Currently 0.25% per week.

I agree with earlier sentiment that this money was probably gone a while ago anyway.

The Pirate meeting was at New York New York. I was the guy who met Casascius and could not get in. I had to meet him at a Chinese restaurant near by and he was nice and bought me lunch. I'm pretty sure Pirate did not go to DefCon but could have. I did not spend much time with Pirate other than that dinner and that night after.

I know who was the first guy to lend to Pirate and might be able to ask him when it started but I'm thinking June-Aug 2011.

The 'private business plan' was a user's working theory I believe.  Double check this.

You make no mention of FPS&T. 

Bitcoin Savings & Trust (BTCS&T)
-BTCS&T was founded in June or August of 2011, privately over IRC with a few investors, by Trendon Shavers, under the pseudonym “pirateat40“, then called "First Pirate Savings and Trust". On Nov, 3, 2011, he took his 'service' public on these forums .

-He initially offered 1% interest per day, payed every 3 days. He soon changed this to offer up to 7% interest per week (depending on account size and activity, paid weekly), which was roughly 2-3 times the rates offered by other deposit takers at the time. Most people did not trust this, and only a few people invested based on his reputation (OTC rating).

-After collecting his first round of investors, Trendon held a vote amongst them to decide if BTCS&T should be made invite only. It was decided so, and investors were discouraged from accepting payments for invites. Several people who are known not to be directly involved with BTCS&T report denying considerable offers for invites. The stated reason for the action was that managing accounts, withdrawals, etc was becoming too time consuming.

-For several months, Trendon made all payments faithfully, and at one point he had to pay out a considerable amount of deposits as people rushed to take advantage of a price spike in BTC/USD. By whatever means, he was able to create the appearance of solvency.

-Trendon did not publicly disclose the nature of his business, purportedly to avoid competition in some form of arbitrage. He did, however, leak his “business scheme” to a few people in private, one of whom was a respected member of the community who otherwise had good business sense. Trendon had previously done business selling computer hardware and had a good reputation doing so, and founded gpumax.com at some point early in 2012.

-Around May, 2012, Trendon re-opened BTCS&T to the public indirectly, through “pass-through” programs which he had previously condemned. A few people had opened these in order to gain the 7% rate, not having sufficient funds for it themselves. The stated reason was to allow others to simplify the management for him, and interest rates were determined both by account value and by the total activity of the pass-through operator. A few pass-throughs were insured against Trendon defaulting, although each had its own contract.

-On Jul 27-29, 2012, Trendon appeared in Las Vegas, where two other events were taking place (which he did not attend). He met with several people from the community, including some who invested with him as well as some who did not, and provided his identification which was later revealed as “Trendon Shavers” from McKinney, TX.

-On August 17, 2012, Trendon announced that BTCS&T would be closing, as his profit margins were falling below the interest owed.

-On August 28, 2012, Trendon announced that BTCS&T was in default, presumably due to inability to pay interest. He demanded that all pass-through operators disclose the contact info and account holdings of their depositors, which was impossible for certain operators, and against the contract agreement of others. At this point his manner turned to belligerence and threats of non-payment to any operator who refused to comply. None of their questions were answered adequately.

-Shortly after this, Trendon ceased communications, drawing criticism and threat of legal action from the community. His “business plan”, as it was disclosed privately was then revealed as follows:

“Given he's not surfacing or communicating, I don't see why not.  This may not be the actual model used but is is one way to do it - it exploits an inefficiency between two markets and indulges in market manipulation along the way.  I would think a year at 3%/week would be easier, but it would become unweildy to do it for much longer than that (again, it's an opinion).

- Mr X wants a 10% return on a USD investment, but banks pay near zero.
-  Mr Z can provide him that return and gets a $500k deposit.
-  Mr Z buys bitcoins at $5 each.  Because bitcoins is small, Mr Z can corner and squeeze the market - preventing big price swings, selling high and buying low.
-  Mr Z does this with bitcoins that he has obtained from bitcoin users - he pays them interest.  Over six months, Mr Z has moved the price to $11, sells 50k to return $550k to Mr X
-  Mr Z has happy customers, and made some money along the way.

The plus of this is that the price of bitcoins generally increases.  The down side is that the market is controlled and there is much less free-will or competitive force at work.  The phrase "you've been played" springs to mind.  Interestingly, this process also allows (within reason) a forecast future trading range (increasing).  The bubble over $13 probably hurt BS&T along with the reduced liquidity from the August withdrawal spree.  Having watched this over the past year, it was clear a lot of trading was not occurring through Gox and there are lots of good reasons for that.

Why can't he unwind it all quickly/smoothly?  Not sure, but then I would have run it differently.”


Obviously this plan cannot possibly succeed, as cornering the market can only be run at a loss, and there is no means within it for making interest for two sets of investors on opposite sides of a currency pair. It was at this point that it became obvious that he had been running a ponzi scheme.

It is not known if his business associates at gpumax were involved with BTCS&T, however there is good reason to suspect them.

Zach Nakaska: https://www.linkedin.com/in/znakaska

Michael Thalasinos: https://www.linkedin.com/profile/view?id=191324706&pid=69812266&authType=name&authToken=_K83&trk=pbmap

Atlas Shrugged Part II Trailer! Release Date October 12, 2012

Upon viewing the trailer, I can't help but muse if the last part of the trilogy will be about Bitcoin.

In the States it is illegal to call third parties to collect the debt of one of their family members.  It happens often and most collection agencies get away with it because they have a lot of funds, but imagine in civil court where Shavers says, "Oh I would have paid back but I was getting death threats and my family was being harassed and threatened."

Why? Probably because of pirate threatning the ones who sued him would not see a dime.

It was deleted.

Excellent question.  The only way what you can achieve what you are asking for is if a class action lawsuit is filed.  A criminal undertaking by the Securities and Exchange Commission or the Justice Department would not allow for this result. 

Basically a class action lawsuit would be filed against pirate and whoever else.  At that point a lead or lead plaintiffs would be nominated, and the court would either grant or deny the Rule 23 Class Action lawsuit to proceed.  The lead plaintiffs are just the names on the lawsuit basically.  Now at any time the "plaintiffs" (all of the injured parties) could agree amongst themselves in the form of a contract as to how they will split any proceeds.  At this point it could really only be decided upon a percentage basis after legal fees and litigation cost, as no one knows how much there actually is left. 

Here is one related post https://bitcointalk.org/index.php?topic=109363.0 (thanks Joric from IRC)
Hopefully it gets moved to a proper forum.