How does one seize a wallet inside a True Crypt file?  Imprison the suspect until he or she tells them the password.  Authorities will of course ask for the hidden volume password too (they've not stupid), so the suspect had better be prepared to hand it over too.  I hope they have a hidden volume, as if they don't they can't prove a negative.  What if the suspect refuses?  Hold the suspect in detention until they agree.  Withholding passwords to encrypted information is a criminal offense in some countries (like England).

Brain wallet?  Maybe if the user can memorise the entire wallet.dat.

I'd just like to point out that posting personal threats (even if deliberately vague) is a criminal offense in pretty much every developed country.  Even if the threats are done via an alleged third party 'someone said that they might do X....'  

If speculators can get a substantial amount of bitcoins back from Pirate they may be tempted to cut their losses and exit bitcoins, especially if the only reason they bought them was to speculate on the hope of getting paid 1% per day.

If Pirate fails to pay a substantial portion of his fund then that may be good for bitcoin's price.

You know the old saying, if I owe the bank a thousand dollars it's my problem, if I owe the bank a million dollars it's the bank's problem.  Right now Pirate has the power to dictate how much he's willing to pay back simply because many of his creditors are going to be desperate to get anything back.  Is a 50% payback a default?  Of course it is.  It's not a 'hair cut', or 'easing of debt'.  We've seen the same tricks applied with Greece (and soon Spain/Italy/etc) where there is massive pressure to take a huge loss to avoid triggering an actual default.

It seems to me whatever Pirate's strategy was it was going to fail sooner or later.  It's not a case of 20/20 hindsight.  It was stated by myself and many other people before the collapse.

- I remember reading an IRC log where Pirate was openly threatening people to stop pushing the price of bitcoins up.  He even ended his IRC session with a comment along the lines of 'okay, I'm pulling the plug.  Watch out everyone'.  If his strategy required the market moving in a particular direction of his liking then it was doomed to fail.  Anyone who has ever invested in currencies/precious metals/shares/etc knows the market moves against you very often, and at completely unexpected moments.

- There is a lot of current speculation that Pirate may have been buying bitcoins on behalf of actors who most in civil society would consider 'unsavoury', to put it mildly.  If so, Pirate has more to fear from his clients than anyone chasing him for bitcoin payouts if the deals go sour.

Slashdot has finally published a link to the failed scheme:
http://news.slashdot.org/story/12/08/29/0349226/large-bitcoin-ponzi-scheme-collapses-with-a-loss-of-56-million

Pirate's antics are hitting popular media.  3 out of 4 stores on /. about bitcoin seem to be scam this, theft that.  Sigh.

I am shocked and dismayed by this news.  No one could have ever predicted that 7% per week was unsustainable and simply not possible.

I keep on waking up every morning, rolling over to the laptop and wondering if I'm going to see bitcoin's price at less than a dollar, kind of like the hack crash at MtGox in mid 2011.  There's an IRC log somewhere with Pirate claiming he has/had enough BTC to crash the price to $1.  Maybe that's playing on my mind.

If only pirate could have kept his operation going a bit longer.  In a few months he would have pwned every bitcoin in existence.

 

It's only a matter of time until the people who correctly pointed out that his scheme was mathematically impossible to sustain are directly blamed for the collapse of the scheme.  It'll be like a Scooby Doo moment: 'It would have worked if it wasn't for these meddling kids!"

All I need is belief and I can do anything?  Okay, I want to be a billionaire and truly believe I can be.

That kind of thinking is closely aligned with 'If you can put your mind to it, you can do anything'.

I used to be skeptical about whether bitcoin could sustain multiple hacks and incompetents acting against its interests.  MtGox hack, exchanges disappearing (Bitomat), Bitcoinica (twice!), now Pirate (promised interest right up until the hour of payout, already 7% higher than 1 week ago).  These acts could have shattered confidence in bitcoin (Pirate's antics have yet to hit Slashdot or popular media...), yet bitcoin remains strong.  

If someone runs with 500k btc there'll be a whole lot of people chasing.  

The original story was that he was winding up his investment scheme as it was beginning to be too big and complex to handle.  Fair enough.  He should have all the money on hand to return, unless he's placed it himself in another highly speculative investment that's not going right.  His declaration of closing BTCST suggested it was of his choosing, not that he was forced to.

It seems to me pirate is now saying the market or conditions have turned against him, and now he's blaming personal attacks too.  Makes me wonder how long before he declares 'I would have returned all the money long ago, but it's your fault I haven't because so many people said I'm running a ponzi scam'.

That's part of the time honoured ponzi formula.  Claim you have a new method to generate massive returns.  A proprietary space age trading system in the cloud, leveraging world events while hedging against all risk.  Or something like that.  It's different this time.  I'm breaking all the rules.  People fall for that all the time.

Why do people hand over massive amounts of money to essentially anonymous businesses?  Why do pensioners hand over their life savings to slick operations only to see it being lost, time and time again?  Slick marketing and the target's greed.  Many people don't realise that generating a guaranteed 7% return after inflation per annum is quite difficult.  Pirate was offering 7% a week.  Alarm bells anyone?

Its been almost a week since Pirate promised to start making full payments to his clients.  How's that going?  If he was paying out interest from trading activities then he should have had all bitcoins required to pay out immediately.

I think without pirate's scheme the price would still be around $5 to $6.

It would help if you posted a link to where the bet was made.

EDIT: Thanks for the link

How is Pirate going at returning the funds of his investors plus interest?  Anyone know if he's paying out as promised?  Two full days have elapsed since he promised to progressively make his clients whole.

Already bought back in, sold, and bought again.  If you can't fight the volatility, use it.

It's the last time we see cheap bitcoins, until the next time.  Early adopter advantage isn't a problem for you and me, but it is for the impartial observer who just discovers bitcoin.  "How do I get some Bitcoins?"  "You buy them from people who created them"  It's one of the key reasons why bitcoin is written off as a pyramid scheme by some.

Two problems with this weekend's action: it makes bitcoin look extremely volatile.  Who relishes the prospect of using bitcoin to transfer money between countries, and in the space of a few hours before it can be cashed out into the currency of their choice they lose 20%?  Sure, they could wait for the price to recover, but then it's not transferring money.  It's speculating.  I was contemplating using bitcoin to transfer a relatively significant amount of money back home but now I don't think I'd bother.  I'd rather declare it officially and go through banks.

The other bad point is a salient point bitcoin's detractor's have: many of the cheap and easy bitcoins are locked up with early adopters.  Concentrating wealth in the hands of a few is never healthy, and here we've demonstrated how someone can obtain quite a large proportion of bitcoins and use them in ways not beneficial to the overall marketplace. 

Swinging from $9.50 to $7.50 and then $10.50 within the space of a few hours only makes speculators happy.

The buy 'wall' at $9.75 is very cute.  A little like a 2m sea wall to stop a 10m tsunami.