Just curious,

For those telling Hazek to STFU, are you doing so because you also think it's a ponzi and simply want more people to jump in and pump up the pyramid so your fun won't end?  In other words, are you perceiving Hazek to be a threat to the ponzi?

For the record, I have a small amount invested in a pass-through and to that extent hopes it continues as well.

Approved for 6 BTC. Funds sent.

6.6 BTC Due August 4 to: 148976HDBdNBGdixBf7u2GTWPeup7MgESA

1% Penalty daily  after.

Bold move considering people will learn how you look and who you really are. It's almost as if this was a stunt to inspire confidence.

Okay, I wasn't familiar with that term. But that still sounds like something that would have to be done in the future, unless you are saying someone has already applied these techniques to identify him. Is that what you're saying?

I assume if Pirate is sophisticated enough to run a successful long-running ponzi scheme, he's sophisticated enough to also cover his tracks. Or at least thinks he is.

I would be interested in seeing a Deposit address or ten, to see what happens with deposited funds. As far as GPUMax, based on what I've seen, there is either nothing of note going on there (I'd need deposit addresses to know more), or this is a massive money-laundering operation. Money launders can make upwards of 50% of what flows though them, so that would both pay for the whole show as well as explain why Pirate doesn't feel like using his own BTC.

I am quite qualified to do blockchain analysis, and I promise not to reveal addresses sent to me, just the information that I find.

pirate: I just have to say that if you were the one who put up the 'BTCST defaults July 4 or before' post, that would be the coup de grâce.

BTCST is a Ponzi scheme, pure and simple. It's been masterfully planned and executed, but I suspect the end is near. 7% a week (28% a month, non-compounded) is far too high to sustain the operation for very long, and it's impressive that it has lasted 6 months. Madoff survived so long by offering about ONE percent a month. People handed him billions to be able to get those returns. There is simply no business opportunity on the planet for which it makes sense to borrow at a compounded annual interest rate of 3300%. If you had a way of making even 1% a week, you'd be crazy to share those profits for longer than it took you to accumulate enough capital to self-fund and bear the risk of whatever you're doing. Or convince a single large private lender of what you're doing, and borrow at something like 6-8% annually.

Here are some aspects that make this a well-played Ponzi:

- Establish trust and reputation over a long period by making OTC trades and building a high OTC and Forum rating. What is the trust rating of an anonymous avatar ultimately worth vs. potentially stealing 100k BTC or more? "Con man" derives from "confidence man". A successful confidence man goes for the long con -- building trust over a long period of time, not taking the small short-term gain in order to take the big score at the end.

- Build an early core of investors who are well-known forum members. My guess is these people were pulled in a month or more before he ever posted the first thread on the forum. This army of early investors serves as a mob who can shout down the inevitable ponzi warnings on the forums. Read the EVE Online account for an account of how this works. In particular, have certain forum members claim to know Pirate's real name or have met hime. If there are forum members here who claim to know who Pirate is (with proof), you should commit to that identity now in the forum with an encrypted message. When the scheme goes south, you can provide the key for decryption. I highly down anyone actually knows who he is though.

- Limit capacity early on, visibly kicking people's investments out. This serves multiple functions. First, it sidesteps the "whale" problem of taking on too much money too early and not being able to make payments. Second, it is a psychological trick that causes investors to be afraid of the wrong thing. Instead of having the fear of losing their entire investment, investors fear being kicked out by earlier investors or "lack of capacity". This makes them reluctant to withdraw, because they may not be able to get back in. Finally, it gives preferential status to early investors, who can offer pass-thru investments to others, and essentially magnifies the marketing efforts of what he could do on his own. He can still control the overall growth rate by restricting these pass-thru providers though. These pass-thru providers may or may not be in on the scheme. Even if they're not in on it, but suspect it's a Ponzi, they can effectively collect risk-free spread by skimming off their spread, while shifting the blame onto Pirate when the eventual default comes.

- Use very vague description of the business. Indicate that there are these large "whales" out there who want to invest in bitcoin and are willing to pay absurd premiums to the market rate in order to do so, and apparently want more and more BTC over time. Even though no one else has found such clients, no one can really prove that you DON'T have access to such clients. This is better than Ponzi's original scheme which he said involved buying massively discounted postal coupons overseas and selling them for face value in the US for big arbitrage profit. The post office called his bluff -- that can't happen to Pirate.

- The scheme is being run using a virtual currency which is semi-anonymous and can be effectively laundered, either along the way or at the end. Based on current law, it may not even be considered a crime, if bitcoin is not considered to be property by the law.

It appears we may be nearing the end of this. The rates are being lowered (but why wait til Aug 1? Potentially, to suck more money in for the next 4 weeks to earn the still-high returns). These "trust" accounts are where the real money is to be made. By making a large differential between the direct accounts and the high value "trust" accounts, it encourages the inflow of a lot of capital to trust accounts (with a nice little 500 BTC kicker per account for the "security deposit"). This is the time for the payoff, so it makes sense to take as much money as quickly as you can before the end. No more worries about whales.

Posting that he's going to be available to meet up in person is another signal that he needs to create additional assurance to suck more investors in. Odds are, either the scheme will collapse before then, or he'll conveniently get sick and not be able to make it.

How does this end? I can think of 3 main ways:

1) He simply disappears, never to be heard from again on the forums.

2) He announces it's a Ponzi -- sorry, you've all been had.

3) He announces that (horror of horrors!) he's been hacked. All the BTC are gone. He's really sorry to let down all his investors -- but it's that damn hacker you should track down!

In any of these cases, he could cash out to USD beforehand or afterwards at a later time. But if you were uncertain as to the impact that revealing BTCST as a ponzi might have on the exchange rate, I think it's much more likely that you'd try to cash out beforehand.

The sooner people test their ability to actually withdraw their account balances, the sooner this will be all over. A ponzi can't tolerate even the HINT of a run on the bank. Why pay out money that you know you can't? Better to keep it and end the scheme.

Good luck to you all.

Going back to the subject, which is the new interest rates, from what I see the PPT re-sellers are announcing the their interest rate is not going to change after August the 1st.
Which is great and basically means that Pirate does not lower the rates with the recent change, but only pushes away small accounts.

About selling BTC in bulk for cash:
* Why is there so high demand for BUYING BTC from pirate alone and not some other people here too?
* Where does pirate get back his BTC for the USD he got? MtGox? The ppl. he sold BTC to at a price difference?

I will always buy back at 1 BTC.   And yeah, if anything the price of the bonds should go up. Also it looks like I might be able to move the bonds up once a month but not sure.

It would actually be good news for bond holders, since the market price would probably go up if the volume stays fixed.

Someone with $1000 on MtGox can put an order for 100,000 BTC @ $0.01. Doesn't mean that will ever be able to execute. The better estimate would be to take the total USD amount of $1.32M, and see that it corresponds to about 200k BTC at current market price of $6.5.

From what I understand now there will be no need to change the payout of .068BTC. Even if we lose 10,000 BTC I'm still in the clear to get the 7%.

However starting the first of next month I might no longer be able to sell more bonds. This I will ahve to look into. Anyway if you hold now, do not worry, all is good:)

A smart one does to avoid the whale problem in order to last longer and get bigger..

It doesn't do that anymore, and it'd take some serious effort (more coins than will ever exist) to clear the visible one:

Rates dropping, limits increasing, ect ect