(continuing from the previous thread) The way I understood it, what they were offering was insurance against an unknown, clearly disclosing that there was a risk of default that was ostensibly unknowable, and in the process of providing this quasi insurance with their own funds, were simply enjoying the opportunity to make a bet themselves (in the opposite direction against their customers) in a manner that magnified their potential losses/returns relative to the amount they risked, essentially equivalent to betting with leverage. Must the pass-through operators be aware that the scheme was an actual fraud in order for them to be liable? I am mostly just curious.
I don't believe that's quite an accurate assessment. AFAIK, for most of the PPTs, either there was no insurance and the risk and bearers of that risk were explicitly stated publicly in their terms, or else for the insured PPTs (at least those that made good on that insurance, and there were some), would not have been betting against their clients, since they would need to reserve money aside in unrelated assets in order to pay out. In short, just like any other insurance company, they were betting that they would NOT have to pay out (the only situation in which they would have made any extra money), ie that pirate would not default. Also, many/most of the PPTs are not US based, which makes them much more difficult targets. I do have a question, though. Assuming we do manage to force pirate and associates to cough up, either by returning what was stolen and/or by liquidating their property, is there a reasonable process that we could arrange a legal agreement for how those funds will be distributed before we get a ruling? I could only imagine a series of disasters following without such an agreement. |
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There's a few things that have come to my attention recently, that I think are important to this whole issue. Patrick, can you please expose what you previously thought to be pirate's business model? If not, why not?
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. And on a competitive note, since BS&T closed shop, I have processed around 8000 BTC of withdrawals for Starfish customers. Apparently the secret "business plan" that a few people mentioned they knew from close dealings with pirate was a total load of shit. There really never was a legitimate business, we've been flat out had. What is probably most likely is that he used the profits he shaved from pool hopping with gpumax to keep his ponzi floating long enough to make it believable, before re-opening the business to the general public. If the info I've seen on gpumax is accurate, then he and his silent business partners have known about this from the beginning, and have never intended to pay anything significant back. If this is true, then giving them the benefit of the doubt by pushing for a civil settlement is playing to their favor and not ours. Not only do we have basically no chance of getting anything back, but we would have to pay a significant sum just to see him in court (assuming he doesn't run to Brazil or somewhere we can't touch him, then we'd pay for absolutely nothing). In short, messing with Trendon's family is probably the least useful option. He and his business partners should be our direct targets, and chances are we're better off going immediately for criminal charges in order that things proceed as quickly as possible, and to minimize any further losses on our part. Consider every day that we wait to throw him in jail to be hookers and blow. |
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For fuck sake  . If I had known that I wouldn't have invested in pirate, either. That scheme wouldn't work at all, and assuming that you can corner the market is a bet you're 100% certain to lose every time. You can't pay 10% interest in fiat AND 7% in BTC without actually making (lots of) money somewhere. His promise to pay someone else 10% in USD does not pay interest on my BTC deposit. Also, you FUD-spamming assholes consider yourselves 'honest', but none of you have contributed shit except to spam other people's threads. You never had a single shred of evidence, and you have called everyone on these boards a ponzi whether they actually were or not. I don't see any of you screaming ponzi in triple posts in dank's obvious scam bank, oh no, you're here, trying to insult patrick when he's one of the few people who lived up to his promises. How bout taking your self-righteousness and shoving it in the orifice you so love to speak from. |
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Nice to see at least one lender coming out of this sans scammer tag.
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Nice info. Paraguay is apparently 2 days, whereas I thought it was more like 3 years. Not all places are equally good to hide, though. @moni3z: That's basically the gist of it. If we can't have our BTC back, then we'll collect his head instead. Hopefully it won't come to that, but if it does we should be well prepared. |
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I don't want to detract from the value of your listing this info, and I don't want to run this thread off the rails. However, I think the only bit of evidence we have for the 5.5M USD figure is his single boast of 'controlling' 500K BTC in an irc session. No?
A few of the PPT ops have also stated what's on their balance sheets. We could at least pull together a lower bound figure, which is still in the millions, without having to go on his word alone. I reckon a lot of the early GPUMAX demand was probably genuine external customers who wanted to use it for pool hopping, but compared to running a Ponzi scheme that's not hugely profitable for Pirate himself.
Possibly, although that still leaves unanswered questions. It's not uncommon for people to (unconsciously) make up aliases that keep some traits of their real names (initials, syllables etc) without realizing it.
Trendon Shavers
Don Shrents That's likely. Apparently "Trendon Shavers" appears on his ID, although I haven't seen it myself. If that really is who pirate is, then I'd say he either really intends to pay out, or else he's already got citizenship somewhere he can avoid prosecution. That, or he's incredibly stupid. It usually takes 4-5 years to acquire citizenship in any country, which makes that less likely but not impossible. Does anyone know how long it took between the time bitcoinica got hacked and the time they started processing claims? It's been 4 weeks or so for pirate now.. Reeses: Please stop quoting zyk. I'm already having to use the ignore button much more than I would like. |
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We already know quite a bit that would be useful to the authorities.
1) His name is probably Trendon Shavers, from McKinney TX.
2) He runs gpumax.com, which is registered under "Don Shrents". A little investigation would easily dig up how these people are related.
3) We have a decent estimate of the USD value of the funds he's liable for, and the fact that he has suddenly gone silent when the bill came due. (tax evasion is treason in the US these days, they'll hunt him if only for that)
4) We have circumstantial evidence that he may have been running a ponzi scheme, and that he could possibly have been involved in money laundering (why pay over par for mining activity?). Even if not, if he doesn't pay then it's still grand theft.
Assuming pirate doesn't come out and make some substantial announcement, and more importantly make a tangible effort to start coughing up, anyway. I think most of us are perfectly willing to accept that he can't pay interest from the time things fell apart, or would be satisfied just getting most of our money back.
However, as long as he fails to inspire confidence that he's not just going to run away, we ought to keep whetting our knifes if only to make sure that pirate knows we're not playing around. There's plenty of useful information we could dig that would speed along the process of conviction should the stick become necessary.
makomk: That still doesn't make much sense. How was he able to pay miners over par and pay out interest at the same time? Unless he had some other purpose for it, that would have made him bleed money much faster.
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I support this.
People trusted pirate because:
A: He had perfect OTC rating and community respect.
B: He had (up till now) been reliable and did what he said he would do.
C: There was evidence that he was doing some sort of legitimate business (would any of the ponzi-thumping morons like to explain what's up with GPUMax, since you obviously know everything about pirate?)
D: They accepted that whatever he was doing was probably risky, but assumed that he would do right should things go tits up.
I don't think it's reasonable to expect to get any money back, but I think it would be sending the wrong message to let some asshole walk away with millions of dollars like it's nothing. Of course, given how long it took zhoutong to start processing claims for bitcoinica (people were saying he walked with the money, too) it's possible that pirate is currently shitting himself trying to work things out in a fair and manageable way. If that's the case, he'd better speak up before the FBI shows up at his door.
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Hahaha.. hahahahahaha.. Rest assured dank will meet his daily quota of noise pollution for as long as he feels like pretending to practice music. Low risk of improvement! Rotten vegetable guarantee! |
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You don't have to die to give your soul bad karma.
Then your title should state "dank karma guarantee" not "dank soul guarantee". If you're not offering to commit seppuku in a sealed EM shielded box, then "soul" is false advertising. |
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Ahhhh not your soul..... Geez.....
Actually, it might could be arranged  . Of course he would have to die first, but a contract is a contract. |
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Anyone have advice for how I can distribute it? The OSX equivalent of py2exe does not look... reliable. I'll try it, but I would prefer to avoid the complexities and run it as a native python script, if possible. Perhaps bundle up all the site-packages into the install directory so that it can be standalone without having to install extra dependencies...?
I'm guessing that packaging and distribution will be the biggest hurdle to getting Armory released on OSX. Perhaps someone with more OSX experience can provide guidance...
Well, you have to install brew manually on OSX, but if it's already installed it might be possible to make up a .pkg for it with a script that will install everything else required and compile/copy all the necessary parts. Not really certain how well that would work, but failing that you could just use a zip or tarball as you would in a manual installation on linux. App file bundles on OSX might also theoretically be used to contain a python script, but I don't know that the functionality is quite flexible enough for that. If you want to dissect some .app files to see how they work, right click->show contents is what you'll want to look at. One thing that sucks on OSX though, and I'm not sure if this applies to newer versions, but filepaths which contain spaces tend to seriously mess with makefile type scripts, which cause all kinds of corruption and errors. I don't think the same applies for pkgs, but usually those are installed from a dmg which allows you to control the path name. |
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Needless to say, few "investors" or perhaps nobody will see their bitcoins back. He will now say, I have an unexpected number of withdrawal requests; fulfilling them will take some time, etc. He might even fulfill a few small requests to buy himself some more time. But then it's game over.
lol, if everyone gets their money back in the next week or two, will you promise to stfu for the rest of forever? |
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me: pirate should offer CDs to reduce his adverse liquidity exposure.
everyone else: fuck you dude, you're just a greedy asshole, I want my money all the time. The lower rates will balance out everything so it doesn't cut into his profits! 4.9% is still awesome!!
pirate: the interest rate cuts caused an unexpected flood of withdrawal requests, so I'm shutting down BS&T and returning all funds starting monday.
everyone else: 0H T3H N035!!1one
me: ...I hate you.
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While I agree that 7% wasn't sustainable, giving his larger passthru's the option of more interest for only withdrawing once a week would give him stability, and let people keep their higher return. It looks like his problem was stability, if bitcoinmax can offer that, why not keep it at the current rate? Deposits at bitcoinmax would skyrocket.
Not nessecariy... I prefer the ability to get at my coins. Iwoulld almost certainly withdraw if that change were made. I can see this as well. What if the price of coins fell through the floor, etc? So, I guess I would say that "some" would want that for the interest/greed position. Others would want more liquidity, such as you suggest. I'm on the fence, but 4.9% is pretty good too. The best solution would be to offer CDs so that those willing to give up liquidity for interest could do so, without restricting those who prefer liquidity. Lowering interest doesn't really solve the problem of too much activity. |
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Some interesting points. Not all of them are applicable to the people offering services. Some comments/observations:
1: Having higher liquid reserves can be useful, but at a 20-30% level would leave small (by customer number) or poorly diversified operations exposed to contingent events. Also, the short-term asset market is not as liquid as many people would like. Not sure what sort of event would be made worse by having extra reserve cash sitting around. Thinking about it, though, the 1-month term for "current debts" is probably a good enough approximation for "short term". 2: Tracking maturities in a "point in time" system is not practical and some CD issuers manage this internally, but not visibly. It is a cash-flow management issues and relates to solvency (paying debts as they fall due). Cash flow is a pretty fundamental part of credit analysis :\. It doesn't really need to be tracked exactly, just to make certain that loan/asset terms have similar (or greater) liquidity as the deposit terms. 3: Surplus or net assets - covered. Should it be greater than 100% is debatable - that goes to risk profile and the nature of the business. The rule of thumb for non-financial businesses is 1:5 (20% debt) debt/asset ratio or lower preferred, and 1:3 (33%) is running on bankruptcy. For a financial business, higher ratios are acceptable, but the considerations are different. Frankly, if a business chooses a higher risk model, they probably should not have as high of a credit score, and higher leverage means lower ability to repay principle in the event of some unexpected adversity. It does depend on the nature of the business, though, since a mutual fund would have very different considerations (and expected higher leverage) than a more money-market oriented "bank". There's also incentive to consider, ie a mutual fund owner who charges clients even when he makes a loss does not deserve a high rating. 4: If I wanted to look at security, I'd also look at the kind of websites and other things people do, but there are some clever thieves out there. That is part of the due diligence anyone should do before investing. That might also assume coins are sitting idle which is unlikely.
I was thinking more along the lines of the recent forum hack whereby the hacker(s) gained access to other people's accounts and then made withdrawal request PMs to be delivered to a hostile address (client rather than server side compromise). On the other hand, security is probably beyond the scope of credit ratings anyway. |
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Sure, but 5% is already very very good. Plus, that doesn't mean all the passtrough will get lower rate  Ha, well, I don't want to be on the losing end of that deal, especially since I never make any withdrawals that aren't interest  . I'm just starting to make good money now. |
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The reason I continue to get loans is because I'm trying to grow. And I am. I have a few hundred BTC now, up from nothing earlier this year. You have? How much do you own? ie, minus liabilities? I'm not issuing any debts, it was a simple delay of transaction. Orly? Then what's this? Hey fellow lenders, I'm just putting this out there because my cars getting old and I'd rather get one now than later. Here's the deal, you would buy a used car for about ~17k USD and have it shipped to me. I would then repay you double the amount of the full car value within a year. Payments would begin after one month. I'll pay $500/month for the first three months, then I would pay $1000/month for a few months, $2000/month, etc. until the $34,000 is paid off. You can keep the title in your name till it's repaid if it gives you more confidence, I don't care, as long as I'm driving it.
I could buy the car myself in a few months time, but I really could not care less if I paid twice the amount to get it a little bit earlier.
This is no bullshit. If you're interested, we can discuss it more however you'd like. There are already some members on this forum that know my personal information, I wouldn't mind sharing what may be necessary to get a car.
Thanks to all of you lenders for your support.
"Oh, but that's separate from dank bank". Sorry, but every liability you personally incur directly affects the solvency of dank bank. Has no fiat currency bank ever withheld or delayed a transaction before? An enviable standard, indeed. We out here in the fringes of the free market expect more. At least I had reason and was in touch with the client. Ah yes, if I had a bitcent for every "reason" you gave for not keeping up with your liabilities properly, I'd be pirate. (15Pgdwz3dDJv6Ee3NzwT8bkoDS1Q7rRzMC plz ) Because Mt Gox has a closed minded verification system. I didn't have any of the documents they needed to be verified, but I had a lease agreement and asked if I could submit that for verification. I did, but they did not approve because it only had the partial street address, not full. My time on this forum is spent in the lending section expanding my ventures, not looking at different Bitcoin clients. You're making presumptions that I am a scammer, that's spent over 10 days of my life here, and you're grasping to things you think support your claim. Mt.Gox has to deal with government regulations, just like everything else in this world that gets clogged and made unusable. But, if you've been around for a year+ and have "paid off at least 10 loans", then why is it that all of a sudden you need to verify with Mt.gox? Also, most of your activity on the lending forum involves posting absurd requests for loans which has gained you the reputation that requires you to defend everything you do. That said, even if you aren't running a ponzi, responsibility/solvency still escapes you. You're analogy is completely off from what happened with me an Andy. Try this: I hire a contractor to build a house, I pay them half upfront and they build half of the house. I disappear even though they tried to make contact with me. Should they finish the other half of the house? Should they refund me a year later when I complain why my house wasn't finished?
Except he did contact you. I'd say it's more like hiring a contractor to build a house, then coming back to find they built a teepee and spent most of the time screwing around, then telling them to fix it, only to get some excuses of how they had a fishing trip planned and their dog died and they'll get around to it next week, but they never do. |
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Those rate changes were posted back in July, originally intended to take effect August 1st. I see nothing changed other than it got pushed back twice (once from Aug 1 -> 14, now from Aug 14 -> 20). Back in July paybt.c confirmed that BitcoinMax would remain 6.9% though. Interested to hear if something has changed behind the scenes though (like pirate no longer offering premium rates to the older & larger passthroughs).
No the rates were just revised lower today. True story. 25k+ trust account are now @ 5%. For those of you who do not live on IRC, here is an excerpt from the man himself: [11:42:38] <hashking> Why the short notice Pirate
[11:44:47] <@pirateat40> hashking, I tried to hold off thinking the operating wallets would balance out but they haven't fast enough so Im having to hold more reserves which is eating into my profit margin.
[11:46:23] <@pirateat40> Its a stability thing, its getting harder and harder to predict when coins will come in and go out.
[11:46:49] <Chaaaang-Noi> i see
[11:46:51] <@pirateat40> So I'll have times when im holding too many coins in op wallets and move some over and then get a flood of withdraws.
[11:47:12] <Chaaaang-Noi> could you just lock it so we can only take out on mondays or someting?
[11:47:34] <@pirateat40> Yea, but i hate limiting people moving funds.
Shit. I really wish he'd just limit withdrawals to mondays, or else offer CDs for set terms. I'd bet I'm not the only one willing to trade liquidity for interest, either. |
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Hmm.. I've been thinking about this quite a bit. A few tweaks I have in mind:
1) The ratio of "liquid reserves" only needs to match current accounts (ie accounts that can be withdrawn from at any time), and should be between 20-30%. The remainder should be in exclusively short-term assets.
2) For CDs (which have a more limited liquidity requirement), the more important metric is how well the asset maturities match the debt maturities. In other words, if a lender has 100BTC in 3 month CDs, they should have not more than 100BTC in loans/assets with 3 month maturities. Assuming they keep proper liquid reserves, it's less important whether the assets mature exactly when the CDs are due than whether liquid reserves are sufficient and kept replenished.
3) The amount of BTC the lender himself puts down (equity/deposits) should be counted separately, assuming the lender keeps a policy of insuring losses with their own money. This ratio should be ideally 100% or better.
4) Other security practices, like setting up dedicated receiving addresses with accounts and not allowing withdrawals to other addresses, should probably be added under the "non-financial" section. A significant fraction of major BTC losses are security related.
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