No special framework is needed. If there was a claw back, it would be based on the fair market value of the bitcoins fraudulently transferred as of the time they were transferred, likely with interest accumulating from that time. As far as the legal framework would be concerned, bitcoins would be treated like any other thing of value. Intangible items with a market value are routinely clawed back at fair market value. For example, stocks are clawed back.

The big question is whether the recipients could be identified and whether anyone is ever going to have enough information to even try to identify them.

That's pretty worrisome, don't you think?

So, if I take that risk and lose, how can I tell that some actual investment in fact lost money rather than that you just decided to keep my money?

Isn't is kind of strange how you look *exactly* like a scam in every way?

I don't think you can. As I said, your offer is pretty much incapable of being legitimate. It says there is high risk but does not say precisely what the risk is. It specifically allows you to just say "sorry, you lost money" and you can keep 75% of deposits for any reason, or no reason. How can that not be a scam?

If you're not trying to scam anyone, why does your offer bear such a perfect resemblance to a scam? Honestly, this is even worse than Pirate, IMO. You've basically specifically retained the right to take 75% of deposits in the high risk fund just because you feel like it. What honest person would draft terms that retained for themselves that right?

It would take your to change your offer so that it looks like a legitimate investment and not a scam. Investors would have to know what investments they are holding, how much they paid for them, and how much they are worth, on a regular basis. There has to be some way to assess risk on a regular basis, not take your word that it is "high" or "low". If investors lose money, they need to know *why* they lost money..

That's how legitimate investments operate and honestly it doesn't seem like you have any interest in being one of those. And bluntly, I can't imagine why any legitimate investment service would denominate investments in BTC right now. For one thing, you're competing with Ponzi schemes. For another thing, it forces you into a strategy that loses if bitcoins go up in price. It just doesn't make sense for a legitimate operation.

I completely agree.
Well, that's where you're wrong. *Precisely* what we need to do is replace government oversight with private oversight. Did you see the government doing anything about Madoff? They were practically a co-conspirator. It was private individuals who noticed how perfectly Madoff fit the profile of a Ponzi scheme who sounded the alarm.

It is the obligation of everyone who asks other people for money to ensure that the people giving them money understand the terms under which they are taking that money. If you can't fit the arrangement into their world view, you have no business taking their money. In any event, there's no conceivable way anyone could pay those kinds of interest rates on borrowed funds denominated in Bitcoins while the price of Bitcoin is shooting upward. The only way to sustain those kinds of interest rates for months is if the exchange rate is relatively stable.

Regardless of the frequency with which interest is paid, the rate should be quoted on a yearly basis. Annualized rates permit apples-to-apple comparisons both to interest rates on other instruments and to inflation rates. Many countries require interest rates to be specified in this forum to prevent precisely this type of deceptive description.

We're in the imaginary world where Bitcoins are useful as a real currency. You are, of course, correct in the real world where Bitcoins are not yet even remotely close to being usable as a real currency due to, among other things, the inability to acquire realistic quantities in reasonable timeframes.

I have done so, and have not been impressed at all with the responses that I've gotten. They mostly consist of the same type of implausible explanations made in public. If anyone reading this wishes to claim such special knowledge, you are welcome to send me a private message.

To date, nobody has been able to explain what these things are doing in a way that meets three criteria:

1) It doesn't require some people who invest to prosper at the expense of others who invest in the same enterprise.

2) It doesn't rely on something phenomenally implausible to be the case.

3) It doesn't have at its root some significant misunderstanding of how things work.

It's the same nonsense: arbitrage (fails 2), mining (fails 2 and 3), market manipulation (fails 3), unlimited supply of people willing to pay *way* too much for BTC (fails 2 and 3), perpetual growth (fails 1 and 3), multiple independent ventures that cancel out each other's weaknesses (fails 2 and 3).

From: http://en.wikipedia.org/wiki/Stock_Generation

""Company 9 was the "privileged" company, with its shares "guaranteed" never to decrease in value. Promised return was originally 10% a month (215% annually,) but was later reduced to 7% a month or 125% annually. In early April 2000, Stock Generation, despite all previous guarantees, devalued its privileged company shares to 5% of their previous value.""

This looks *exactly* like Stock Generation. If it's different, you haven't said how it's different.

Let's talk about the "high risk" fund. What is the risk exactly? Under what scenario will this fund not make payouts or lose money and how can I tell whether these things actually happened rather than you just deciding to keep my money? Bluntly, it looks like you've specifically reserved the right to just arbitrarily reduce the value of this fund for no reason or any reason. Perhaps there's some reason you'd want to word things this way, but to me, it sounds like only something a blatant scammer would say.

How is the "high risk fond" any different from "Give us your money and we might pay you huge amounts of money, or we might not and just keep your money". And why would anyone who wasn't a scammer even make such an offer?

You specifically say this is a low-risk fund. What *precisely* is the source of that risk? And if the risk occurs and I don't get paid out, how can I tell that this was honestly because of an unforeseen and unlikely event and not just because you decided to keep my money and say, "Sorry, we said it was low risk, not no risk"?

Again, this is precisely the Stock Generation scam. You tell people to invest with you and promise them a low risk but make no disclosure of what the risk is or under what circumstances the risk will materialize. Then you say, "Sorry. Your investment lost money. We said there was risk."

Even if you keep your promises and do everything you say you will do, the offer *itself* still looks like a blatant Stock Generation style scam to me. You are asking me to take a risk that I will lose money without having any idea what that risk is and if I do lose money, all I have is your word that something bad happened and therefore I lost money and you didn't simply decide to keep it because you'd rather have it.

What am I missing exactly? You say you are different from Stock Generation, but I don't see the difference.

If you don't want something brought up, why did you bring it up? There was basically zero chance the conversation was going to go that way, and there probably still is basically zero chance.

Who want to take *what* risk? The risk that you'll decide not to pay them 20% interest?

What's the difference? Your pitch appears identical to Stock Generation's pitch.

In other words, you may or may not pay out on any 'project' based on factors that you won't disclose. What sane person would give money under such terms?

Sure, as much as you choose to offer them for as long as you let people keep money in them. That sounds a lot like Stock Generation, doesn't it?

But you don't promise high rates. You make it clear that there's some unspecified risk that the high rates, and even the principal, won't materialize. And you do not make it clear under what conditions principal can be lost. Effectively, you're saying "You might make money, I might keep your money, it's risky. And I won't tell you what determines which of these two things will happen."

The same was true of Stock Generation. You've yet to explain how this is different.

Explain what the "risk" is precisely and how someone who loses money can tell whether this is because of a legitimate risk that didn't pan out or merely because you decided to keep his money.

All you've said so far is, "You might make a lot of money. Or you might lose money. It's risky. And we won't tell you what the risks are or how we decide whether you make or lose money. It's up to us." Sorry, that's something only a scammer would say.

Your pitch is precisely like this: "Lend me $50 and I'll pay you $10/week. I'll do something with your money that makes money, and I'll share the profits with you. However, it's risky. I might have to stop paying you at some point.." That's just not what an honest business does, because it not only suggests but explicitly allows you to just stop paying because you'd rather keep people's money. You have to say *what* the risk is so that if you do stop paying me, I know it's not just because you decided you'd rather keep my money.

The scam with Stock Generation is not what they did -- with one very minor exception, they kept their promises and did what they said. The scam is the offer itself -- we might or might not pay you based on factors we won't disclose. And that scam offer seems, at least to me, to be your offer. If I'm missing something, please correct me. How is your offer different from the classic SG scam offer?

Care to comment on how this is any different from scams like Stock Generation? This appears to me to be precisely the same type of offer. It appears that even if you keep all your promises, this is an incredibly bad deal. It's roughly the same as "lend us some money and we might pay you some interest, but we might also keep most of your money (we promise not to keep all of it, though) -- it's risky in an unspecified, unquantifiable way". How is that a deal any rational person would want?

You might want to learn what that phrase means before you accuse others of not appreciating it. From your own link: "The only exception was if the seller actively concealed latent defects or otherwise made material misrepresentations amounting to fraud."

Actually, withdrawal limits are unusual for a Ponzi. It's *discouraging* withdrawals that's common for a Ponzi.

No, that's not the only thing at all. There's a long list of things. The key is that excessive returns are promised at an unspecified risk with no disclosure of what the investments are (and thus no way to assess risk) and without any disclosure of the amounts of funds held. That it is a Ponzi perfectly explains all observed facts and requires no improbable circumstances at all. Every other theory has holes in it you can drive a truck through or requires improbable assumptions.

Your comparison is not apples to apples. You are comparing small retail high-risk loans with giant wholesale allegedly low-risk ones. You're comparing a $500 payday loan to General Electric borrowing a billion dollars.

We wouldn't do that because it's so obviously deceptive and irrelevant. But if you think it's valid, *you* do it and let us know what you think it shows. There have been a few arguments for why BTC loans should be different and we've patiently explained why they don't apply to large loans.

And another thing that helps convince me personally, though I completely understand if you don't find it convincing, is that I know a lot of people who are very active in the Bitcoin economy. Every single one of them that I've discussed this with, and that's most of them, is 100% firmly convinced that it's a Ponzi. This includes top-level people associated with Mt. Gox, formerly associated with Tradehill, associated with Bitcoin Magazine, three people who each hold in excess of 50,000 bitcoins each, and so on. Not one of them has any other explanation that they think is even remotely likely.

And while I love a big "I told you so" as much as anyone, I honestly would love to be wrong about this, because a lot of people are going to get hurt very badly. This could be the Bitcoin equivalent of the global economic collapse because so many Bitcoin-related things have serious exposure that they may not even realize.

Maybe I'm just nit picking your simplification, but a credit default swap isn't really insurance and can be in any amount. It needn't bear any relationship to the principal. One can purchase a $50,000 credit default swap for a $1,000 loan and if the $1,000 isn't paid out, the CDS pays *its* face value, $50,000. They're somewhat more akin to gambling than insurance. (Though you can use them as insurance, of course, if you just happen to have an insurable interest that they match.)

Certainly true. If someone, for example, bundled a CDS with a bond as a form of insurance, the price of the combined instrument would reflect the value of both the bond and the CDS and would tend to be slightly less than the sum of the two values.

Honestly, this is really, really basic stuff. It's Ponzi 101. Any good introduction to Ponzi schemes will cover this. Madoff famously refused many investor's money. It was not unusual to hear people argue that if Madoff was running a Ponzi scheme, he wouldn't refuse any deposits. He also cleverly warned people that because withdrawals disrupted his strategy, people who withdrew might not be permitted to re-invest.

One very basic thing any major scammer does is at least occasionally, intentionally act against type. You have to look carefully to get the big picture.

I'm saying that when we say "we believed the Earth was flat", it sounds like we had a belief that was erroneous. But if you rephrase it as "we believed that the best conclusion we could draw from the evidence that was available to us was that the Earth was flat", it's no longer clear that the belief was erroneous. In fact, that was the best conclusion we could draw from the evidence.

It is also important not to equate a claim with the proposition claimed.

When someone says, "Your wife is cheating on you", a rational person responds, "why do you say that?" not "that's interesting, you've just stated a logical proposition that might or might not be true". We understand "Your wife is cheating on you" to be a *claim*, not a statement of a logical proposition. The person saying it means, roughly, "I have evidence and/or argument that justifies a belief that your wife is cheating on you".

If I *claim* the Earth is flat, I am saying that based on the evidence and knowledge I have, the conclusion regarding the shape of the Earth that I can best justify is that the Earth is flat. This can be correct even if the Earth is not flat and incorrect even if it is. The correctness of a claim is different from the correctness of the proposition vouched for. (It does implicitly claim the evidence is sufficient to justify the conclusion to a reasonable level of confidence though, and one could argue that this implicit claim was erroneous.)

I think you owe me two and a half hours. It's unfortunate that Tzortzis couldn't hear me calling him an idiot every few minutes. Here are a few observations:

1) A believer in an eternal God denies that anything with an infinite past can exist. Wtf?

2) A believer in an uncaused God argues that nothing can arise without a cause. Wtf?

3) A believer in a God that causes the universe argues that there can only be one God because of Occam's Razor. But the argument works precisely the same with zero Gods.

4) He completely mis-states what a cause is, as if every event has a single cause that makes that event inevitable. This is inconsistent with modern science.

5) He doesn't seem to know what an agnostic is, thinking they are "on the fence".

6) His argument that the "remarkableness" of the Koran suggests it is miraculous is absurd. No matter how many times he says it's "logical", that doesn't make it so. The biggest flaw is that it is impossible to prove that a miracle occurred in the past. To be a miracle, it must be a violation of the normal rules of cause and effect. But to infer anything about the past based solely by looking at the present, we must assume the normal rules of cause and effect hold.

7) His comparison of the Koran to China and reporting is silly. If we had as many inconsistent reports about China as we do about Holy books, we'd legitimately start to wonder if China really exists. One of the reasons I believe China exists is because I don't have equally competent reports saying it's in North America, saying it's in Europe, saying it's mythical, saying it's underwater, and so on.

He loves to list a couple of possibilities including the one he believes and a few silly straw men and then disprove the straw men. He does this too many times for me to list them all. (For example, the Koran must have been written by a human, Mohammed, or God. Why not intelligent aliens? If you think that sounds absurd to you, that God wrote it sounds *much* more absurd to me. This is a form of special pleading.)

9) His arguments are permeated with the error that you can discard incredibly unlikely possibilities. You cannot do so. For example, if I flip 100 coins, whatever outcome I get is incredibly unlikely. If you discard unlikely possibilities, you conclude there is no way I can flip 100 coins. This is obviously incorrect. In fact, incredibly unlikely events happen all the time.

10) His argument that Mohammed can't be deluded because he said some things that people recognize are important is comically absurd. And, again, he ignores much more likely examples that that Mohammed was sent by God, for example, that Mohammed had his mind engineered by intelligent aliens. (I consider God at least as unlikely and absurd as you consider intelligent aliens.)

11) And, of course, every religion can make precisely these same arguments. Any argument that equally supports multiple inconsistent conclusions, cannot be valid.

12) He thinks his arguments are correct unless someone can come up with better arguments for different answers to the same questions. This is silly. "I think Abraham Lincoln had bread for lunch on his 12th birthday because I saw it in a vision. You must accept this unless you can come up with a better argument showing what Abraham Lincoln had for lunch on his 12th birthday."

13) Tzortzis was blatantly dishonest in complaining that Buckner failed to rebut his arguments in his opening. Tozrtzis went first, so he got to make his argument first. This means that when Buckner speaks, he either has to rebut Tzortzis before ever making his own argument (and thus be on defense the whole debate) or largely ignore Tozortzis' arguments (until rebuttal time) and make his own opening (which is what he's supposed to do, it's *his* opening). For Tzortzis to complain that his arguments weren't rebutted *before* *rebuttal* *even* *started* is dishonest and scummy. And as an experienced debater, he had to know what he was doing. (Buckner pointed this out, but it's hard to point out that your opponent is being a rude jerk and should know better.)

14) Other evils don't justify an evil. If religion starts wars, that's an evil of religion, period. It makes no difference what other evils start other wars. A rapist doesn't defend himself by pointing out that there are murderers out here.

15) Tzortzis doesn't seem to understand how you show an argument is inconsistent. When Buckner presents an argument, "You believe X, that leads to Y, which leads to Z, which is false", he responds, "You can't make that argument because you don't believe X". Wtf? (For example, that the problem of evil is a problem for atheists. No, no problem for atheists at all.)

16) Tzortzis is a very good debater and very adept at making the weaker argument appear the stronger. Buckner's refusal to be dishonest (and inability to achieve what he needs to achieve honestly) hurts him a lot. It's a skill he just doesn't have, but in fairness, it's very hard to debate someone who argues the way Tzortzis does. (Look how poorly he pointed out Tzortzis' cheating in 13 above.)

Tzortzis won the debate. Buckner needs to learn how to counter that style of debating better. (It's very, very hard.)

Exactly. If you're one of the people making money from a Ponzi scheme, the last thing you think you want is that it be revealed that it's a Ponzi scheme. You fear that would keep new suckers from feeding in the money that's going to your exorbitant profits. (But the truth is the reverse. You do not really benefit from being the recipient of fraudulent transfers. See my other posts about things like claw backs.)