such specification in his contract.  All he did was promise a certain payback over a certain period of time.  And that's exactly what he should be held liable to.

And Patrick made the mistake of trusting the people he loaned money to. Same mistake.

Right.

That's not true. They could have imposed any restrictions they wanted to on how the funds were invested. And they chose to invest with Patrick.

He didn't offer a risk-free contract. He stated that he believed he had sufficient diversity in his loans to cover a Pirate default.

Right, but in this case that was after both parties agreed that he had sufficient diversity to cover a Pirate default. If two people agree on X and then agree "therefore Y", if X turns out to be false, they didn't actually agree on Y. Read the transcript:

Aug 10 08:06:54 <mircea_popescu>   hey. your deposits still bs&t free ?
Aug 10 08:07:21 <patrickharnett>   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39 <patrickharnett>   that's what the market wanted
Aug 10 08:07:58 <mircea_popescu>   you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:08:00 <patrickharnett>   back in a couple of minutes - grabbing a glass of wine - friday evening here
Aug 10 08:09:57 <patrickharnett>   back
Aug 10 08:10:17 <patrickharnett>   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett>   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56 <mircea_popescu>   well that works. i'd like to put 500 bitcoins with you
Aug 10 08:11:02 <mircea_popescu>   do you mind id'ing with gribble ?

Both parties agreed that Patrick's loan portfolio was significantly free from correlated risk. Patrick concluded, based on that agreed fact, that he would have enough equity in his portfolio to cover a Pirate default. However, Patrick's loan portfolio was not significantly free from correlated risk, and thus he didn't have enough equity in his portfolio to cover a Pirate default. The parties never discussed what would happen if the portfolio had significant correlated risk -- it was something neither party considered.

For example:

A: My house is 1,200 square feet.
B: I'll paint it for $2,500.
A: Deal.
-
If the house isn't 1,200 square feet, A is responsible.

B: I measured your house, it's 1,200 square feet. I can paint it for $2,500.
A: Deal.
-
If the house isn't 1,200 square feet, B is responsible.

A: My house is 1,200 square feet.
B: I know, I measured it. I can paint it for $2,500.
A: Agreed.
-
Common mistake. If the house isn't 1,200 square feet, A and B are jointly responsible.

This is like the last case. Both parties, with sufficient information to realize otherwise, concluded that the loan portfolio was free from correlated risk. Patrick's agreement was based on that shared mistaken conclusion.

Using your example...

Patrick is assuring the person paying for the paint job that the house is 1,200 square feet after measuring it himself.  The house turns out to not be 1,200 square feet.  It is PATRICK'S fault that the house is not 1,200 square feet, because HE was the one in the position to ensure the house was 1,200 square feet.

It is NOT a common mistake, because those investing in Patrick had no choice of who to invest in, nor did they have any way to verify that they were not PPT's.  Patrick was the ONLY one in that position, and he gave people false information.  Sure, he didn't know it was false information at the time, but it is on him that the information ended up being wrong.

To revise your example:
A: I have no idea how big my neighbor's house is, but I want you to paint it.
B: I measured it, and it is 1,200 square feet.  I can paint it for $2,500.
A: Agreed.
B: Whoops - turns out you owe me $5,000, because I asked the home owner how big it was, and they said it was only 1,200 square feet.  Turns out it's actually 2,400.
A: No.  Just, no.

+1

That's pretty retarded throughout, but the bolded part is particularly funny. Even WITH a signed contract there's no way to determine that. The latter contract would have to be brought up by the interested party. Which, you know, the interested party is welcome to do at any time, instead of sending in the likes of you and Katz to make these outrageously funny arguments you make.


No, it is not.


Let's try and put this insanity to rest.

I. If A trusts B and B trusts C, these are not nor could they ever be "the same". They are different. They are of the same kind, they may have the same name or belong in the same category, they may be similar. They are not the same. In order for them to be the same in this context they would have to be identical, which is to say the same exact thing. Not two different cherries that are both cherries and thus "the same", but the same exact cherry.

II. The common mistake is a doctrine in common law that allows setting aside contracts that have no basis in fact. If for instance Mircea Popescu and PatrickHarnett both heard about this virtual cryptocurrency called Bitcoin (by reading on Something Awful, let's say) and then entered the original contract, except later it was discovered that there exists no such thing as "Bitcoin", it all being a joke pulled by SA, then indeed the contract would be void, by reason of common mistake.

However, even in this case, the voiding of the contract would not release PatrickHarnett from the obligation to repay all sums he might have received under the presumed contract. So, if indeed Bitcoin did not exist, and Patrick Harnett recieved $5,000 to invest in Bitcoin loans, PatrickHarnett would be held to repay the $5,000. It is true that the contract was void, it is true that this was because of a common mistake, it is not true that one gets to walk with the other's money.

III. The common mistake is always narrowly construed. The case of Bell vs Lever Brothers Ltd. is particularly informative. The relevant quote is


In this case a company hired some people on generous terms. It was later shown those people engaged in fraudulent activities. The company sought to quash the contract, on the grounds that had it known about those activities it would not have entered into the contracts. This was denied by the Lords, on the grounds that the cited mistake wasn't sufficient to nullify or negate the consent of the parties. This is still case law to this day, upheld in Appeals as recently as 2002.

So, if two people contract to convey a certain piece of machinery, which the seller certifies as "free of defects" and then the buyer finds a defect this is not enough to void the contract. The buyer may have access to equitable relief, but since the piece of machinery was actually conveyed the contract is, principally, satisfied (barring specification in the contract to the contrary).

If two people contract to convey a certain piece of art, which both the seller and the buyer mistakenly identify as Ulysses and the Sirens by H.J. Draper in spite of the circumstance that the only recognizable shape on the canvas is a truck apparently carrying a couple of oversized cherries, and they later discover that in fact they were mistaken and that piece of art is not Ulysses and the Sirens by H.J. Draper this is not enough to void the contract: the certain piece of art was in fact conveyed.

If however two people contract to convey interest in land for the purpose of building a public land pool where the general public may be admitted to swim in earth for a fee, and they later discover that their assumption that one could swim through the earth like they would through water is mistaken, then the contract could be voided for common mistake.

IV. The understanding entered was that the lender will lend, that the borrower will repay with interest, and in a specified contingency (pirate default) the borrower will make good with his own money ("I have more than enough assets to cover that"). There's no room for common mistake here. There is plenty of room for misrepresentation of fact, as in, one party represented they had assets they did not have, represented they were using assets in a manner substantially different from the way assets were actually used and other such fraudulent representations. All this falls squarely under fraud in contracts, and has nothing to do with "mistakes" (which, obviously, is a term of art).

This is all plain obvious, ofcourse, and it is completely unassailable by rational means, of course. Nevertheless, I have not the faintest hope that the forum entertainers (and by this I mean at the very least JoelKatz) might leave their nuttery aside and come to sense - for the very simple reason that once an idiot has made any personal investment whatever into some particular idiocy, that idiot will expend all available effort and all available capital in pursuit no matter how doomed of the illusory hope that his idiocy, his darling idiocy, might be somehow enacted as sensible. This is, after all, how people ended up buying pirate "debt" after the unraveling of that scam.


You've stated this numerous times, it was rebuffed as FALSE numerous times. Again: Patrick's portofolio was never discussed nor considered. Instead of repeating the same FALSE claim numerous times, be so kind as to actually substantiate it.

The only information needed to know that Patrick had significant Pirate exposure was the basic methodology of his business (bitcoin loans at high interest rates) and the existence of Pirate. You can search the posts to this forum and you'll see many people arguing, from just that information, that he had to have significant Pirate exposure. The transcript, and common sense, shows that those who loaned to Patrick knew that he was loaning the money back out. Obviously, the interest rate couldn't have been lower. And everyone knew that Pirate exists.

Without their mutual erroneous belief that Patrick's business model was sound, the contract would never have occurred. Of course, I agree this doesn't mean Patrick gets to keep all the money. Some equitable solution to share the harm would have to be found.

I think everyone can agree that Patrick should pay at least 40% over three years. That's *ridiculously* generous to him. That's why I've said that if he isn't committed to, and on track towards, paying at least that, he definitely deserves a scammer tag.

This is faulting Patrick for not doing the impossible. Please learn something from the Pirate fiasco -- there is no way to provide high returns at low risk. Patrick's belief was obviously wrong and was shared by those who loaned him money. They both made precisely the same mistake.

There will always be Patricks, Hashkings, and Pirates. We'll never stop that. If nobody holds the people who paid them to screw the community over accountable, this will never end.

Now you are pretending that a signed contract cannot determine if the mutual agreement was changed or not. In case you do not know, contracts are signed to avoid any party to append additional obligations that were not part of the mutual agreement. If you were wise enough to read the book I recommended to you, instead to spell out your arrogance, you would find this:

This is called the parol evidence rule. It is important to remember three things:

1) The parol evidence rule only applies to things that occurred *before* the contract was reduced to writing. The logic is that if the parties intended their previous agreements or terms to be part of the final agreement, they would have included them in that final agreement. This can't apply to subsequent acts. (Though if the contract specifically states how the contract may be modified, this is usually enforceable.)

2) The parol evidence rule does not apply to evidence of fraud, mistake, or other ways to invalidate the contract. These are not forms of extrinsic evidence seeking to modify terms of the contract, and so are not restricted by this rule.

3) The parol evidence rule only applies if the written agreement appears to have been intended by the parties to encompass their complete agreement. This is why many contracts specifically state that they are the entire agreement.

What "everyone knows" is irrelevant to this discussion.


The contract does not involve Patrick's "business model".


Nobody asked you.

For the record, the sought compensation is detailed below:

500 BTC capital
+ 1% per week until the date of full repayment. Currently this is 14 weeks (since August the 10th), or 74.7371065 BTC
+ .01 BTC per word of my posts in this thread. Currently this is 3935 words = 39.35 BTC
+ Treble damages (punitive).

Total sought (if discharged today): 1842.2613195 BTC.


Review the bolded part below:


Augustocroppo: you're so far out in left field I'm not even going to respond to you directly (other than to state for the record that you're an idiot).

Please stop for a moment and consider this: just the fact that you can sort-of read the letters in a book or on this screen does not, by itself, guarantee you understand what they mean. You, personally, do not. This is a failure on your part, due jointly to a defect of your brain (you, unlike other people, lack that important quality called intelligence, being stupid, ie, your brain does not quite work well, much like an old beat up Honda Civic for instance does not run smoothly) and a fault of your parents, who either didn't bother or could not afford to educate you properly. You are simply a deficient human being, unfit for human intercourse over a certain level of complexity. What is going on here, and around Bitcoin in general, and around the Internet in many cases is far, far past the level of complexity your inferior intellect and your lacking education can efficiently handle.

A better use of your time would be to find a floor to wash somewhere. At least that way the net result of your effort would be a clean floor rather than nothing at all.

The two last paragraphs only shows how very desperate you are. In the first paragraph you said that you would "not even going to respond to" me "directly". But then you proceed to respond to me directly with an ad personem argument in a last effort to instigate humiliation. You completely failed. I known who I am, where I come from and what I understand.

Whatever you write about my character, this will not change the fact that you did not require a signed contract to secure your end of the deal.


If Patrick's business model did not have any relevance to the mutual agreement, why did you choose to invest in Patrick's business model?


You do not have a contract which specifies such obligations. You will have to settle an agreement with Patrick before you pretend he will accept your terms.

I'm genuinely starting to wonder if you are delusional. You posted a log that *very* clearly shows the complete opposite of this.

Aug 10 08:06:54 <mircea_popescu>   hey. your deposits still bs&t free ?
Aug 10 08:07:21 <patrickharnett>   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39 <patrickharnett>   that's what the market wanted
Aug 10 08:07:58 <mircea_popescu>   you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:08:00 <patrickharnett>   back in a couple of minutes - grabbing a glass of wine - friday evening here
Aug 10 08:09:57 <patrickharnett>   back
Aug 10 08:10:17 <patrickharnett>   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett>   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56 <mircea_popescu>   well that works. i'd like to put 500 bitcoins with you

In fact, you argued yourself that the contract was based on Patrick's business model:


The difference between our positions comes from the fact that you hold Patrick 100% responsible for this mistake while I hold both parties roughly equally responsible for it.

You really are delusional.

Yeah that's a whole lot of crazy if you ask me...

You really expect someone breaching a contract to get away with paying less than what they owed by contract? In what alternate universe is this ever the case?

I guess that are more than one person behind the user MPOE-PR, hence the recent contradictory statements.

A quick investigation reveals different Internet users utilizing the same avatar picture:

http://www.thewickednoodle.com/luscious-lemon-curd/


http://www.biznology.com/2010/01/internet_hucksters_of_the_info/


In the two next links, Mircea Popescu appears along with an user using MPOE-PR's avatar picture:

http://www.pahomi.ro/cacanarii-din-social-media.html


http://pavelarcana.com/2011/04/11/imi-furi-caciula-singur/


The above user participates in the comments of Mircea Popescu's personal blog:

http://polimedia.us/trilema/2012/the-storm-that-was-fel/#comment-90309


Crossing all the references of the above users it is possible to trace back his presence in this blog:

http://thewhet.net/about/


The language structure of the next post it is quite similar to MPOE-PR's recent posts in this forum:

http://thewhet.net/2012/the-pedagogy-of-the-oppressed/


I am inclined to assume that MPOE-PR is a minion acting in behalf of Mircea Popescu.

No of course not.... BUT I would expect him to pay what he really owes not some made up amount counting words in a forum thread....

I am inclined to believe you are a fucking genius.

I am reclined with laughter.

If not, she's even more delusional than I thought.

With the amount outstanding if you are correct (BTC20K), I would not take such a hardline stance on your settlement of this debt.   I would be for sure, flexible on interest owed and just good judgement on the principle. 

You did take risk in investing in "his" investment strategy and investing in "him" as that principle for your BTC.  Maybe we just have different ideology on capital, investment and risk, I accept that.   But please believe, I am quite read on this subject, I am mean the old way of doing things, which I think was a much more fair and proper system (pre-1913).  I think keeping good communication with him and giving him time to dispatch his debt to you will serve your interest more that berating him on here as hard as you have.


Does anyone have a explanation on why his Guarantee did not meet his non-pirate exposed liabilities?   I assumed it is from deadbeat borrowers. 

He claims that a lot of people borrowed from him to invest in Pirate, despite having sworn otherwise. When Pirate defaulted, they were unwilling to dip into their personal finances to settle a debt that likely wouldn't be enforceable in any court of law. There is no way to verify this, but it is precisely what lots of people warned would happen. It's also possible Patrick significantly exaggerated the extent to which this happened and walked off with a bunch of money. We don't know.

This is where you're consistently getting yourself confused.  From everything I've seen in this thread MP didb't measure the house but took PH's word for it.  Nowhere have I seen any evidence (or even suggestion) that PH gave MP a list of all his deposits so that they could be verified as Pirate risk-free.  PH made an assertion which MP accepted - nothing more than that.

The basis of a common mistake is common knowledge.  In your house example that's access to the house to measure it (what if the house owner offers the builder access but the builder declines and says they'll take the home-owner's word for it?).  In this instance no such access existed - there was no public list of PH's deposits and no access to such was offered.

If your argument then mutates into "well MP didn't ask for access so it's still MP's fault" then you move into the area of sheer lunacy.  Imagine the following conversation with your bank:

Bank: Sorry, we can't return any of your deposits as we made some bad investments.
JK: But you told me my money was safe with you!
Bank: Well if you'd looked at our books you'd have seen it wasn't safe.
JK: But you never showed me your books!
Bank: You didn't ask to see them.
JK: If I'd asked would you have showed me them?
Bank: No.
JK: So why don't you owe me the money?
Bank: You didn't ask for the books - so it was a "common mistake" as we both assumed (or, in our case, asserted) that your money was safe with us.  Sorry - but we'll give you a little bit if/when we can, however we aren't in default as you're as much to blame as us.

That appears to be what you're arguing.

PH had access to significantly more relevant information than MP (details of his deposits).  No offer to share that information was made.  PH made an assertion about that information (that the deposits were pirate-free) which MP accepted, being unable to verify it.  Without (substantially) equal information there can't be a common mistake - and details of the deposits was, by far, the most important information in making that assessment here.

Let's take your argument to the extremes of ridiculousness - why has pirate got a scammer tag?  After all, it was obvious it was going to go bust.  So isn't that a "common mistake" between pirate and his investors - as they all knew (or should have known) that it wasn't going to end well?

There's some irony in the fact that you seem to have come here to defend PH yet, by your argument, are actually making the worst case against him.  MP''s (or MPOE-PR - same person as far as I'm concerned) case is that PH had the credibility and repuation to deserver having his word taken on something as basic as how he'd invested the funds under his control.  You, on the other hand, appear to be arguing that his reputation was so bad back then (forget now) that anyone who believed an assertion he made about how his funds were deployed deserved blame for being naive enough to take him seriously and enter into a contract with him.  To be crystal clear, your argument only holds water IF it was common knowledge and readily apparent that PH was unfit to give accurate representations about how the funds he managed were deployed (e.g. he was KNOWN not to do proper diligence).  Is that actually your argument?  More to the point is it PH's?  Is he actually going to post saying "Look - sorry but you should have known I didn't have a clue what I was doing and shouldn't have taken my word on anything, so you're as much to blame as me."?

Not sure why all the crap about written/verbal contracts arose (not from you JK).  The form of a contract only matters if its content is disputed.  All of the citations from various wikis etc are only of relevance when there's an argument over what was agreed - there appears to be no such difference here.

Unless PH disputes the terms of the contract (or claims it's in some way invalid -e.g. by JK's argument of incompetence) it's hard to see any option but to consider that he owes the obligations under it and is in default.  Whether that deserves a scammer tag is a seperate issue - there appears little consistency in how these are given out and he didn't offend a moderator so likely he's safe from that.  From my perspective I'd like to see scammer tags given to anyone who defaults on an obligation (whether through malice or misfortune) with the tag removable where it was just misfortune after repayment in full or an agreed settlement.  I accpet that the tag should likely be renamed were that to be the case -or split into two (Scammer and Defaulter maybe?).

Because Pirate committed fraud and his customers did not. Otherwise, you would be absolutely right and the blame, and hence the damages, should split between Pirate and his customers.

In this case, both parties had sufficient knowledge to conclude that Patrick had significant Pirate exposure. Total outsiders reached this same conclusion. It was obvious. And there's no evidence of greater fault on either side.

Your other examples are inapplicable. This contract was predicated on a mutual agreement to something that was false due to equal fault on both sides. None of your examples have that characteristic.

So what evidence did MP have to draw that conclusion when PH asserted the opposite?  What information was there about PH which meant any reasonable person would have concluded he was lieing or mistaken?  I was under the impression he had a fairly good reputation - what am I missing?  Didn't he do credit-ratings - suggesting he went far beyond normal due-diligence?

Looking back after the facts and concluding "well it should have been obvious..." isn't much evidence of anything.  Is it really your assertion that ANY investment paying 1% per week (or whatever he was offering) back then MUST have been invested in pirate?  Was there NO alternative?  Was PH's reputation SO bad that he deserved NO credit for doing due diligence?

If you're going to assert that something was common knowledge (in this case that it was common knowledge that PH was invested directly or indirectly in pirate) then:

1.  You should prove it.
2.  How come PH didn't know?  If he didn't know how can you reasonably assume MP must have?  Or are you saying he DID know?

You see, point 2 is the key one.  PH had MORE information than MP (deposit details).  If PH couldn't draw that conclusion it logically can't make sense to assert that someone in MP's position MUST have known it.  The alternate, that PH DID know (and MP should have) would be an automatic scammer tag - as then PH would have misrepresented himself when making the contract.  You can't have it both ways - that PH didn't know but MP must have known.   So which is it?

The business model, the interest rate, and the existence of Pirate. That was all that was necessary.

The business model was fundamentally broken. The only people who will borrow money at such absurdly high rates are those that are taking, or are, absurdly high risks. The existence of Pirate and the greater interest rate he was paying is sufficient information to conclude that people would borrow from Patrick to loan to Pirate and lie about it. The lack of enforceability in any court of law is sufficient to conclude that if the things people did with the loans went bad, they wouldn't be willing to take their own money to cover the losses. (As Patrick appears to be unwilling to do.)

Yes. It's has nothing to do with PH's reputation. It has nothing to do with what he did or didn't do. It has to do with the simple fact that he was saying "X follows from A, B, and C" when it simply did not follow.

Search the forums. You'll see lots of people saying this. It is obvious. It was obvious.

I am saying that he, like all the people who loaned money to him or Pirate, had objectively unreasonable beliefs. They were deluded.

They both should have known. Neither knew.

They both drew the same incorrect conclusion. So did everyone who loaned money to Pirate. This was a case of common mistake from equal fault.

Why are you so resistant to holding people accountable for mistakes that cause harm?

Yes, this would be an ideological divide. Our position is firmly that contracts must be executed entirely as they are, and that no claim can be diminished post default, but only increased (and preferably significantly).

This may yield a higher rate of people who run off from their obligations, but on the long term it has the positive effect of limiting the total BTC lost to incompetence/malfeasance by excluding the incompetent and the malfeasant from the marketplace.

Your alternative point of view may seem reasonable, but this is only if you subscribe to a socialist view of the world (ie, we are all equal, we must all find a way to live together, we're not individuals but parts of a collective etc). These notions are not tenable on the Internet. We are not at all interested in helping the floundering, we are interested in cutting off the floundering as soon as practically possible so as to prevent them from bringing their disease upon others. A world of ten poor people is of no interest, a world of four rich people (even if their riches come at the expense of excluding six others) is what we're building.

The history of BTC world, short as it may be, seems to wholly support our position. In fact, all the failures so far can be traced to people instinctively (and, I dare say, uninformedly) taking a stance similar to yours.

That's an incoherent position for cases where the contract was based on a shared false belief.

Two people both believe that there are 1,500 pounds of cherries in a truck. They agree to exchange the 1,500 pounds of cherries in the truck for $5,000. It turns out, through equal fault, that they were mistaken and there are only 1,200 pounds of cherries in the truck. How can the contract be executed entirely as it is? Does the seller have to put 300 pounds more cherries in the truck? Or does the buyer have to take 1,200 pounds of cherries even though he agreed to take 1,500? Or what?

If a contract is based on a shared false belief, without which neither party would have entered into the contract, it's not possible to execute the contract as it is.

Sorry to burst your bubble, but MPBOR is at 9% a month atm, which comes to something like 2% a week.

You don't understand, it's a common mistake. Why are you so resistant to lunacy?

No. If it turns out there aren't 1,500 pounds of cherries on the truck, then some equitable way has to be found to split the damages among the parties. If the money hasn't already changed hands and the cherries are still intact, it might make sense to just void the contract. But if some of the cherries have already been consumed or the parties have taken irreversible actions relying on the contract, then the harm done by the common mistake has to be divided fairly between the parties.

That's what I'm suggesting should happen here. Both parties made the same mistake which directly led to the harm and had the mistake not been made by both parties the contract wouldn't have existed,  so the harm should be divided fairly between the parties. I'm not proposing any specific division as fair, but 50/50 would be my default presumption. (Actually, if Patrick expected to get a greater share of the profits than those he borrowed from, it might be just to make him bear a greater share of the losses.)

So basically you want to owe us half of the 1842.2613195 BTC, is that it?

I would never suggest taking the outputs of your delusions as the inputs of any process attempting to produce a fair result. GIGO and all that.

Fascinating, because that's exactly the situation you find yourself in.

We are all social creatures,  in certain ways I am individualistic /deterministic and other ways I am more socialistic (ie: towards my family, friends and allies).   With the view that people that are floundering are a disease and people who do not flounder are preferred, I don't think you want to actual interact in a world where people in the mindset dominate.   Most people's "floundering" come from environments and systems they had no hand in making that have impaired them with reduce opportunity to operate.  

You should have more empathy towards that kind of human suffering unless you do not have the ability to show empathy.  

You speak of the history of Bitcoin, you may want to re-read this history.   As far as I can see, Satoshi made Bitcoin as an Alternative to our current monetary system that actually mirrors your " world of ten poor people is of no interest, a world of four rich people (even if their riches come at the expense of excluding six others) is what we're building." comment.  I care and respect for anyone who truly reciprocates that care and respect back.  That doesn't mean I think we are all equal, we all have different talents and traits.   I do believe in Justice, a fair Rule of Law and providing opportunity to all.

From your comments to be honest, you sound jaded, cynical and domineering (no disrespect, just follow-up on your opinion of me).

Thoughts on my comments other that my personal evaluation of your character visa-vie the internet, lol?  

You're repeating the same fallacy again and again.  The two cases aren't remotely similar.

In the cherries case either:

1.  Both parties can (or have) verify the contents of the truck (e.g. they're standing by it) - both equally at fault,
2.  Neither party can (or have) verify the contents of the truck (truck in neither of their possession) - contract void.

In this case PH, as you specifically pointed out, PH's assertion was:

"in the event BS&T goes bust, I have more than enough assets to cover that"

Only PH can verify what his assets are - MP can't.

Going back to the cherry case, that makes the actual analogy:

PH: I have a truck with 1500 pounds of cherries on to sell you.
MP: Are there really 1500 pounds of cherries on it?
PH: Yes.
MP: OK I'll buy the truck.

Some months Later.

PH: About that truck ...  The truck's bust and turns out it had 5 pounds of bananas in it not any cherries.  So you can't have the money you paid me back as you should have known I couldn't possibly have any cherries.

At no stage was MP shown the truck - but made the deal assuming PH acted in good faith and knew what in his truck.  The above is YOUR argument, not one PH himself has made btw.

Now you're arguing that everyone knew PH only grew bananas so anyone who tried to buy cherries off him is as much at fault as he was for trying to sell them and for not looking inside his own truck that noone else had access to.

The saddest thing about your little argument is that PH himself seems to accept that he owes the funds - and hence that the error was his.  Not once does he appear to argue that his own incompetence (by YOUR definition - as he apparently couldnt reach a conclusion that you believe everyone else with less information could reach) negates the debt he owes or alters the fact that he's in default.

And no - both parties did NOT make the same mistake.  PH's mistake was not properly evaluating his OWN investments to ensure they were pirate-free - compounded by asserting that to obtain new business.  MP's mistake was believing PH's assertion.  If someone portrays themselves as competent in an area (in this case, assessing the viability of loans) then subsequent evidence that they weren't as competent as they liked to think doesn't remove from them their contractual obligations just because "well, everyone should have known he was wrong."

You can't have a common mistake where only one party is in a position to ascertain the relevant facts and the second party relies on an assertion from the first party.  Your example very carefully avoids the issue of who has possession of the truck/cherries and whether either/both parties have looked into it.  Written more clearly your example would clarify that PH owned the truck and asserted that he had verified its contents.  Moreover his "in the event BS&T goes bust, I have more than enough assets to cover that" is analogous to a claim of "even if the truck is empty I have enough cherries to give you yours anyway."

It's a terrible analogy backing up an even worse argument.

Well put Deprived.

I am not sure why JoelKatz believes his arguments are logical, much less even slightly tenable.

This is about money. Let us not mix things, because contrary to what you might think the reason fiat failed is exactly an attempt to mix them.

If you want to show empathy go ahead and donate, help someone, whatever. Do not attempt to ruin the workings of the economy, because in the end that just spells disaster (and for a good discussion on the why and wherefores, even if somewhat remote, see "It's not yours to give (http://www.freerepublic.com/focus/f-news/1311972/posts)" Davy Crockett bit).

And incidentally, we happen to be the only Bitcoin business with an actual, regular CSR program. We've donated to numerous worthy causes, it's all in the monthly P&L statements. You seem to be arguing against the dirt of mud from inside the swamp or something like that.


The problem here is that I speak of the history as it is and you speak of the mythology as you imagine and interpret it.

In point of fact the historical events are Peter Lambert, Pirate, Meni Rosenfeld (with Bitdaytrade), Kludge, Nefario, the fifty-odd scams perpetrated under the GLBSE umbrella and so on. The cause of those (or, in some cases, the main compounding factor) was exactly this mistaken socialist attitude.

What Satoshi intended or didn't intend is a point of conjecture. I can just as well say he created Bitcoin specifically to nip in the bud even the hope of your attitude ever reaching cultural relevance again. I happen to believe this is exactly true. What difference does it make?


This is fine and not something anyone disputes. You further [seem to] believe that "providing opportunity" is something that you are allowed to do by stealing from those who do well to prop those who do poorly. This is certainly unacceptable, and provably what Bitcoin was made to destroy.



I am inclined to think augustocrappo is inclined to think something novel and interesting which he'll share with us presently.

My core contention is that both parties are equally at fault for their mistaken belief that Patrick's business model, fully understood by both parties, was fundamentally sound.

There's no evidence Patrick ever misrepresented his assets. Both sides knew what they were -- high interest Bitcoin loans to people who swore they weren't borrowing money to loan to Pirate. That was sufficient information to realize there was likely to be huge correlated risk, yet neither party did. Outsiders realized this.

MP didn't believe PH's assertion. MP reached the same conclusion from substantially the same information.

Aug 10 08:10:56 <mircea_popescu>   well that works. i'd like to put 500 bitcoins with you

Patrick's methodology wasn't a secret. Outsiders realized that his belief that there was little correlated risk couldn't be true.

You are saying that Patrick's mistake is that he didn't do the impossible. I am saying Patrick's mistake was that he believed the impossible.

@OP,

You got fucked.

Micon was warning people of Patrick yet you still invested with him. It's your loss and fault. I'm not even sure why we have a scammer subforum for requesting tags. In all fairness to people who invested requesting a scammer tag be given to another user, you, by DEFAULT, should get a DUMBASS tag on their account.

 :D :D :D

I am not the self-proclaimed business man which made a deposit without require a signed contract...

That novel is yours and only yours.

By the way, would please a moderator report if a decision was settled? The scammer tag is going to be issued or not?

I'm curious about which jurisdiction you think this contract exists in, because you're sure as shit not going to get an award of punitive/exemplary damages under NZ law.  Nor are you going to get an award for full costs (typically, only about 60-70% of actual costs are covered in a judgement where costs are awarded in Australia and NZ).

I don't agree with Joel's reasoning, but you're dreaming if you think that a NZ court would award you the amount you're trying to claim you're owed.

Outsiders to Bitcoin in general - such as yourself - make all sorts of basically stupid but otherwise wild claims. The fact that they make them rends them no particular validity.

The "that works" in that quote works as follows:

PH: Hi, I would like to paint your house for a fee.
MP: Are you able to paint houses without doing them damage? Specifically, set them on fire?
PH: That doesn't matter because if I damage your house to any degree I will pay for it, up to the extent of the house's full value.
MP: That works, go ahead.

"That works" means that the respondent offered something substantially different from what was sought that is considered nevertheless to satisfy the original point. In this case, MP's concerns about PH's loans were put at ease by PH's universal and unconditional undertaking to repay (personally) in any event.

This is what "the business model wasn't part of the agreement" quote of mine before means: it was not, because what had originally started as a discussion of that was averted by Patrick's reply.


Our position is that this contract exists in BTC world. We're obviously (all of us) still working out how BTC world contracts work. The demand is obviously nonsense, nobody has the authority to award damages in BTC world, so the point is factually moot.

However, since JoelKatz's delusions reached the point of setting numeric percentages (randomly 40%, later randomly 50%, all this of course fully backed by the imaginary legions of "everyone" surrounding him in his mind) I figured it can't hurt anything to set a counterclaim, as an example. It's not to be taken out of the context of talking to that lunatic, and it's not intended as anything else than illustrative for that context.

There seems to be a whole lot of meaningless blabla going on in this thread when action (or not) is needed I think somebody should set fire to Patrick's house or just leave it and let him payback like he's agreed as you handed over a non reversible digital currency to a foreigner in the first place.

To the extent that they would not be enforceable in whole or in part in the real world, Bitcoin contracts pretty much exist only by mutual consent.  I know that everyone likes to take the "Wild West, different rules, blah, blah, blah" line but I think that doing so not only leads to absurd over-valuations, it also encourages total paralysis when shit goes wrong and to some extent it discourages realistic recovery arrangements.

I think that Patrick's real world occupation and his experience in the energy derivatives market created a perception that he was or should have been aware of the strong possibility of correlated risk to a far greater extent than the other PPT operators.  I think that people made the assumption that "Patrick knows what he's doing" in large part because of his extensive experience in high risk markets where correlated risk has caused spectacular collapse in the past (Enron anyone?).

It's clear that you are absolutely determined not to learn anything from this fiasco. I hope others are not so stubborn. Your complaint is that Patrick did not do the impossible and you fail to take any responsibility for failing to realize that this is what you were expecting him to do.

Should those "others" happen to include you, please learn the pecking order. You don't come to tell me what's what.

OK i'll do it $2000 dollars!! (bitcoin only)

It doesn't matter whether it was impossible to fully determine the risk - what matters is that Patrick is responsible for shouldering the risk because nothing in writing stated otherwise.  And because Patrick did not fully disclose all of the information that would have made the extent of the risk "common" knowledge, it cannot fall under the "common mistake" rules that you keep coming back to.

I find it particularly telling that he repeats ceaselessly that 1% a week is "the impossible" but completely ignored the obvious point that the MPBOR is twice that atm.

This is much like saying that paying half the LIBOR is "the impossible" in fiat. BS.

Agreed.

I mean, heck, payday lenders charge upwards of 900% APR on a one week loan.  Which, broken down to a week, equates to what, 2.5% weekly interest rate or so?

1% interest per week doesn't make it obvious that it was part of a pirate passthrough scheme.  It wasn't obvious then, and it's not obvious now (as proven by MPBOR).

Was Patrick's business model sound or not, in your view? Why do you think his business collapsed?

They take huge risks, and they know it. And they have the force of law to go after people who don't pay them.

@ MPOE-PR - Ok, I agree with you on a few points.


1.  Yes this is about money

2.  No, we should not steal from others to give opportunity to others, but on the other hand, we do not live in a bubble so you do owe something back to the system that created your opportunity to prosper

3.  Able people should be making able decisions.



Question:  What I don't understand then is this, did you think this was truly a "risk-free" asset?  You were not depositing your BTC for safe keeping with him.  You knew that he was doing "something" with your BTC to generate profits to pay the advertised interest rate.   You didn't know what he was doing with it, but you knew it had risk.      What do you feel was the risk you were taking on to capture these profits?  What I don't understand is why your taking such a hardline stance and not working with him to get paid back?  Getting him a scammer tag will affect his reputation and may impact his ability to collect on the debts he is owed.   It seem counter-productive for someone who wants to get paid back unless you have another motive in mind when you made such a large deposit?  

Well yeah.  That's why they charge a high interest rate.  No one is disputing that high interest rates generally correlate with risky investments.  What people are disputing is your insistence that a relatively high interest rate made it obvious that the funds Patrick invested in were investing in Pirate.  That is simply not true.  If I would have looked at a 1% weekly payout investment prior to the whole pirate debacle, I might have suspected that it was invested in Pirate, but it would have not been at all "obvious" as you claim.

Perhaps you are simply more insightful than the rest of us.  But just because something is obvious to you and a handful of other outspoken forum members does not make it obvious to everyone, nor does it make it "common knowledge" of any sort.

Yes. Miner fees.


You are aware I'm just the spokesperson, right?


Matter of policy. As explained afore (https://bitcointalk.org/index.php?topic=121915.msg1324916#msg1324916), negotiating with scammers makes no sense.


According to PatrickHarnett himself, it was by no means a large deposit at all, let alone such a large one.

You really just don't get it, do you?

1.  MP didn't know who PH's customers were.
2.  Those customers swore they weren't invested in pirate to PH, not to MP - more accurately, MP took PH's word that they'd said such - as MP COULD NOT verify that due to 1.
3.  PH had responsibility to assess the credibility of his customers' claims not to be invested in pirate because a) They were his customers,  b) MP couldn't due to 1.

If you accept the above then the following is each party's degree of knowledge:

PH had either been told (or not told) by his customers that they weren't invested in pirate.
PH either did or did not do due diligence on those customers.

MP knew that PH claimed he was satisfied that his customers weren't invested in pirate.

MP's knowledge about the specific investments was limited to ONLY what PH divulged.  There's no equality of information there.

Your argument then gos back to its default state which is:

"Everyone knew PH was invested indirectly in pirate"
"PH didn't know he was invested in pirate"
"MP didn't know PH was invested in pirate"

It's blatantly obvious that the first of those three statements directly contradicts the last two.  That lots of others also invested in PH also disproves your key assertion (that it was common knowledge PH was at risk to pirate exposure) - as noone who wanted pirate exposure would have invested at 1% per week.

Not only is your argument logically inconsistent ("everyone knew X",  "Except the people who had the most interest in knowing X", "And specifically except the only person who COULD know X"), it's also totally irrelevant anyway.  At no stage has PH claimed he should be released from his obligations because "everyone who invested must have known I was exposed to pirate so should take a massive haircut if they ever get paid back as their ignorance trumps my incompetence.".

Seems to me like PH made some errors of judgment, was unable to fulfil his commitments, still accepts he has those commitments but is unable/unwilling to resolve them in any sort of timely manner.  As such there's no point him posting here - as he isn't disputing any of MP's facts or what he owes.  If policy was consistent then I'd actually expect him to get a tag about same time after default as nefario did (both broke an off-forum agreement - more clearly tbh in PH's case).  Both have reasons outside their own control why they believed they had no choice but to break existing agreements.  Both, arguably, should have known that risk existed (in PH's case by properly doing due diligence on how his customers were using their loans).  Luckily for PH I don't think any of his victims are mods - so he's probably safe.

Spokesperson?  Really, you don't sound like an impartial spokesperson.   You talk with too much authority for that.

Scammer, so you invest with someone, the investment goes bad and they are a scammer so you don't work with them to get your money back.  Sounds like a different motive.  Has you not gotten any principle back or gotten communications from Patrick about ETA for repayment.  This sounds personally motivated to swear his name, and not actually accept a delayed payment.

Sure, maybe it is a small deposit, but still BTC500 isn't something to think is small, it is in effect 1/42000th of all the Bitcoins in existence.  No matter, this doesn't add to the dialogue.

Miner fees, sorry I thought we were having a wider discussion about ideology outside of Bitcoin.  My bad.

True but how would that have made any difference?

MP could not verify them even if she knew who they were. What would she have done other than ask them? You think they would lie to PH but tell the truth to MP? PH knew Patrick's methodology. If it was unsound or insufficient, that was a common mistake.

And Patrick did assess the credibility of his customers. It's not like his method was a secret.

There was nothing PH knew that would have changed MP's view. They agreed on the common set of facts and they both drew the same incorrect conclusion from those facts.

If everyone was rational, this would be quite correct. But when it comes to greed, people have a rather bizarre ability to compartmentalize and isolate their knowledge. With subtly different senes of knowing, all of these were true. It's just like how every gambler knows that the odds are against them and many gamblers believe they will be the exception.

It just shows what we all know, that a lot of people gamble stupidly. Everyone who invested in Pirate knew that what he was saying was too good to be true, yet in a sense those investors believed it.

Your key false assumption is that all people are fully rational and only hold logically consistent beliefs.

I did not say impartial. The point is that it makes no sense to ask me what you tried to ask me, as I have no way of knowing.


Are you aware the deposit was part of a CDO series? "Delayed payment" does not work in this context. On time or bust.

But no, PatrickHarnett has not been in contact (as is typical for scum of the sort).


This is not the first time someone's raised this point and I do think it'd be pretty sad if it were in fact true.

So far, in all honestly, I have no reason to suspect it is. Obviously there may be plenty I don't know that'd support that claim, but as far as I know, it's not the case.

I just don't see how you can confidently say "There was nothing PH knew that would have changed MP's view. ".  Do you actually KNOW who all PH's customers were at the time that deal was made?  Do you actually KNOW what steps he took to ensure they weren't going to use the funds to invest in pirate?  Unless YOU know EVERYTHING PH knew you can't possibly give any credible comment on how much of that someone else would have known.

Now IF PH's methodology was simply to ask people "Are you going to invest this money in pirate?" AND IF it was well known (KNOWN, not suspected) that was his entire methodology then you might have a point.  Is this what you're claiming?

On the general issue that people gamble whilst (at least partially intentionally) ignoring the risks I have no argument.  Most idiots (as opposed to rational people) look at pretty obvious ponzi schemes and try to look for reasons to believe they're legitimate - when they should, rationally, be looking for reasons to confirm they're NOT legitimate.  So they get into a mind-set of effectively trying to persuade/tallk themselves into investing when they should be doing the opposite - and insisting that the operator give full disclosure, answer in detail all queries etc.

But that's neither here nor there in this specific case.  MP wasn't investing in an obvious ponzi - in fact appeared to want to totally avoid pirate exposure.  MP's biggest mistake was likely assuming PH was competent to run his business - which WAS an erroneous belief both parties had in common: however someone fooling others that they have more competence than they do has never been an issue which, on its own, will invalidate a contract.

When this deal occurred, I also shared the mistaken belief that PH was likely competent to run his business.  When offering loans the most basic of skills needed is the ability to properly vet loan applications to determine ability to repay.  This obviously includes assessing the general reliability of the individual but also includes determining the means for which the loan would be used.  If your contention is that he wasn't doing that (or was just asking, not verifying) then obviously his business was just a disaster waiting to happen - but that doesn't mean that AT THAT TIME all and sundry knew that.  Even if there's threads pointing this out (or suggesting it) that doesn't mean that everyone read those threads - or that those who did read them gave more weight to the views of the posters than to a pillar of the community like PH.  Where's even ONE thread where there's general consensus that PH's investments MUST have heavy pirate exposure?

Just because YOU may have believed something at that time - which subsequently turned out to be correct - does not mean (or give you the right to assert) that everyone else should have realised the same thing.  And it's still a big leap from "should have known" to "did know" - where the latter would be the relevant condition.

As for your claim that not knowing who PH's customers were was irrelevant, thta makes no sense.  Are you asserting that EVERY customer of PH's invested the money in pirate and defaulted?  If not, then you already accept that SOME people borrow money at PH's rates and DON'T invest in pirate/similar.  So we then have two groups of people:

1.  Those who borrow and invest in pirate/similar,
2.  Those who borrow and don't invest in pirate/similar.

How do we find out how many of each?  Either:

1.  Investigate the customers,
2.  Ask PH.

MP didn't have the list of customers, so had to use #2.  PH was confident that pirate exposure was minimal/zero.  PH should know - from whatever due diligence he performed before (and after) loaning.  Doubting his word on that would make no sense - if you didn't believe him competent to undertake even the most basic requirements of successful loaning (doing enough due diligence to have decent confidence in repayment - which includes determining a use that isn't random gambling/spunking away on ponzis) then you shouldn't even be considering investing in him anyway.

I repeat in case you missed it.  Unless you claim ALL borrowers from PH were pirate investors then you NEED the list to work out whether, at any point, his exposure to pirate is 0%,10%, 30%, 50% or 100%.

PH fooled people (including himself) that he was competent to run a lending business/bank.  Your argument, at root, is that because people were stupid enough to be fooled by PH they deserve to lose out and that he shouldn't be punished for it.  That's a scammer's charter - aside from anything else.  You're basically saying that if you can talk people into an investment that, with full 20/20 hindsight vision, is clearly bad then they're as much as fault as the individual offering the investment (as both of them should have known it was too good to be true).  You also massively over-rate the weight people give to whatever threads (at that time) supported your proposition that PH was incompetent, out of his depth and very clearly exposed to pirate.

Your argument is that Patrick's business method was sound, he just couldn't quite figure out how to get it right. Perhaps he used the wrong magic words. Perhaps there was one little thing he forgot to do. If he had just asked one more question, checked one more reference, it all would have worked. You have learned absolutely nothing from this fiasco. I hope you are in the minority.

From what I have seen here I highly doubt it, seems like they have never met a scam they would not like to throw their money away on around here..

No, my argument is NOT that PH's business method was sound.  My argument is that you aren't entitled to assume that everyone KNEW that he was exposed to pirate risk.  And you sure aren't entitled to expect those PH owes money to to take a large haircut just because somewhere on the forums you and/or your friends posted that PH was incompetent and/or exposed to pirate so they should have taken your word for it over PH's.

I've never invested in ANY of the loan/undisclosed businesses - be it pirate, PH or whoever (sole exception being trading OBSI.HRPT AFTER it had collapsed).  In an anonymous arena like bitcoin I'm just not interested in investing in undisclosed businesses - and loan companies here are undisclosed businesses one step removed from me.  If I don't have the information to assess the risks myself then I simply don't invest (and I invest short-term rather than long-term anyway as most 'businesses' here will never make a profit for long-term investors anyway - e.g. nearly all mining bonds/stocks).

I object to your insistence that you have the right to assert that something was common knowledge whilst, at the same time, also insisting that those directly involved didn't know it.  I also object to you attempting to make some kind of defence for PH which he's never raised or supported himself.  If he has a defence against the claims against him then HE should make it - rather than you dragging his name through the mud claiming he was so obviously incompetent that everyone on the forums knew he was exposed to pirate except himself and MP.  And I finally object to your claim that if someone misrepresents the nature of their assets when making a deal then it's the fault of the other party if that party chooses to believe them.

That's why I'm posting - not because I invested in pirate or PH - so not quite sure what lesson it is I'm supposed to have learned but haven't.

That's particularly....funny coming from the one and only person actually shown to hold logically inconsistent beliefs in this very thread. Repeatedly.

I believe at this point the only way forward is to place Joel Katz under the tutelage of some sane and respected community member for his own protection, seeing how he is either mentally ill or otherwise very, very confused.

It would be from now on at the very least immoral for anyone to engage in any sort of commerce or transaction with Joel Katz, given what we now know of his mental disabilities.


There's a thread showing the general consensus the other way here (https://bitcointalk.org/index.php?topic=92279.0).

Note the date of the first Joel Katz posts in there, and note what he bases his sudden knowledge of banking and finance on: some passing remark by Gavin. Apparently discovering in September what "everyone knew" before August is a-ok, and apparently the gospel words of Gavin (who is neither competent to discuss such things as contemplated in the agreement we have before us here, nor was in fact discussing such things as contemplated in the agreement we have before us here) can be bent so that 1.5 = 1 and so forth. Simply put Joel Katz is mentally ill.

The particularly offensive thing in all of this is that the mentally ill (as opposed to rational people) come to make completely irrational statements which, upon being proven both false and logically inconsistent are merely repeated, all this in what is declared to be a defense of reason. And then the poor idiot purports to have taken some sort of higher ground, in his own mind. Sad to watch, really.


My general expectation is that those who cnat raed won't.

In other news, we've commissioned a little art piece to commemorate the ludicrous in this thread. Here it is:

http://live.coinbr.com/images/cherries2.png

Let us forever remember, aside from the quote starting this post, that computer programmers are not simply on the strength of that to be regarded as competent in any other field, including basic logic, basic law, basic finance or basic anything, in spite of an uncanny ability to produce text strings if given a keyboard - not the only characteristic they share with the proverbial monkeys.

That's a cute pic.... at least you can find some humor in this :)

What are you qualified for? What are you credentials? What are your competencies?

Do you think Patrick's business model was fundamentally sound? Be honest.

Joel, what has changed your opinion since you posted this in the other thread?

In that thread Patrick posted that


That seems to make it fairly obvious that any significant level of default would leave Patrick struggling to repay his depositors in a timely manner.

You literally stated in that thread that investors had no way to assess risk.  Now you seem to be arguing the opposite.


https://bitcointalk.org/index.php?topic=92279.msg1160524#msg1160524

PH deserves a scammer label for investing customers money into pirate and claiming it was backed by his own funds which turns out to be patently false in the case of Kraken fund at least. He deserves one as much as NcKrazze and others who did exactly the same bait and switch.

You're cutting out the context which was me arguing that Patrick's business model is fundamentally unsound even just considering uncorrelated risk. I was arguing that there's no way for investors to assess risk and come to any conclusion other than that the risk must be extraordinarily high. Here's what immediately follows the part you quoted:

"Fundamentally, it's this simple: If the fund operator is not making decent money, there's no good explanation for why they'd go to all this trouble and risk other than that it's a scam. If the fund operator is making decent money and not exposing their investors to extreme risk, the first thing they'd do with the money they're making, if they're not an idiot, is pay down all their ultra-high-interest debt."

In other words, Patrick's business model fundamentally makes no sense, the risks would have to be enormous. That's the same thing I'm arguing here.

Of course, where is the evidence which indicates that?

You forgot to indicate the source of your amazing piece of evidence:

https://bitcointalk.org/index.php?topic=122881.0

Economy > Marketplace > Services > Drawing contest, win 5 BTC

Well, looking at what happened it obviously wasn't (whatever his steps were to ensure his deposits were pirate-free, those steps were clearly woefully inadequate). But what we NOW know isn't particularly relevant to the discussion in this thread.

At the time I had no idea whether it was viable or not.  As stated earlier, I avoid investing in anything where the business is undefined.  With this sort of lending business, the recipients' businesses are unknown to me - hence I can't assess the risk so won't touch the investment.  That's a decision I've made because there's little/no ability and/or willingness for lenders to take action against defaulters - so unless I can be confident there's likely to be no reason for default I won't invest.

The issues isn't whether his business model was sound anyway - it's whether it was KNOWN to be unsound.  We already know that wasn't accepted by all - you've already accepted neither PH or MP knew it (or even believed it) and have yet to demonstrate that any significant number of people believed it.

It is relevant because both participants believed at the time that it was. And there is no evidence that one party was more at fault in this belief than the other. Neither party would have entered into the agreement had they known this. So this is a common mistake.

Well then you've made the first part of my case for me. If they both believed it was sound, yet it wasn't, then that's a common mistake.

When you have a common mistake such that neither participant to a contract would have entered into the contract but for the mistake, unless there's substantially greater fault for the mistake on one side than the other, the parties should split the harm that flowed from the shared mistake. So long as one party isn't significantly at greater fault than the other, it's inequitable to enforce the contract as agreed.

Common mistake doesn't require the mistake to be negligent or culpable. It just requires both parties to be wrong about something critical to the agreement.

Once you agree that both parties had a false belief and that neither party would have entered into the contract without that false belief, the next issue is whether the belief is at the core to the contract. My position is that the discussions that formed the agreement make it clear that the belief is at the core of the agreement -- the contract was premised on the soundness of Patrick's business model and his lack of significant correlated Pirate exposure. Generally, showing that neither party would have entered into the agreement but for the mistaken belief is sufficient to show that it's at the core of the contract. And then the next step is to figure out how to equitably split the damages.

The common sense version of the doctrine is this: A contract states what happens under various conditions. But if neither party believed that a particular condition could happen, then their agreement couldn't have covered what should happen under that condition. (Unless it has specific "catch all" terms of some kind.) Thus, you can't follow the contract to decide what to do in that condition, you have to judge what's fair.

The Kraken fund was supposed to be 100% backed by his personal funds. (Note to self: Why would an investment ever promise 100% backing of losses and still send you profits? What's in it for them?)

Well, as it turns out, there's no such thing as a free lunch.

An email was sent by PatrickHarnett two days ago to fund investors that the 100% backing didn't really exist. Since a large percentage of the fund was put into pirate debt, Kraken is now officially in default. The higher of 100 BTC or half the pending balance of each account has already been paid back, from liquidation of personal assets. This allegedly adds up to 75% of the entire fund value. There is still a promise that the remaining 25% will be paid back, if ever recovered from the "toxic" and illiquid assets held.

I'm not sure if the above email should be made public, but any of the Kraken investors can attest to the above. Even if the Starfish BCB issue is ignored entirely, I believe a scammer tag is appropriate purely on the basis of misrepresentation of the Kraken fund.

It's not evidence you idiot. Seriously, how do you manage to breathe and type?


You might want to give a look to MPOE bonds then. Quite well defined.


And the evidence just keeps on piling and piling and piling....

If Patrick made this blatant promise for his potential customers, and then later he provided evidence contradicting his initial promises, than a scammer tag should be issued. The investors should open a thread in this section and present the necessary evidence to prove the intention of fraud.

Welcome back to reality. How was your trip?

Do you even know what sarcasm means?

http://oxforddictionaries.com/definition/english/sarcasm?q=sarcasm


By the way, I am still curious to know what you are qualified for.

I know that being ignored is one of your main specializations. What are the others?

^ Breasts?

What are your "specializations"? I know that lying to people on the internet that you are married when you are actually 100% alone is one of them. What are the others?

(Yes Augusto, I found out. Busted! Haha.)

This is off the topic for this thread. Please, publish your rants in the thread you made for me.

 ;D

RMSR.
That means Read My Signature, Retard.


Lol, so of the two muppets in this thread one's a proven liar and the other's a proven nut.
Funny how the world works.

Perhaps she has a winning personality? I have noticed though that her ignore has gone from piss yellow to drank mountain dew all day gold. I wonder what percentage of people on the forums can even see her posts anymore. Way to advertise for your site. Here be trolls.

Why do you care?

Your motives are in question constantly, I am simply using the same method of discussion you use on everyone else. So why do you care? Personally, I think you are on so many peoples ignore list you are simply looking for new people to piss off. But you never know, you might think bringing your companies reputation down further (If that is possible.) will benefit you somehow in the long run.

I'm pretty sure you have no idea what reputation is. Now that we've established you have no idea why you care enough to post, can you explain why you think I should care about what you post?

I do not think you care what I post, nor anyone else. You simply state your opinions, slip in snide remarks about people you have had no dealing with or even a good reason to troll. Like the peanut gallery for the forums, you simply throw out the propaganda you want to insert, then disappear and stop responding if you do not like what you hear. You are a sad sad person who works for a pimp, who has unleashed you and all your self loathing on these forums. Please just stop, go sell crazy somewhere else, we are all stocked up here.

The Kraken fund may be a slam dunk case of fraud. The Kraken fund began operations after it was quite clear that Pirate was in massive default and very unlikely to ever pay back another penny. Yet the Kraken fund bought Pirate debt, and Patrick was clear about it being guaranteed by him personally. (All of this was known to the investors too, but the fault in this case is not equal. In this case, the investors mistake really was to rely on Patrick's promise. There was nothing Patrick didn't know at the time.)

I am truly fascinated. Watch this:



So basically, you have been here almost two months, you're below the poverty line, pretty much the only way you count in this world is on the census/welfare programs and yet....

And yet you think you get a word, and a day in the sun, and that somehow you can discuss my reputation. You think somehow you can get into arguments with me, and "win", based on the fact that...you can make up shit and someone will take your made up shit seriously?!

Is this how it works on tv or something?

Go post a thread and ask for peoples opinion of your reputation. Do not take it from me, you are the pinnacle of awesome according to yourself. Just go make a thread and ask, what people take away from your reputation and the company you work for just based on your posts and the way you treat people. I wont even post in that thread, simply let it run its course. And yes, amazing on you digging through those posts from months ago, truly impressive that you can use a search function.

Welfare? That's a surprise to me.... I have my doubts on that one..... ^ :)

Shhhh she thinks I am destitute and beneath her, lets see if she actually posts a thread asking what people think of her stellar reputation.

1a. I could be using the option which does not display post signatures.

1b. That is Fluffygirl's credentials. I have already proved that another user is acting in behalf of Mircea Popescu.

2. CharlieContent did not proved anything at all.

So, I am still waiting to known what you are qualified for...

You don't see how this totally undermines your argument in the MP/PH situation?

One of the foundations of your argument is that neither PH/MP knew PH was exposed to pirate.  Doesn't his behaviour with Kraken suggest that MAYBE he DID know he was exposed to pirate but chose to lie about it to raise more funds?

The basis of a common mistake is common knowledge - which is where your argument has always fallen down.  PH KNEW where he was invested, his depositors/investors had to take his word about it.  As he had more information AND made assertions which his depositors/investors had to take his word for, there's absolutely no basis on which a common mistake could be concluded.

Otherwise, by your twisted logic, EVERY defaulter could use your argument - after all, neither they or the lender believed they would be unable to repay (or they wouldn't have entered the agreement).  Hence they shared a "common mistake" of believing that repayment would be possible, hence they share fault.

All your examples about cherries, sunk ships etc share one element in common that is NOT common to the PH/MP deal - symmetry of information.  The information in PH's deals (with MP and also Kraken) was asymmetrical - PH KNEW what his investments were, the other parties didn't.  Accordingly, any error in assertions made by PH about those investments HAS to be his fault if wrong - as he was the only one in a position to make any judgment about them.  Common mistake has nothing to do with one party making an assertion that they can verify but the other can't.  It has to do with an assumption made by both parties where neither has significantly more information than the other.

A good example of what WOULD be common mistake would be losses caused by the failure of GLBSE - where no mention of that (or responsibility in the event of its collapse) had ever been made in negotiation or in contract.  But where one party has made an assertion that they could reasonably be expected to have significantly more information about than the other party then there's no longer anything "common" about it.

PH explicitly took on the risk of losses caused by pirate default anyway.  You can't explicitly take on a risk then walk away from it when it happens because "I was wrong and you believed me - so we're both at fault."  And, to get back to the original point of this post, given what's transpired with Kraken it's arguable that he's no longer even entitled to an assumption that he was being honest in his discussion with MP anyway: did Kraken somehow accidentally, and without his own knowledge, end up owning large chunks of pirate debt rather than what it was supposed to be invested in?  If someone's intentionally misrepresented themself on a very specific issue once do you really believe an argument predicated on the basis that when they made such a representation previously it was honest has any validity)?

I assume you accept that if PH KNEW he was invested in pirate but lied about it to MP then there was no common mistake.  Given Kraken and that he definitely KNEW what his Starfish investments were (MP didn't) how confident can you possibly be that he was honest when he made that assertion to MP?

The Kraken Fund was about 50% invested in PPT (Patrick Harnett's own passthrough he was insuring and apparently bought himself out of with Kraken Fund).

When he defaulted, he paid 50% of balances. I'll assume it's for the debt he bought himself out with the fund (and took back on default) and that other assets are the one he defaulted on:
https://i.imgur.com/VOOmE.png

He did break a few promises, including that he would cover any loss and misrepresenting where the funds would go. For those asking why would someone borrow to invest and offer 100% coverage on loss? Offering to cover losses to borrow would imply he does not have the liquid funds to operate but that he has assets he can liquidate should the need arise. It allows operation with borrowed capital without the immediate need to depart with other assets such as precious metals, house, stocks, etc. He did not cover the losses.

I don't readily comprehend this graph. For one, shouldn't it add to 100% or something?

Yes it should. But his graph don't add up to 100%. Feel free to interpret it however you want.

Ok, so then the 11+12+17 = 40% is the 50%? I'm confused.

I don't have the slightest idea either.

Where did you obtained the graph?

The PDF newsletters he sends.

Now wait just one cotton pickin' minute here.





Testing the waters with some bs offer of 40% on the 6th, then moving to 50%, then trying again the 40% line on the 8th....

How to ruin a reputation for dummies. Ask Joel Katz.

Where do you get your talking points you scammy fuck you?

For shame.

Would you please share this PDF newsletter? Judging by that graph I can only conclude that Patrick is completely clueless to produce pie charts or he is producing misleading data. It is important to verify the data which comes along with the newsletter to define what exactly that graph means.

http://www.4shared.com/zip/9Lj1yWKB/krakenreports.html (http://www.4shared.com/zip/9Lj1yWKB/krakenreports.html)

Archive containing all PDF reports received.

From the Kraken fund newsletter:

30 September 2012

http://imageshack.us/a/img41/9779/30sep2012.jpg

5 October 2012

http://img543.imageshack.us/img543/2616/5oct2012.jpg (http://imageshack.us/photo/my-images/543/5oct2012.jpg/)

14 October 2012

http://imageshack.us/a/img221/4656/14oct2012.jpg

I give this graph an AAA+ rating.

I think this graph shows our common mistake in thinking PatrickHarnett has even basic math training. How the fuck do they do high finance in New Zealand, some sort of icon-clad cash register a la Idiocracy?

No, I don't.

Kraken came much later. This loan was August 10. Kraken was September 30. In between those two dates, Pirate defaulted.

The rest of your post simply repeats the claims you've made elsewhere -- that Patrick's at fault for failing to do the impossible and somehow making a fundamentally unsound business model work.

JoelKatz

MOE-PR is obviously not a smart guy.  What do you keep arguing with him. 

This thread is exhausting.

It's kind of like a train wreck or a traffic accident.  You really don't want to watch but you somehow can't turn away.

You have to be really fucking retarded to have missed the simple fact that once caught, the shill quietly moved on to pestering Deprived.

He's not going to argue with me ever again, given that he's never going to have a good response to the 40% and 50% "coincidence".

Not that it makes any difference, both of them, Katz and Harnett, are ruined for anything in BTC worth the mention.

Might as well start making new accounts.

It's bizarre that you are claiming that the fact he attempted to do the impossible somehow absolves him of some responsibility, or that the responsibility is shared.

It's his fault for trying to do the impossible, after all - he devised the whole ill-fated scheme!

The people who gave him money weren't doing so as part of a joint venture with him. That was not the deal. The deal was "Give me money and I will give you a fixed interest, and you can withdraw your principal at any time." and not "Invest with me and we will share risk and profit equally."

He broke the deal. It may have been unavoidable, but that doesn't matter. He was running a business. His depositors were his customers. He made an assurance to them and he broke it. The deal was never structured as a joint venture, it was never described as a joint venture, and it shouldn't be regarded now as a joint venture.

I made it quite clear that 40% over three years was something I felt people could agree was a *minimum*. And I said that 50% if the default position when a harm appears to be equally caused by both sides. And I also argued that the 50% default position could be adjusted if one side expected to get a greater share of the profits because it's reasonable to make it bear a greater share of the harm.

But you're clearly much more interested in turning this into an insulting match or questioning my integrity than in ever facing the possibility that maybe, just maybe, some of this is your fault.

It's common sense. You can't fault a party for failing to do something impossible.

And others equally failed to realize that it was impossible. I agree that he bears fault for that, that's why it's a common mistake.

I agree that was the deal. The question is what shared beliefs was the deal premised on because those are part of the deal. (Unless the deal specifically addresses them.)

The deal was premised on the shared mistaken belief that the business model was fundamentally sound and that the loans were free from significant correlated risk. Read the transcript. An agreement predicated on a shared mistaken belief is actually no agreement at all if it turns out that shared mistaken belief is false.

In this case, there was a shared mistaken belief on which the agreement was based, without which neither party would have entered into the agreement. The question is how to allocate the harm that flows from that shared mistaken belief.

No, but you can fault a party for making an impossible claim. If I lie to you, are you equally at fault if you believe it? Maybe you do believe that, but I don't. I think the liar bears the moral responsibility for lying. Maybe Harnett didn't deliberately set out to deceive anyone, but he made various untrue statements. He made the statements. He bears the responsibility for making them.


You speak as if this shared mistaken belief came out of nowhere. It came out of Harnett's mouth. Yes, it was a shared belief, but if Harnett didn't make the proposal then the deal wouldn't have been made. Harnett made various assurances. He assured the impossible. We can't blame him for not making good on his impossible claim, but we can fault him for making it in the first place surely?

Absolutely. And I do fault Patrick for making impossible claims.

There's no evidence Patrick lied about anything having to do with this arrangement. And I agree, he bears the responsibility for the false statements he made.

Yes, and I do. However, I place roughly equal blame on those who believed that what Patrick was claiming was possible. It is substantially the same mistake. There's no significant information that Patrick had that those who invested with him didn't have that had any relevance to the question of whether his basic business model was sensible.

Those who invested with Patrick made precisely the same fundamental mistake Patrick made, in precisely the same way, causing precisely the same harm. I want to hold them responsible too. You seem to think I'm trying to excuse some fault on Patrick's part. Absolutely not -- I do not excuse anyone who believed that Patrick's business model was sound and risked people's money on that basis.

I think we will need to agree to disagree on this point. I think the moral responsibility rests on the person who makes the claim, not the person who believes it.



They were responsible for the decision they made, but why should you hold them responsible? Surely the loss of their coins is bad enough. And surely this thread is about holding Harnett to account?


I don't excuse anyone who risked other people's money either. They should also be held to account. Scammer tags applied, etc.

But what of those who risked their own money? Do they really need to be pilloried for making a stupid decision? Surely the man who lead them down that road should be the one blamed for what happened. The road lead to disaster, and they should both have foreseen that, but Harnett was the one walking ahead, saying "Follow me, follow me."

His carelessness was not mere personal carelessness. By being careless with other peoples money, he abused the trust that they placed in him.

You say you have no wish to absolve Harnett of responsibility, but when you say that both parties in this transaction are equally culpable for the loss of coins, then you paint the whole thing with a brush of moral ambiguity. When you say to the gentleman who has had his coins stolen "More fool you for believing him!" then you automatically absolve Harnett of at least some responsibility.

In my mind there is a victim and a culprit here. People lost a lot of coins so that Harnett could gamble with their money. I think that what he did was wrong and it was his responsibility to make sure he could do what he said he could before he claimed it. That's an issue of personal ethics and my moral compass, and as I said it's maybe something that we will have to disagree on.

They're not mutually exclusive. And I don't think anyone believes that you can't hold someone responsible for believing a false claim and acting on it.


What?! If the loss of their coins is just compensation for the harm their mistake did, then Patrick wouldn't owe anyone anything and this thread would have no point. The point of this thread is to resolve the claim that Patrick owes his investors money.

Yes, they do, because their stupid decision harmed others.

The idea that Patrick was the leader and his investors mere followers is just comical. That's simply not how it happened.

No, not true at all. If I ever suggested that, it was unintentional.

Ahh, so you do wish to excuse those who are equally culpable. That's too bad. Because Patricks and Hashkings and Pirates will always come along and if we don't hold the other people accountable for making precisely the same mistake with precisely the same consequences, we'll repeat this fiasco again and again.

But don't say that I'm trying to excuse people. I'm trying to hold *more* people accountable than you are.

What integrity?

The integrity that comes from taking responsibility for your own bad judgment and admitting when you are in the wrong rather than hurling insults and accusations at the people who try to point it out to you. The integrity that comes from taking an unpopular position because you believe it is correct and because you believe it is what the community needs to hear.

I'm sorry I've been holding back from commenting on this thread (as I've never had any business dealings with Patrick and thus this topic is really none of my concern) but now with that comment I must interject.

This logic of yours is NOT what the community needs to hear.

If someone says they have funds to personally cover any losses and then doesn't actually cover said losses there's not much left to argue about here.

I agree. Patrick was mistaken and should be held accountable for that mistake:

Aug 10 08:07:58 <mircea_popescu>   you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:10:17 <patrickharnett>   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett>   mainly because the 15,500 coins I hold on deposit are not invest in BS&T

There's no evidence this was a lie or misrepresentation. It was simply something that he was incorrect about. Where I disagree with some others in this thread is that I believe the people who loaned Patrick money made precisely the same mistake and are likewise accountable for the harm that mistake caused. Patrick believed he was sufficiently free of Pirate exposure and correlated risk that he would have sufficient loan assets to make repayments if Pirate defaulted. He was wrong. But this was not because of secret knowledge only he had, it was because he thought his basic business model (which was not a secret) was sound when it wasn't.

If people are not held accountable for bad decisions and poor judgment that causes harm, we're doomed to repeat Pirate, Patrick, and Hashking over and over again. Those who invested paid folks like Pirate to run their scams and knew, or should have known, that they were paying people to make them the recipients of fraudulent transfers. Patrick was an un-knowing Pirate intermediary and is, in my opinion, much less culpable than the knowing Pirate intermediaries such as PPT operators. Those who loaned him money were equally un-knowing Pirate intermediaries.

Patrick Harnett's offered loans and taking deposits. He was acting somewhat as a bank often guaranteeing no loss. If he was under a LLC/entity separate from himself, the operation defaulting and paying partial might have the way to go. However, this was not the case. He operated under his own name.

- Not a joint venture.
- Often promising no default would cause any loss.
- Claims of good backings.
- Offering deposits with interest paid on balance.

When someone deposits at a bank, they don't accept to take any risk as to if the bank will or will not make good investments. If the bank cannot pay depositors, it has to default. Same as when the bank loans to businesses. They're not in a joint venture and the bank is not going to accept the business defaulting on the loan without the whole business defaulting on the sole reason the specific investment didn't go as planned and claimed. The person extending money to the other party is not at fault for the receiver's business shortcomings.

You could potentially blame the depositors for for their choice of place to deposit their money I suppose. And you could argue that the default being unavoidable, it's logical that people are partially paid with what is left.

However, in this case, the issue is not the default or partial payment. It's that Patrick Harnett chose to operate as himself, and he took deposits in his name and should not default on deposits if he does not default himself as an individual and keeping his personal wealth. The risks of operating under your own name instead of managing a legally separate entity.

That's correct. But that's because a case where the losses are equally the fault of the bank and those who loaned the bank money are rare. However, if you imagine such a case, it should seem clear they should split the losses.

As a silly example, suppose I tell you that I feel really lucky on the slots today and that if you give me $50, I believe I'll win $100 and split the profits with you. Say you also believe that this is the case and therefore loan me the money, fully believing that I will win $100 and split the profits with you. In this case, if I lose the $50, it's not fair for me to be responsible to you for the entire $50, lost profits, and so on. When you have a common mistake, made equally by both parties, with no significantly greater fault falling on either party, it is inequitable to try to enforce the contract as agreed. In our gambling case, our contract never addresses the case where I lose money because neither of us considered it possible -- it can't say what should happen in that case because neither of us ever tried to make it do so.

The issue in this case is that both Patrick and those who loaned him money made precisely the same mistake, and neither party would have entered into the agreement but for that mistake.

Some global mod should grow some balls and either tag harnett until he defends himself or lock the fuck out of the waste of disk space that this thread has become.

If you lend me $1, and I haven't done anything with it, then I still hold that $1 that was deposited.  But If I lend that $1 to someone else, I no longer can say that I hold $1 on deposit.  

You don't say that you hold a deposit when you no longer hold those funds and instead have turned around and lent those funds out.

You might make the argument that Patrick made a mistake and used the wrong words (versus intentionally trying to deceive).



Nobody else but Patrick is "on trial" here though.

In context, I don't think it was possible to understand what he said that way. This was preceded by:

Aug 10 08:07:21 <patrickharnett>   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free

I think both sides clearly understood that Patrick's "deposit accounts" were in fact loans. If there was any confusion about that, that would be a separate issue.

In fact, I can't see how that could be misunderstood. If he had 10,000 BTC on deposit, he would have 10,000 BTC sitting around, but he'd also owe 10,000 BTC. So how would that help cover a default? He has to have been referring to his loan portfolio. (If he had said it was a "reserve", you'd have a point.)

Right, but we can't do that without figuring out how to handle a case their contract didn't cover. When we do that, it makes a difference how you apportion fault on the two sides.

For example, say you represented that there were 1,500 pounds of cherries on a truck and I bought it from you for $3,000. If I don't pay you the money, and there weren't actually 1,500 pounds of cherries on the truck, we can't just conclude that I owe you the $3,000 the contract specified because you didn't provide me the 1,500 pounds of cherries the contract specified.

Now, saw we both determined there were 1,500 pounds of cherries on the truck and we were both wrong. It's still inequitable to make me pay you the entire $3,000, making me suffer all the losses that flowed from a common mistake, when the fault was both of ours equally. We have to adjust the amount owed based on things like the relative fault. (But not just the relative fault. As I argued elsewhere, it's complicated.)

We can't assess whether Patrick is in default unless we asses how much he should pay. And we can't do that until we apportion fault among the parties. (However, as I've also argued elsewhere, we may be able to skip this process if we can agree on an amount so low it's obviously fair to make Patrick pay at least that and then show he hasn't even paid that amount. I've suggested 40% over three years as this amount.)

Except you are NOT taking an "unpopular" position. You are taking a logically inconsistent and provably (and proven) untenable position.

Originally I thought you were just mentally ill, but the "coincidence" of the 40% and the 50% arbitrary values coming out of you with the 40% and 50% arbitrary values coming out of Patrick as well as a mounting pile of circumstantial evidence paint quite the opposite picture:

You have absolutely no integrity, you are just shilling. And you should be ashamed of yourself.

You might at the very least have disclosed your relationship instead of lying about no relationship.

In your example, indeed it's an investment contract with no clause in the case money is lost. It could be seen as a joint venture and the share of the loss could be expected. It was never agreed it was loan, but that he'd use the money for gambling and share the profits.

But in this situation, I disagree that it could be regarded as such. He took deposits, acted as a bank taking deposits and extending loan, stating repeatedly that his business was sound, diversified, and that he could bear defaults. The mere fact people asked about how he operated does not suddenly make it a joint venture or imply that risk will be shared. Otherwise, applying this logic, if I asked a bank about their business practices before depositing into an interest bearing account, the bank could make a bad investment and then default on my deposit without default as a whole because my particular funds went on a bad investment and risk is somehow shared.

By depositing with Patrick Harnett, just like at a bank, you do not assume taking risk in any particular venue or to sharing risk with the various investments & loans the bank will make. They simply entrust their money to a financial service provider who will then make decisions for them. They are not making any specific investment or assuming the risks. One key characteristics is that capital is pooled from all the depositors' funds to be then redistributed to business ventures. The depositors do not take any risk other than the bank defaulting as a whole and Patrick Harnett operated under himself, not a separate entity, but did not default himself.

He acted as if it was a joint investment venture and defaulted only on the capital of depositors, not personally, despite operating as a bank under his own name for his own personal profit, acting as a financial service provider and not directly disclosing how he invested the capital.

If he operated under an independent entity (which earn it's own profit, pays its own taxes, etc.), then defaulting purely as a bank on the deposited capital would have been acceptable, however he was acting as the bank and he was directly and personally receiving any profit yet didn't claim personal bankruptcy.

The wording and claims Patrick Harnett made (at least for the Starfish lending/deposits business) were very misleading as to the nature and how he would manage scenarios regarding his offer.

If you don't agree with the above, well let's agree to disagree on whether to classify Patrick Harnett's business as a joint venture such as your example or as a bank (financial service provider) such as in my example. Because it does not seem we disagree on how to handle the case in either scenario, but on what kind of scenario we are actually dealing with. (Note that I did not deposit anything with Starfish. But I did have a deposit in his other operation (fund), but the mere fact it was a fund would place me under your joint venture example where risk is shared. However he added the claim that "Contributed capital is backed by my personal funds." and defaulted on it without personally going bankrupt. One could have assumed he was borrowing investment capital by backing it with his personal assets, which turns it into a loan more than an actual fund/investment vehicle, but he did not back it as promised when the situation required so. Which you seem to have agreed to already.)

I explained where the 40% and 50% come from at least twice now. As for "values coming out of Patrick", I don't know what you're talking about. If Patrick is attempting to copy my argument, it's not because I've asked him to or he's asked me to.

I have never accepted money from anyone to express an opinion of any kind. (Though not for lack of trying. If you want to pay me to shill, I'll take your money. I just won't lie and say I didn't.)

I dislike Patrick. I've never coordinated any activity with him nor, at least as far as I can recall right now, have I ever had any communication with him (or, so far as I know, anyone connected with him) whatsoever other than public posts to this forum. (Other than one private forum message to, I think, ripper234, in which I advised him that I thought Patrick's business was likely a scam.)

There is absolutely no possible reason I would lie or be dishonest about this. Patrick will likely get a scammer tag anyway, and this has no effect on any actual court of law. The only difference is that I put some blame on you. It's hard to imagine anyone would pay me to do that.

Accepting money is not what's at issue. Nice try, I suppose this sort of slimy, intellectually dishonest behavior usually works for you.


Right. Except not really.

That claim was based on his false belief that his business model was fundamentally sound and that he was diversified against Pirate exposure. It's certainly enforceable against those who have no culpability in that mistake. But it's not fully enforceable against people who shared that mistaken belief and jointly acted to cause the harm. Both Patrick and his investors made the same mistake and it caused precisely the same loss in precisely the same way.

To give a somewhat silly analogy, say some people believe that if you give money to the poor, God will repay you tenfold. If someone borrows money to give to the poor expecting to pay it back from God's bounty, they are totally stuck if the bounty fails to materialize. It's all on them. But if they jointly develop a loan scheme with someone else who shares this belief, and borrow from them in the mutual expectation that the bounty will materialize, it would clearly be inequitable to hold the borrower 100% responsible for the amount borrowed because the mistaken belief that caused the loss was shared by both sides equally. This is so even if one person says, "I'm sure I can pay you back from my money", so long as that assurance flows directly from the shared, mistaken belief.

That's precisely what happened here. Both sides were equally culpable in their mistaken belief that Patrick's business model was sound and that his loan portfolio was largely free of correlated risk. Everything they said to each other reinforced and flowed from that shared mistake belief. The damages flowed directly from that mistaken belief.

I'm pretty sure you're trolling now. You have exhausted my ability to presume good faith. I give up on trying to reason with you.

In all the years I've been posting on Internet forums and blogs, only two people have ever exhausted my presumption of good faith. So congratulations.

You admitted a bank would rarely be at common fault, yet you know just as much by depositing at a bank that the deposits will be lent afterwards and you're just as much led to believe its loaning behavior is sound. Yet depositors are not sharing the risk. Your analogies/examples always show an example where the investment is disclosed, while Patrick Harnett acted as a bank, being the financial service provider selecting who to loan to. Those benefiting from those loans made the actual investments (and lied to Patrick). The depositor is yet not at fault for the bank mismanagement.

The depositors were not investing in the bank itself such as would be the case if they became shareholders. (In which point they would be equally liable to a loss from the unsound business such as in your example.) They merely deposited with Patrick Harnett providing a financial service:

Depositor > Patrick (bank) > Lendee > Investment or Personal Purchase

I claim your proposed scenario cannot apply on behalf that it was not an investment but a deposit. Patrick was providing a financial service and was not directly making an investment or disclosing the lendees and the specific reason they are taking a loan just like a bank. The wording strongly suggest that he works as a bank and that he takes the responsibility to loaning cash to sound requests and doing proper investigation. Now the bank needs to default, Patrick voided part of the deposits but did not default himself personally, despite that he was acting as the bank entity (which has to default), directly and personally pocketing any profit.

Joel, you are actively stopping this debate from moving forward.

In my mind, what we need to know is quite simple:

Should Patrick not recover any coins from his Kraken Pirate investments, will he back contributed capital as he stated?

He agreed to that for Kraken Fund and that it well looks like a scam. He's disagreeing for the Starfish deposits that risk was not shared. The statement about the backing by personal funds was made for the Kraken Fund only.

This is a false statement you have for the first time introduced on November the 5th:


and since repeated it 43 (that's forty three) times without any actual substantiation (if we don't count "everybody knows") and with no actual change.

The statement, illogical and untenable such as it is, was demolished by pretty much everyone who bothered to consider the matter, among which:












Basically, a cut and dry case of a shill trying to scream louder than everyone and thus enact his lie as some semblance of truth.

I had a short conversation with Theymos regarding this thread. From what was clarified to me, it is unlikely that Patrick will receive a scammer tag while he keeps trying to repay or to renegotiate his obligations. Since JoelKatz has already established that the mutual agreement was based on common mistake, and Mircea Popescu's spokesperson has already indicated that there is not a signed contract, the furthering discussion of this matter is useless.

Mircea Popescu is free to come to this forum and renegotiate his mutual agreement with Patrick.

Regarding the Kraken fund issue, I advise Patrick's investor to open another thread and provide evidence which indicates that he was trying to defraud or to deceive his investors.

LOL. Funny how libertarians are so comfortable writing in the style of Big Brother. Perhaps libertarianism is mostly about jealousy and there is not much else to it.

Would you care to explain how the above quote relates to this thread?

Who are you again?

O wait, some random idiot (https://bitcointalk.org/index.php?topic=121915.msg1326345#msg1326345) with delusions of self importance?

For the record: PatrickHarnett made no attempt to either negotiate or even contact us about his default, and he has made no effort towards repayment. In fact, he's not as much as represented himself here. Which means that you're in the best case lying about your conversation with theymos.


Augustocroppo is nothing but an idiot. Idiocy is indeed about jealousy, inability and not much else. Libertarianism really has nothing to do with it, if he "were" a fireman he'd still be Augustocrappo the Idiot.

I am the person with good relationships with the forum participants since my registration. I am sure that no one had included my username in an ignore list. I became a forum VIP member by my own merit. I have a great deal of respect for Theymos because his background and his actions. We even share same preferences for books, games and other activities.

You are completely the contrary of my character. Your relationship with the forum participants have been bad since your inception. You never donated for the welfare of this forum. Your username is present in various ignore lists. You have no respect for Theymos neither you share any preferences with him.

I recommend you to do a mirror check. I am sure Mircea Popescu can obtain one for you.

So wait, have you obtained the oh so revered VIP thingie "on your own merit" or did you just donate like everyone else?

Yes, I donated as everyone else and the donation represents my merit. To pay for a certain status is also a matter of merit in case you do not know. The 50 BTC which I donated were obtained from my own effort.

You... Well... You paid 5 BTC for a person to design a truck with cherries and you did not obtained any merit with that.

 ::)

Is this (http://www.the-spearhead.com/2010/09/07/nothing-makes-a-gina-tingle-like-a-killa/#comment-40768) you?

I haven't investigated this much. I didn't read most of this thread. Maybe I'm totally wrong about my facts, but my current understanding is:

PatrickHarnett probably did break some contracts, though he never intentionally broke them and in fact he tried to take some precautions to avoid breaking the contracts. Still, he has an obligation to pay back the victims of his broken contracts at least the money that his victims directly lost (ie. the loan principal). Maybe he has a moral obligation to continue following the exact terms of the contract, but that seems to be impossible, and I'm not going to enforce that using the scammer tag.

When someone breaks a contract and ends up having to slowly repay debt, sometimes they get a scammer tag first and the tag is removed once their debts are paid. But since PatrickHarnett seems to be putting a lot of effort into paying his debts, and since he's always acted pretty honestly, I tend to think that he should not get a scammer tag unless he stops making payments on his debt.

+1

Theymos, a suggestion that has been made that I think does have merit is making a "In Default" tag for people in debt that can be evidenced?  What do you think?

Patrick rates this ruling AAA+, especially considering the ruling didn't take into account the new information in this thread showing that he actively deceived "investors" through his "newsletter". 

This part is completely false:


He's put absolutely zero effort, and he's made payment in what amounts to a mockery (a couple percent). It would be barely enough to buy him flowers.

Please do read the thread.

Also, I would like you to make a statement re AugustoCrappo's allegations above. Are you in some sort of confederation with him re this entire discussion?

No. That is a comment made by an user identified as Keyster. The author of that blog entry is Paul Elam.

This indicates that you do not even know how to examine data collected from the Internet.

You missed my original comment few lines bellow of Keyster comment.

Fail...

By the way, this is not a thread about my character. You can open your own thread about me, as CharlieContent did.

I think the Kraken fund would likely be a slam dunk case for a scammer tag. Even if he is making good faith efforts to repay that debt, he *started* that fund after Pirate was already in default and he fully knew that there was a good possibility Pirate would never repay a single Bitcoin. Nevertheless, he clearly personally guaranteed that principal. Even if he still personally believed that Pirate would pay back all or some of the money he owed "soon", I'm not at all convinced his investors shared that belief. It was specifically his guarantee that induced that investment. The only blame you can place on the investors is for foolishly believing Patrick's personal guarantee. And, of course, "You shouldn't have believed me" is not even a partial defense even if "You made the same mistake I did" is.

It seems I disagree somewhat with what's happening here. I think it's entirely fair to give people a "scammer" tag even if they're making good faith efforts to repay a debt. And I think it's quite likely that Patrick deserves one simply because even if you split the losses with his investors and give him a few years to pay, he still hasn't acknowledged the validity of the debt, committed to some reasonable schedule of payments, or actually made reasonable payments. Even if he's broke through no fault of his own, if he can't pay for his share of the damage he did, IMO he deserves a scammer tag. (Not because he's a scammer, but because he incurred obligations he couldn't even come close to satisfying, even after giving him every imaginable consideration.)

I keep looking at this thread hoping that somewhere you'll actually give an example that's even vaguely comparable to what happened.  But, yet again, you disappoint.

Here's your example rewritten to at least have a crude similarity to the situation 0 but with your conlusions left intact.

"As a silly example, suppose I ask you to lend me some money.  You know that a lot of people are borrowing money and gambling on the slots so you ask whether I intend to gamble on the slots.  I say no.  You ask whether I'll lend the money to others who gamble on slots and I say no.  Say you also believe what I tell you and therefore loan me money, fully believing that I won't gamble it on the slots or lend it to other who will gamble it on the slots.  In this case, if I lend the money to someone who gambles on the slots and they lose the $50, it's not fair for me to be responsible to you for the entire $50, lost profits, and so on.  When you have a common mistake, made equally by both parties, with no significantly greater fault falling on either party, it is inequitable to try to enforce the contract as agreed. In our gambling case, our contract never addresses the case where I lose money because neither of us considered it possible -- it can't say what should happen in that case because neither of us ever tried to make it do so."

Do you see now just how dumb it is?

Elsewhere you've claimed PH was somehow "trying to do the impossible".  Your claims that it's impossible to make 1% a week without investing in Pirate is unproven - yet your entire argument relies on it (if it's not totally impossible then your argument fails immediately - as you'd have to accept an investor couldn't know whether PH was investing/lending to such an alternative).  Somewhere you've somehow conflated "investments in pirate were going to fail" with "all investments paying 1%+ per week were invested directly or indirectly in pirate" and have constructed an entirely fallacious chain of evidence based on that very elementary mistake.  And now you keep on constructing different analagoies- none of which are actually analagous.

Here's a few pointers for your next attempt at an alternative comparable scenario.  It needs to contain the following elements:

1.  There's a well-known risk.
2.  The Investor asks the Investment whether they have exposure to that risk.
3.  The Investment indicates they have NO exposure to that risk (they do't say "Yes" as in your above-quoted dismal failure of an attempt at an analogy).
4.  The Investor does not know the details of how the investment will be used - and has no way to find out (Again, totally unlike your above example).
5.  The Investment uses the raised funds to expose themselves to the risk.  They claim this was unintentional.

You would appear to maybe be claiming that my points 2-4 are irrelevant as investing in Pirate was the ONLY thing PH could be doing.  Are we meant to take your word for that?  If we find ONE company that paid 1% per week around then without pirate exposure would that disprove it?  Or do you have some (so far unreleased) information indicating that PH, specifically, was bound to be invested in Pirate - even if others could make 1%+ per week without pirate exposure?

The point is that it was no secret what Patrick was doing or how he believed he was protecting himself from Pirate exposure. There's no evidence that Patrick didn't do what he said he was doing or that there was anything he could have or should have done differently (other than changing his business model). Whatever you believe is the reason he actually did have huge Pirate exposure, there's nothing to suggest that Patrick is any more at fault for that than those who loaned money to him -- they also had unexpected indirect Pirate exposure just like Patrick did. Both Patrick and his investors made precisely the same mistake and caused precisely the same harm in precisely the same way.

(Note that the above does *not* apply to Kraken or any funds taken after Pirate was in default.)
That's not true. Patrick's business model and practices were not secret, and there's no evidence whatsoever (and it totally defies common sense) to argue that what Patrick was doing was basically sound and Patrick just didn't quite say the right magic words or wave the right magic wand. That's just absurd. This is why I believe this kind of reasoning is an attempt to actively refuse to learn anything from this fiasco.

You didn't acknowledge or argue against this logic. That unlike your example, deposits did not constitute an investment in Patrick business, but a deposit just as a bank. Your examples always shows:

Investors > Funding of a business > Profit or loss shared among investors

While this situation is:
Patrick creates a business under his own name for accepting deposits and then re-lending at a higher rate for a profit.
Depositor > Patrick (bank) > Lendee > Investment or Personal Purchase

Depositors are actually entrusting the bank for safekeeping of deposits as well as receiving a small interest from the financial service provider (Patrick Harnett). The money is not invested, it is entrusted. The only thing people knew about their deposit is that:
- Patrick would loan the deposits to others.
- Patrick would pay them an interest on deposits.
- Patrick would investigate lendees.
- Patrick was not exposed to a ponzi.

Which are basically the same you'd expect and know when depositing in a bank. You agreed that depositors at a bank are rarely at common fault for the bank's bad investments and everything seems to point that the situation is very similar to deposits at a bank. You know just as much when depositing at a bank yet you do not accept any risk other than the bank declaring bankruptcy. In this case the bank is Patrick Harnett himself and he did not declare bankruptcy. He just voided partially the deposit amounts and said he'd pay deposits if he manage to get something back.

I did. I argued that this case is different because both Patrick and those who invested with him made precisely the same mistake.

This is not a case of a bank making bad investments while its depositors had a reasonable expectation that it would make good investments. This is a case where both Patrick and those who invested with him made precisely the same mistake -- given his business model, there's nothing Patrick did wrong (until the Kraken fiasco). He just picked a lousy business model to invest in, just as his investors did. I don't know what else I can say other than to keep repeating myself because these are points I've already responded to. (You are, of course, welcome to respond to my responses.)

Patrick and those who lent money to him belived that Patrick would have sufficient funds in his loan portfolio to cover deposits in the event of a Pirate default. But he did not. This was not through any particular fault of Patrick's that wasn't shared with those who loaned him money.

Aug 10 08:06:31 <mircea_popescu>   listen i actually wanted to talk to you.
Aug 10 08:06:38 <patrickharnett>   hi
Aug 10 08:06:54 <mircea_popescu>   hey. your deposits still bs&t free ?
Aug 10 08:07:21 <patrickharnett>   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39 <patrickharnett>   that's what the market wanted
Aug 10 08:07:58 <mircea_popescu>   you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:08:00 <patrickharnett>   back in a couple of minutes - grabbing a glass of wine - friday evening here
Aug 10 08:09:57 <patrickharnett>   back
Aug 10 08:10:17 <patrickharnett>   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett>   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56 <mircea_popescu>   well that works. i'd like to put 500 bitcoins with you

Patrick is arguing that because of his business model, he would have sufficient assets to cover his borrowed funds even if Pirate defaults. Those who loaned him money agreed with this assessment. Whether it was inevitable given his business model or Patrick just suffered bad luck or what have you, Patrick and those who loaned him money agreed on a set of circumstances which formed the basis for the loan, a key one of which happened to be incorrect, without which neither party would have entered into the agreement.

I don't know how it could be clearer: "well that works. i'd like to put 500 bitcoins with you".

And I'm challenging that it could be seen as an investment based on how it was defined and promoted. It was deposits and Patrick acted as a bank. Depositors were not investing in the business, just agreeing to use patrick's financial service who's offer was basically working the same way as a bank.

You've now added that people loaned him money and Patrick was the borrower which also points to a depositor/bank situation. That the fact he was wrong when he said he had sufficient funds to cover deposits in the case of a Pirate default is somehow just as much the depositors' fault because they heard that statement and then proceeded to extend funds to Patrick?

In that case, if someone tells you to loan him money for expanding his mining farm and claims to have enough current mining power already to pay it back later, if he ends up being wrong, someone the lender is at fault and should accept that risk was somehow shared because it was some joint venture? It was a loan. Extended money, not an investment in a company. If it was an investment with shared risk, Patrick would not be offering a fixed rate on deposits. The rate would be proportional to profit or loss because you own part of the business. His offer was to take deposits and pay interest on it, just like a bank. The business was his own only and all profit from the deposits/lending difference in rate went to him. Not "investors". The bank now voided deposits without going bankrupt.

You repeat that risks are shared among co-investors with example situations demonstrating it and that profit is shared just as much as loss is. But you bring no argument why it should be considered as a co-venture. I claim that it cannot be considered an investment in Patrick's operation because there's no ownership of Patrick's operation for depositors and profit is not shared either, neither should loss. Patrick acted as a bank, as a financial service provider, offering a fixed rate on funds entrusted to him and requiring an higher rate when then lending said money, keeping 100% of the bank's profit. Had it been a co-venture/investment like in your examples, the margin between deposits rates and loans rates would be shared among the investors.

I agree that profit and loss is shared when we're dealing with an investment. I want to know how you arrive at the conclusion that it was an investment when the operation's profits (the difference between deposits rates vs loans rates) is not shared among the investors. But somehow, losses should? Depositors were not investing in Patrick's operation. They were depositing funds in exchange of interests. Deposit accounts are similar to loaning money to a bank, which has the responsibility to keep the deposits safe and also offers a small percentage interest in exchange for the loan.

Not precisely. It's just as much the depositor's fault because they drew substantially the same conclusion with substantially the same information.

If the circumstances were analogous, the result would be analogous. If the circumstances were not analogous, the result would not be analogous. To make this more analogous, those loaning the money would have to agree that the mining farm would produce enough revenue to pay back the loan and agree to the loan only because they agree with that assessment. And you'd need the fault in the erroneous assessment to be evenly split between the parties. In that case, as in this case, the lender's incorrect assessment harmed the borrower just as much as the borrower's incorrect assessment harmed the lender.

It wasn't a co-venture. It should not be considered as a co-venture. It was, however, a contract based on a common mistake.

I agree that that's the first step. But then the next step is to look at whose fault the loss was. To be ridiculous, if the investors loaned money to build a factory and then burned down that factory, clearly the damages from burning down the factory would offset the repayment of the loan. In this case, there is some fault on the part of the investors that offsets the repayment because it harmed the borrower. (These are actually two slightly different ways to look at the same thing. You can view common mistake as akin to shared fault, but conceptually it's a bit different.)

I agree, but that's irrelevant. I'm not arguing that the contract was a co-venture or investment. I'm arguing that the contract was premised on a common mistake.

I am not arguing that the terms of the contract specified a share of the losses. I'm arguing that the losses occurred because of a mistake and the harm from that mistake should be born by those who made the mistake and caused the harm.

Where do you come up with this?

If I am speeding down the freeway, behind another car that is speeding down the freeway, I am not at fault if that driver gets in an accident due to driving at an excessive speed.  And at the same time that driver is not at fault if I get in an accident due to driving at an excessive speed.

I see. However:

He made claims, depositors accepted them. It does not make the depositor partially responsible if the claims were wrong. Patrick was the only one making the verification and was being extended money not as investment but as a loan.

Isn't the premise of granting any business loan based on the belief that the borrower's assessment/business plan is sound and sufficient to guarantee the loan? (Unless you're lending based on trust of someone you know.)

Your proposition would come to the conclusion that unless you don't make any investigation before loaning the money to someone, the lender is always as much at fault as the debtor and should share the loss, because as soon as you know any claim by the borrower upon which you accept to extend them the funds, you're at fault as much as the borrower for being mistaken on the borrower's claims?

As such, to not share losses when loaning with the borrower, never investigate the borrower's need for the fund and current financial situation?

Patrick made a claim and was mistaken. The lenders were mistaken in that Patrick could execute and ran his business as he claimed he would. I'm in no way claiming he did it on purpose. But the fact his business plan did not work as expected does not put the lenders at fault for acknowledging his business plan appeared to be sufficient. This is the whole difference between buying equity in a company and extending fund based on claimed business plan. Equity is shared profit/loss, extending fund, losses are wholly on the shoulders of the borrower.

Of course, but that's not even remotely analogous because there's no agreement between the two drivers.

Let me try it one more time: Say two people each, through equal fault, believe there's 1,500 pounds of cherries in a truck. They each have no doubt this is true, even though there is actually 1,200 pounds of cherries in the truck. In this context, there is no difference to them between "the cherries in the truck" and "the 1,500 pounds of cherries in the truck", because they both believe there are 1,500 pounds of cherries in the truck. Now, say one agrees to sell the [1,500 pounds of] cherries in the truck to the other for $3,000. Then, they discover there isn't really 1,500 pounds of cherries in the truck. What do you do?

One can argue that the contract said $3,000 for the cherries in the truck, so he's still owed $3,000. The other can argue that there should be 1,500 pounds of cherries in the truck, as agreed, as the other guy should add cherries to the truck.

This is a case of common mistake -- a contract premised on a shared mistaken belief without which neither party would have entered into the agreement and which is central to the agreement. In this case, you can't enforce the contract as agreed because the contract "as agreed" requires there to be 1,500 pounds of cherries in the truck.

This contract was about Patrick's loan portfolio and the characteristics of that portfolio were central to the contract. We now know that this portfolio did not exist in the form the parties believed it did. It's just like the truck not having 1,500 pounds of cherries in it.

Both parties believed Patrick's loan portfolio was largely free of Pirate exposure and free of correlated risk. The parties entered into an agreement premised on that mistaken belief without which neither of them would have entered into the agreement. The contract simply could not have said what should happen if it turns out there's significant correlated risk because neither party believed that was possible.

Here it is as plain as day, mistaken assessment and agreement with that mistaken assessment:

Aug 10 08:10:17 <patrickharnett>   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett>   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56 <mircea_popescu>   well that works. i'd like to put 500 bitcoins with you

This is, of course, invalid reasoning. There's indirect Pirate risk even if funds are not invested in BS&T. This is a mistake both parties equally made. Note that they never went on to discuss what would happen in case they were both incorrect and that somehow a Pirate default did cause his equity to drop too low to cover the loans. They wouldn't have because neither thought this would happen. And this wasn't due to fraud or deceit, both parties were simply mistaken.

No. It might not have been on the contract but if he claimed there was 1500 pounds verbally and there is not 1500 pounds, one could contest the contract for misrepresentation, regardless if the seller knew he was wrong or not, he made a claim and that claim should be honored. If the seller cannot honor the contract which requires 1500 pounds, he cannot either refund it partially either and share loss. Since he cannot deliver, he cannot keep/void any part of the $3000 which cannot be either given to seller as part of the contract.

Let me rephrase your example:
A company creates a product which they claim to be packaging and selling in packs of 4. Someone buys the packaging also believing there is 4 items per pack and it's shipped to them. The buyers and the company realize there was an error and only 3 items are inside each pack.

Company to buyers: "Sorry, common mistake, we both believed there was 4 products included but we couldn't deliver what we claimed and you believed it. We're just as much at fault for that now that it's shipped and we paid for packaging and delivery. Since we both made that mistake on assumption of the package's content and we can't undo those shipments, it would be fair to share the loss."

Your proposal would not hold in any jurisdiction that I know of. If they made a claim to deliver 1500 pounds for 3000$, they would have to deliver what was claimed or otherwise refund the money which was given based on the claim they would receive 1500 pounds which didn't occur. If someone doesn't deliver upon his claims, he's always at fault for making claims he could not deliver on, not the ones believing their claims. Although maybe you simply do not agree with the common practices. Which would be fair enough, everyone is free to have their opinion.

I think Patrick is responsible for repaying everyone who invested in his bank.  It doesn't matter what the cause of the bank's problems were so long as he guaranteed the deposits.

So long as he didn't setup an official corporation with limited liability, morally and legally he is responsible.

That part is a quote of a previous comment and do not appear to be Augusto's words. I also fail to see how it is relevant to the current issue at hand: How should the situation be dealt with?

The contract doesn't "require" 1,500 pounds, it *assumes* 1,500 pounds. There are not 1,500 pounds. Similarly, this agreement didn't require Patrick's loan portfolio to be free of significant indirect Pirate exposure, it assumed that it was.

That's correct. If there is equal fault on both sides, then the losses have to be split somehow. To make your example perfectly analogous, say it's 1,500 pounds of cherries that are purchased. By mistake, the seller only loads 1,200 pounds of cherries on the truck and also by mistake, the buyer erroneously confirms there are 1,500 pounds of cherries on the truck even though there aren't. In that case, they have to fairly split the damage from their common mistake. It's inequitable to make the buyer pay for 1,500 pounds of cherries and take 1,200 just because he mismeasured given that the seller mismeasured too. But it's also inequitable to make the seller cover 100% of the damages from the incorrect loading given that the buyer made the same mistake. You have to come up with some fair way to split whatever damages flow from the common mistake in measuring the loading of the cherries.

They didn't "make a claim to deliver 1,500 pounds for $3,000". Please read it over again. They agreed to deliver "the 1,500 pounds of cherries we agree are in the truck", something that does not exist.

And common mistake has to hold in pretty much every jurisdiction. There is no other choice in cases where the contract is premised on a common mistake. In the example of the common mistake about the quantity of cherries being sold., you can't make the seller deliver and the buyer accept the 1,500 pounds of cherries in the truck because there are no 1,500 pounds of cherries in the truck. "Enforce the contract as agreed" is ambiguous because it could equally well mean the buyer has to take whatever is in the truck even if it's not 1,500 pounds or the seller has to put more cherries in the truck -- and neither is what they agreed on. And even if you did enforce the contract as agreed, if that doesn't split the harm equitably, one party would have a cross-claim against the other that you'd have to resolve anyway.

Generally, common mistake applies if the contract is about something that doesn't actually exist or doesn't exist as contemplated in the contract whereas cross-claim is used when it's possible to enforce the contract as agreed yet that leaves one side harmed by the other's mistake even where the mistake is common. To an extent, common mistake is redundant. If execution of the contract as agreed is impossible, you don't need common mistake to invalidate it. If execution of the contract is possible despite the mistake, the common mistake would constitute a cross claim anyway.

This case is on the border somewhere -- it's hard to tell whether it's possible to enforce the contract "as agreed" because the terms are insufficiently precise. This is one of the huge advantages of written contracts over verbal ones. If something unexpected happens, the written contract usually gives you a resolution. However, it often also tends not to be a fair resolution. (For example, in the case of the misweighed cherries, the contract likely would say that the seller's written acceptance of the load waives claims that cherries were insufficient. Though this is a precise resolution, it's hardly fair to let the seller 100% benefit from his mistake while the buyer bears the full costs.)

Here's an interesting thought experiment: Say in that discussion, Patrick was asked this question: "Say it turns out that despite your best efforts, lots of people are borrowing from you to invest in Pirate. And say Pirate stops making payments and many of your loans go bad all at the same time. You probably can't enforce them in any court of law, so your chances of collecting on many of those loans would be low to non-existent. If that happens, are you and your wife going to make personal financial sacrifices to pay back all your investors 100%? This is a serious question and if this happens, I plan to hold you to what you say now and make it a term of our agreement. What will you do?"

What do you honestly think his answer would have been?

The part MPOE-PR quoted isn't AugustoCroppo's words, but it was AugustoCroppo's words that my comments were referring to. They can be read behind the link.

My bad.

It would definitely not hold in most jurisdiction. The buyer never made the common mistake of not delivering or causing the incorrect delivery. They did not cause the loss either. They made the error of believing the seller would deliver on his claims.

You now insist that to be analogous to Patrick's situation, we must add it's a common mistake because they accepted upon delivery that it was correct, but when people agreed to Patrick's statement, no delivery was made yet, Patrick was simply making claims as to what he'd deliver and people paid afterward, expecting later delivery as claimed. They couldn't acknowledge it was properly delivered before Patrick returned funds/covered the loss/his debtors paid him/proved where they used funds. They acknowledged the terms of delivery trusting the "seller" (Patrick) to deliver on those claims. They never checked the delivery content and acknowledged to have received what was expected yet. They could only make such a mistake on returned funds.

Nevertheless, even if they did confirm the delivery was properly done when it wasn't and then realized it was not, the seller would still have to provide the goods paid for in full. In the example, even if the buyer acknowledged correct delivery, this acknowledgement did not create any damage/loss. Assuming they would have realized right away there was a mistake, the seller would have to provide the missing goods. If they make a mistake on being delivered properly and realize it wasn't, it only delays the seller providing the goods in full to correct his mistake. The bad report that goods were correctly delivered NEVER caused the seller to not send the goods in full and/or lose part of them. The seller is fully responsible for that. The buyer assuming the full goods would be delivered as claimed by the seller which assumes the same thing neither makes the buyer responsible for the error.

-------------------------

A common mistake would be if the buyer was for example in Washington (D.C.) and the seller was in Washington (state) and was equipped to deliver in Washington (state) only. On call, both assumed they were in the same Washington when making their contract which ends up being impossible to be delivered before the cherries spoil. Since the buyer also caused the loss through his mistake because both parties did not correctly specify their exact delivery location / delivery zone, he could be judged at fault too and expected to share the loss's cost because the supplier acquired the cherries and they're spoiling. Yet seller could be considered just as much at fault for claiming he was delivering in Washington but not specifying if it was the state or the city. The common mistake of not specifying the exact location directly rendered the contract impossible to execute and caused the loss.

If the seller claims to have something he can deliver an he could execute the delivery if he's right, it does not constitute common mistake. The contract is solely impossible because the sellers fact were wrong and the buyer expected them to be right. It is akin to the seller claiming he delivers in Washington D.C. when he never could. Or someone claiming he could repair something when he does not have the knowledge to. Someone claims he'll deliver X and delivers Y. Patrick claimed to not be exposed when he was. The fact the buyer assumes the seller's statement to be right does not cause the loss or invalidates the contract because the seller could execute it but did not actually have what he claimed, then the seller is fully at tort for not delivering. If someone claims to deliver something in a contract, he's the only one to blame if he did not have the means to. Still, pirate exposure is not even included in the contract to start with which further invalidates that as a potential common mistake. (See further below.)

Common mistake applies when the mistake cause the loss. Not when the mistake is that both believe their would be delivery without a loss while the seller and deliverer was in charge of delivery and the means to do so, and ended up failing to his promises.

(I am no lawyer and unless mistaken, you probably are not either, so feel free to object to these statements/provide further input. They are based solely on my general knowledge and my understandings of the concept.)

-------------------------


Aye, but we're going back to the fact depositors were not investing in Patrick's business or receiving a share of the profits. They were loaning him funds against interest and for safekeeping (financial services) and were led to believe Patrick operated as a bank (Offering said services and Patrick making a profit for himself with the business (the difference between the deposit rates and lending rates.)

The non-exposure to pirate was never part of the contract or included in it and cannot be invoked as a common mistake. Patrick offered a straight "- Deposit money -Receive x% interest" (The actual contract) accounts and operated as bank. The fact people informed themselves about the service provider's practices and declared they liked what they were told does not put any responsibility on them.

As for your thoughts experiment, I personally believe the answer would be "No", which doesn't mean others would assume the same thing or ever received this answer which would make that clause valid.

https://bitcointalk.org/index.php?topic=124152.0  I started a scam accusation concerning Kraken fund. If anything is a slam dunk case of fraud that would be it.

@Joel. Here's a question. Please take a look at this thread (it's really short): https://bitcointalk.org/index.php?topic=124195.0

Would you argue that the alleged scammer in that case should not be scammer tagged, because the affected victim knew of the risk of this happening with Paypal transactions?

Of course not. Someone who commits fraud can't blame those who believed him! In this case there is no common mistake, there are two different mistakes. Also, one party is committing fraud on the other party and the other isn't, so there's no equality of blame between the parties. So these aren't even remotely analogous. (However, both parties in this case did more or less equally defraud PayPal, for what that's worth. This is more like the classic 419 scam. It's fine to blame the victim for falling for a 419 scam, but it's important not to let that in any way excuse the fraudsters.)

The big difference is that in the case of Patrick and those who loaned him money, they *didn't* both know the risk. They *both* believed the risk that actually harmed them didn't exist. If you read the transcript, they agree that Patrick's business model provides him sufficient equity in his loan portfolio to cover losses associated with a Pirate default. They either didn't understand or didn't appreciate the significant *indirect* Pirate exposure the portfolio had. If either of them had realized this, the agreement would never have taken place. The critical difference is that they both have the same culpability for making the very same mistake in the very same way.

The cherrytruck case is not a good analogy because in that both the buyer and the seller and indicated to have equal sighting of the truck. A better analogy would be if only the seller has seen the truck and he tells the buyer that "I have seen a truck that holds 1500 pounds of cherries. Would you buy the 1500 pounds of cherries from me? The contract is only written to mention 1500 pounds of cherries in this analogy and not to mention the truck at all as the pirate exposure was not written into the contract in real world situation either. I assume this truck is supposed to be an analogy to the pirate risk?

Actually the cherrytruck analogy could be made even better analogy by saying that the seller says "I have seen a truck with 1500 pounds of cherries and I know because I am an expert of cherrytrucks and I also publicize ratings of how much cherries each truck carries". This is of course analogy to the credit ratings that Patrick was also making and so claiming to be an expert of risk assessment.

Would it be reasonable for some normal people to assume that somebody who runs a business has more intimate knowledge of risks associated with the business than some external party especially when the person running the business is also claiming to be a specific expert on risk assessment?


This is critical difference. They did not make the same mistake and especially not in the same way. Patrick should have been in a position to much better understand what is happening in his business. It makes no sense to say the lenders should have understood Patricks business enough and in same detail avaliable to Patrick to be able to make the judgement. Patrick on the other hand should have understood these issues and in the case he does not he should not have made claims about them or pay if they are false. It is much more sensible to say that some lenders should be able to take what they are being told at face value and rely on that.

Each of the lenders have their own set of assumptions. I would not even claim that two different lenders did the very same mistake the very same way.

Yeah, Joel you should read up on the economics of liability law. This is very clear cut and for some unknown reason you are trying to confuse the issue.

In an ideal world, maybe that should have been the case. But in this world, it simply wasn't.

Perhaps it makes no sense, but it was in fact true. Patrick's business model and methods weren't a secret. They in fact *did* understand Patrick's business model well enough to make the judgment. If you look, you'll find some of Patrick's lenders arguing about this very issue in this very forum.

If so, why can't Patrick take what his borrowers told him at face value and rely on that? Patrick made precisely the same mistake those who loaned him money did. You're excusing his lenders but not excusing him.

I'm not sure I know what you mean by "assumptions". But the mistake was fundamental and inherent in the business model and lending environment. The mistake was failing to realize two things:

1) There's no way to enforce these loans in any court of law. That means if people have any reason not to repay, they won't repay. Many people won't sacrifice their real-world lifestyle and bank accounts to repay a bitcoin loan that can't be enforced anyway.

2) Borrowing from Patrick to invest in Pirate just seemed like too good a deal, especially since people knew they could just default on Patrick without consequences. No method would prevent this, short of actually tracking what each person did with the bitcoins, which nobody would agree to.

This is why Patrick's business failed. And there is no argument you can make why Patrick should have known this that doesn't equally apply to those who loaned him money.

(And, again, this doesn't apply to Kraken, which I think was likely an outright scam.)

In general, yes, but that didn't actually happen in this case. At least, I very much doubt it did. If anyone wants to come forward and say they considered Patrick an expert on risk assessment and took his ratings seriously, I'll reconsider.

If someone did rely on that and can make a case that there reliance was reasonable under the circumstances, that would certainly weigh towards assigning more liability for losses to Patrick. To divide the loss, you have to look at the facts and circumstances of each individual loan. I doubt that was a factor in the loan that started this thread, but who knows.

So we're up to what, Joel the Shill repeating his baseless, completely destroyed, false claim for the 48th is it time? And a couple more people added to the list (https://bitcointalk.org/index.php?topic=121915.msg1332656#msg1332656)?

Theymos&co, stop fronting for scammers. It washed (somehow) in the GLBSE case. It won't wash forever.

Was this thread about PH ? Or just bait to bash other people?

Well, these other people just keep on running right in front of the swinging bat.

Now, the question is, who's at fault here: The guy swinging the bat or the guys running into the bat's arc yelling "Hey, maybe you shou*OOOMF*?"

I am not exactly sure are you here claiming the Patrick understood this in his heart or did not. In other parts you are clearly claiming that at least some people understood these problems and publicly discussed them on this forum and you link their understanding very strongly to Patricks understanding of the situation. Either Patrick did infact understand these fundamental problems or at least should have understood them as they were presented to him. In neither of these cases it is acceptable to publicly post claims to the contrary in the attempt to get money flowing in, probably from the more stupid part of the audience and if somebody does that he deserves a scammer tag.

Some other kind of argument about the case was that Patrick was operating an honest to good solid business with all the best intentions and did not have any clue there might be big problems and everything just came as a total surprise from blue sky to him later. I might understand how somebody could argue about this not deserving a scammer tag, but in this case also the lenders were totally without fault to themselves and the reason the loss should be shared is that everybody was without fault of any kind. However this does not seem like the argument any more in the last reply.

I find the lenders stupid and think they are also at fault to the losses but I don't buy the theory that it is okay to separate money from the fools. This lenders stupidity and fault is totally separate issue from scammer tag to Patrick. In similar way I find the people falling to Nigerian scammers stupid and at fault of losing their money, but the Nigerians are still scammers.

About the people that borrowed money from Patrick, I know nothing of their actual status, so I am not making any claims about them. I am not even sure whether they exist in how big numbers or what is the actual route how money disappeared to pirate or where. Everything is possible in here. I think the probability is great that there are also good candidates for scammer tag in there. The pirate case was a gift from sky to many scammers and I would be very suprised if all losses that are said to be be because of pirate, are actually losses to pirate.

How did the people who deposited with him cause harm? Yes mistakes were made all around, but Patrick's mistake was the only one that resulted in a loss of other people's money, which he promised to repay on demand.

+1.  That one is a pretty clear-cut case of fraud/scamming, more so than this current thread.

If we assume that Patrick is obligated to repay them from his own funds, then Patrick was harmed -- with that assumption, the investment resulted in a loss of Patrick's money. Patrick is a person other than those who loaned him money. You can't use an argument like a bus and get off at your stop -- you have to see if it ends with consistent results and, if not, keep going.

If you start out trying to enforce the contract as agreed and think that means that Patrick is 100% responsible, then Patrick next has a claim against his investors for the harm their mistake caused him. This claim would offset their claim against him for making the same mistake. You end with them needing to split the losses.

However, I think seeing it as common mistake is more sensible because I don't think it's possible to enforce the contract as agreed at all since the agreement was about a loan portfolio that didn't exist in the form the agreement presumed. But you get the same result either way. It depends on how you try to construe the terms of a vague agreement.

Wait, so if someone breaks into my house and is accidentally impaled by the set of spears that I by mistake only very loosely fastened to my ceiling with a string that too goes across my floor, then that guy has a claim against me?