The problem is that what you just described is a Ponzi scheme, and those tend not to work out very well.  My gut feeling is that someone - most likely an insider - made off with their float.  That would include all of their cash in the bank, their BTC, etc. that they had for operating the business, plus all customer funds that happened to be in on that day.  As long as new money keeps coming in, they'll be able to keep the charade up, but I have never heard of one of these things lasting, and it appears that the natives are getting restless.  My guess is that the massive delays have caused the flow of new money to dwindle, which means that this thing is coming to an end sooner than later.  The email they sent yesterday is a pretty good indication that they have or are about to reach their breaking point.

This would certainly be the most innocent explanation.  However, for a service that promised BTC in a few hours, I'm not sure why they would ever sell more BTC than they had on hand plus the amount that they could buy in realtime to settle the transaction.  Surely one of the key design aspects of a system like this would be to make sure that under no circumstances were they taking on trading risk for even a single transaction.  They are a processing company, not an arbitrage company.  I can't imagine that they wouldn't have it programmed so that it automatically stopped taking orders for BTC the moment that they crossed into this territory.

So for those reasons, I still think there is a lot more to the story (the simple fact that they have been lying and have left us to speculate, points to much deeper issues as well).

Yeah,  not going to happen.  The simple fact of the matter is that their system is automated.  If they had the funds, all transactions would be processed in a couple of seconds.  Code doesn't just break for all of their interactions with all exchanges at once, and in the trillion-to-one situation that all exchanges simultaneously issued changes to their APIs that broke Bitinstant's code with no prior notice, they would contact the exchanges, find out the new processes, and modify their code.  Then they would run the transaction processing script again, and all transactions would be processed in a few seconds.  At most, in this imaginary worst-case situation that would never occur, it would take maybe taken 3 hours to recover.  We are at over 30 days now.

I have been a web developer for 12 years, and a desktop software developer for 7 years before that.  These excuses simply do not hold water, and the fact that they are lying about technical issues to buy time should send up immediate red flags. They seem to be on life support financially and are just processing enough older transactions, likely funded with newer transactions (aka a Ponzi scheme), to keep a small flow of positive posts in the Newbies section.  That serves to keep hope alive and delay people from suing or contacting law enforcement, but it will only work for so long.

Bitinstant started off as a legitimate service, which of course is why everyone has given them so much slack.  But something either catastrophic or nefarious has happened over there, and it is quite apparent that they don't have a way to stop it from careening over the cliff.  Having watched a few of these things unfold in the real world, whomever is left over there that has clean hands needs to go into self-preservation mode.  Take the reigns, come clean publicly about what has happened, cooperate with any resulting investigations, and either take the company into bankruptcy or find investors willing to stop the bleeding. You don't want to go down with this ship.  The jig is up.

I don't understand why it is so hard for these companies to just deliver the service they promise.  Bitinstant's gone to hell, and Coinbase, which has actual VC funding, seems to be hot on their trail.  How these companies can mess up such a giant opportunity I have no idea. 

1) DON'T ENTER THE BUSINESS IF YOU DON'T HAVE FUNDS/COINS TO FLOAT.
2) If selling BTC, either make sure you have them already, or that you buy them automatically at a price lower than you are selling them for.  Mt. Gox has an API.  Learn it.  Use it.  Love it.

It's really that simple, but both of these companies have run afoul of this.  This business is essentially impossible to screw up, but these major players are literally inventing ways to screw up.  Enough of the BS.

https://bitcointalk.org/index.php?topic=155533.0

If anyone feels like they've been scammed vs simply looking for customer service, post in that thread.  Too many people have posted in this thread saying that their money is gone, and had they only seen this thread first, they wouldn't have sent money.  Maybe if it goes to the more public sections of the forum, we can save a few people some money.

All signs point to them not doing "amazingly well as a business".  If you look at that thread, the problems run far deeper than price spikes.  They have been caught in a couple of outright lies and have gone for weeks without responding to issues.  In fact, if their business operated as they claim to operate it, there would be zero risk on their end regardless of price fluctuations.  Something major happened that they still haven't and may not recover from, and they won't say what it is.  Maybe it's a scam and maybe not, but if the net result is the same - customer money being lost - the reason doesn't really matter much.  People still need to be warned.

I'm a little bit curious how Bitinstant isn't at the top of this section all the time.  There are ~85 pages of people wondering where their money is in this thread:

https://bitcointalk.org/index.php?topic=128314.1640

Bitinstant almost certainly owes more people more coins/money/mtgox coupons than anyone else in this section by a long shot, yet they aren't in here.  People keep posting in that thread saying that they wish they had seen the thread sooner, because they sent them money before seeing it and their money is now off in space.  I have absolutely no evidence that it is a scam per se, but a healthy percentage of their transactions are resulting in money simply vanishing.  Whether technical error or outright fraud, we may never know, but it clearly needs to be brought out more into the open than that one thread in the newbies section that people apparently have a hard time finding.

Yup.  BTW they shut off Cash to BTC again....after 2 days of being up in the last month lol.  Bitinstant, please shut down until you have money/BTC/reserves to deliver orders.  How are you not instantly executing orders at the market price the moment an order is completed?  There should literally be no possible way for you to get hurt by the price fluctuations, yet it appears that this is what is happening.  People will understand if you have to change your policy to say that if the price fluctuates between the time of the quote and the time they actually send the money, that their order will be adjusted for that price.  People don't understand when you just don't deliver anything and keep changing the exchanges you have.

If you saw this thread before sending, then you knew what was going to happen.  They can't really even be blamed for not processing the orders when people know they won't be processed and send them money anyway.  It's unbelievable.  Harvard Business School should do a case study on this whole thing - how do otherwise rational people decide to send money to a service that is in a very public death spiral and refuses to even communicate with its own customers?  They are processing a few transactions here and there just to keep a trickle of positive posts in here, but that's all.  Send them money right now, and you have very little chance of it coming out in the way you wanted.  Those are just the facts.

I guess it's safe to assume at this point that Cash to Bitcoin Address is never going to come back.  Sad.  I wonder how long they are going to keep up the charade on the home page about it always come back online tomorrow.  Reminds me of a song...

http://www.youtube.com/watch?v=9_dBep_55mI

They can explain all they want, that doesn't fix the pending orders or the fact that they currently only have 3 exchanges live.  If you're still sending them money with all of the outstanding, unprocessed orders that have been posted in this thread, then you fully deserve the bad things that will happen to your money.  As I've said before, I'm pretty sure even BitInstant is shocked that people are still sending money to them.

If they had significant reserves at Mt. Gox, then they would make a withdrawal of Bitcoins from there, and be able to fund all reserves at all other places with those Bitcoins.  They would then instantly turn on the Cash to BTC function since they would have Bitcoins to send.  Since they haven't done any of this, it's pretty clear that they do not have significant reserves there or anywhere else.  This is further evidenced by the fact that you, along with all the people that have posted here and many others that don't even know about this thread, still have outstanding, unresolved orders.

The proof is in the pudding - this could all be resolved within a day if they actually had funds, in any form, to back up any of the transactions.  Again, the fact that this thread exists and people continue to send them money, followed by shock that their order hasn't arrived, is mind boggling to me.  I suspect even the Bitinstant people themselves are stunned that money keeps coming in.

They've been saying that for nearly 2 weeks.  I could be wrong, but I have a feeling that Cash to BTC is all over with as far as BitInstant is concerned.

Honestly, with all of the unresolved issues in this thread, who would be sending them money anyway?  Right now it appears that the money is just going into a black hole, never to be seen again.  Yet people keep posting in here after sending them money, wondering where their order is at. It boggles my mind.

Anyway, alternative services need to arise - fast.

How could you, or anyone else in their right mind, still be doing business with Bitinstant at this point?  Their failure to post in this thread in nearly a week is all the confirmation you need that the only "Serious Error" that is occurring is that people are still sending them money.

Thanks, I would love it if you could PM me a link.  Too bad BitInstant is out of commission at the moment and not communicating what's going on, but hopefully they'll be back soon.

The problem with Ziggap is that you are actually sending the money to an individual instead of through the Moneygram bill pay feature that was available through BitInstant (BitInstant got that ability through CashPayment.com, which seems to have been dumped even by the "featured merchants" on their home page, so maybe that is BitInstant's issue at the moment).  The difference is striking in terms of fees - the fee at MoneyGram is like $3.95 for a bill pay regardless of the amount, whereas sending $500 to the individual specified on Ziggap costs $40 in Moneygram fees alone - before any exchange or service fees from Ziggap.  Also, sending cash to an individual through Moneygram seems a little iffy to me.  My guess is that he would quickly run out of BTC to deliver if the service actually caught on, but that seems unlikely because he doesn't have a bill pay arrangement through Moneygram or Western Union.

BTW Bitinstant, the complaints are starting.  You might want to start talking publicly again and tell people what is actually going on.  Just found this:

http://www.ripoffreport.com/bitinstant/cash-services/new-york-internet-1eb77.htm

Yes, as I have said previously, despite their protestations to the contrary, this is all about lack of money/bitcoins to send, and not technical problems.  They are trying to buy time, which would actually be OK if they were honest about it.  Problem is that they are blaming technical glitches.  In a situation like this, honesty is the best policy.  

They are most likely waiting on payments from one of their providers, such as CashPayment.com.  My guess is that CashPayment.com is a little spooked about the legalities and have held up their payments, so they simply don't have any money or bitcoins to send.  It's either that, or they lost all of their bitcoins to a hacker.  If/When they do get paid or find someone to finance replacement coins, my guess is that all orders will be paid and the "technical glitches" they are using as an excuse will all of a sudden be cleared up. That could be a while though, if ever, since their payment provider could easily reverse all transactions if they are uncomfortable from a legal perspective.

Now, the Bitinstant guys will pop in here with a snotty response and tell me I'm not only wrong but stupid for posting this, or that I haven't read their BS posts about technical glitches, as they seem to do with anyone that questions them.  But look at the facts.  Everything was working just fine.  A week is more than enough time to recover technically from any hacker attack.  If the site code were changed, you take your code backup, and throw it back up on the server.  Takes a few minutes, not a week.  What they don't get is that everyone could understand a payment holdup or even a theft of their bitcoins, but blaming it on technical issues says "We are lying to you" to some and "We are technically inept" to the rest.  Either way, that's not a good image.  The truth would be nice at this point.

Site is now down entirely.  I'm guessing they are in Costa Rica by now .  These are not technical issues, they are financial.  Whether they are waiting on a payment from CashPayment.com, or have just run off with the cash, I don't know.  But it's quite clear that they are out of Bitcoins to send and reserves at the various exchanges.  That is why they aren't sending transactions out.

OK, so does anybody have a reliable alternative for buying BTC via Moneygram, straight to a Bitcoin address then?  Seeing as how Bitinstant is so quiet in this thread, their reserves have gone to nothing, and their own deadlines for fixing all of this have come and gone, I don't think we have much of a choice but to find an alternative.  Is there one?

P.S. Anyone want to suggest odds for a bet that Bitinstant lost a ton of money in this hack attack, despite their assurances to the contrary?  Or maybe that the whole hacking incident was just a story to give the founders a few days to get to Costa Rica with all of the money currently "stuck" in the system?  If the odds are right I might put money on both of those bets.

They've already been doing this.  That is not what caused the most recent removal of it.  I assume it's a technical glitch, though there is no reason why it would work one day and not the next.  I know that Bitcoin itself hasn't issued any breaking changes, but perhaps their cash deposit provider (cashpayment.com) changed something on their end that broke bitinstant.com's integration with them.

You know what would be really cool?  If we weren't left on our own in their official support thread to speculate why it went down and when it will be going back up (if ever).  Like maybe a couple of sentences in here from the Bitinstant guys would relieve most of anxiety on the part of those that depend on this feature.  Just a thought.