Pirate accomplices

[bitcoinBull]

You are telling me you have no evidence it is a ponzi...  If you have it, and posted it somewhere please just copy and paste it here or link it.

You guys are asking me to prove it is not a ponzi but I think it is about time you guys prove it is...

[BR0KK]

He's on a boat u know ..... and on 12 different airplanes..... (he even has a commercial for this here on bitcointalk)

*that was not meant to harm Goat in any way*

[sadpandatech]

hooo, oohhh ohhh ohh, ho hohooo ohhhh maannnn, those weren't pills your attorney just gave you, Goat...

[SMTB1963]

I think many here are so invested in the "ponzi proposition" that they're refusing to consider other possibilities.

...

Ponzi or not, there's no legal activity that I can think of that would allow paying such returns for any length of time.  

We all did exactly what you just did. We considered it, and then rejected it as completely implausible.

So what is it you know about pirate's op that causes you to reject the possibility of some other non-ponzi scheme, like money laundering or tax avoidance?  (not trolling, just curious)

Purely hypothetical...but it seems to me that if one runs in certain circles, one would know plenty of people willing to pay 90, 80, or even 70 cents on the dollar to clean/hide their money.  Maybe I'm missing something, but a steady stream of dirty funds wanting to be cleaned would certainly allow pirate someone to pay his 7%/week by running a BTC laundromat - no ponzi necessary.  Further, I think running a laundering scheme via BTC would be pretty durn complex...i.e., it couldn't be unwound quickly/easily/without significant loss if something unexpected occurs.

But even so, it doesn't matter. If something is indistinguishable from a Ponzi, and most likely a Ponzi, you should treat it like a Ponzi. If you have a gun that looks like it's loaded, you should probably treat it like it's loaded.

Hey, I'm all about the "if it walks/talks/tastes/smells like a X, then it is a X" line of reasoning; it's a great rule of thumb that has served me well.  But by definition, rules of thumb are not axiomatic.

Again, I'm not trolling or even trying to be argumentative.  In fact, if someone held a gun to my head and said "Ponzi or not ponzi....decide or I'll shoot!", I would immediately choose ponzi - whether the gun was loaded or not.  Thing is, the more I feel like I'm about to become convinced of something, the more I try to challenge my own assumptions (as long as no one's holding a gun to my head).  Since I don't really trust myself to do this on my own, I seek outside help.  No other place to do that but this forum, and I fully expect to get flamed, labelled a troll, or otherwise marginalized in the process.  Especially on this forum when emotions are running so high.

In this case, my process has led me to the conclusion that it is in no way certain pirate was/is running a ponzi.  I see no hard evidence that tips the balance towards ponzi vs some other shady alternative like laundering/tax avoidance/etc.  Joel, if you or some other smart mofo can show me the error in my position, all the better for me.  

To be sure, I see no compelling argument at all that the operation was conducted legally.  If someone who claims to know what pirate was doing would care to offer an explanation to the contrary, I would gladly change my mind.  Again, if there was nothing illegal going on, there's no reason why anyone who knew the nature of pirate's op couldn't share it with the community now (given that the op is shuttered).

Just so no one has any ideas about any bias on my part: I've NEVER invested or bought BTC.  I currently have a few BTC in a wallet somewheres that I earned via mining a long time ago.  I think bitcoin has potential, but only if/when it's used as a medium of exchange beyond the current pitiful level.  When that happens, all the drama related to these "investment" scams will become largely irrelevant to the broader BTC world.

BTC is a legal grey area.

Really?!?  Say it aint so!  But as Vladimir pointed out, using BTC as a vehicle to facilitate a criminal enterprise doesn't change the legality of the overall operation one little bit.

Duck fallacy!

Har!  I mean aarrgh!

[notme]

The respect of someone that clueless, lost doesn't mean a whole lot.

I had more respect for you when I thought you believed it was a ponzi and were just looking to time it for max profit.  Unethical but not stupid.  This theory is just stupid.   On par with ideas like "a rich person could destroy Bitcoin by buying all the coins" but nobody was ever foolish enough to invest on that idea.

In related news Mr-10%-OTC-Trader no longer only owes his creditors ~$5 mil USD.  
It is now more than $6 mil USD and increasing at a rate of $0.75 per second.  

500K BTC * 1.07 * 1.04 * $11.00 = ~$6.1 mil USD.
So congrats are in order I guess.  All you "investors" just made another cool million (on paper)!

So you're saying unethical is preferable to stupid.  Thanks for admitting you feel this way.  I will be sure to avoid doing business with you in the future.

[bitlane]

So congrats are in order I guess.  All you "investors" just made another cool million (on paper)!

http://www.youtube.com/watch?v=98958txVSrE

[notme]

Out of curiosity imsaguy...
1) How do you pronounce your name? I keep pronouncing it like I'ms (or Iams, like the dog food) A Guy
2) At this point, given the long delay and minimal communication do you think Pirate will be able to pay out the rapidly increasing debt he owes as per the terms of his post (principle + interest to the hour)?

1) Illinois Math and Science Academy (IMSA)

2) I've said and continue to say that I am going by the terms of the Vandroy bet which has a deadline of Wednesday if I'm not mitaken.  When the bet was made, it seemed no one had issues with the terms, so if both sides signed off on it, I should be ok with it as well.  It is frustrating to not have any information, but outside of filing legal action, there's not a lot I can do.  Most lawyers (hell, even the credit bureaus) won't touch any sort of default until at least 30 days  have passed, so it seems prudent to wait and see.  So to answer your question directly, the longer things go, the lower my expectations.

Much more respect for you now that I know you're not I'm "something awful" guy.

[notme]

But when he started opening up to public BTC, did he ever say no? Even something growing by leaps and bounds would need to setup some controls such as investment rounds. Perhaps he is a wizard who can plan for a completely uncapped investment flow. So far I haven't seen anything past speculation at his business model, far from the confident proclamations of "I've figured it out and you might be able to as well if you are resourceful" from some Pirate backers a while ago.

2) So much growth he doesn't seem to have a need to control how much inflow of investors there are? Opening up to the public with seemingly no limits or buy in rounds? I know this is an "internet" business but I thought the dotcom bubble and now facebook would have killed the idea of such growth.

There wasn't unbounded growth.  There were people that weren't ever going to invest with Pirate.  There were people that were only going to invest X with Pirate.  Still others couldn't afford to buy more coins because they ran out of funds and/or the price was goin gup past their preferred purchase point.  That only leaves the new coins from mining and obviously, that's limited as well too. 

He said no by lowering interest rates, like a free market business should.  Too bad the FUD masters incited the herd to stampede for the exit .

[DeathAndTaxes]

So you're saying unethical is preferable to stupid.  Thanks for admitting you feel this way.  I will be sure to avoid doing business with you in the future.

Oh noes you got me notme; I am shady.   That is why you won't find a single person with an unresolved complaint.   Feel free to take it that way and not do business with us.  

Then again we don't offer pie in the sky 3400% APR so I doubt you would be interested anyways.

Still why so grumpy?  Since I wrote that last post you "investors" have locked in another $300,000 or so in profits!  
What are you going to buy with your share?  

[greyhawk]

Still why so grumpy?  Since I wrote that last post you "investors" have locked in another $300,000 or so in profits! 
What are you going to buy with your share? 

http://www.youtube.com/watch?v=8P-gDZmFnTQ

[the_thing]

He said no by lowering interest rates, like a free market business should.  Too bad the FUD masters incited the herd to stampede for the exit .

Naive and stupid people got fucked by a scammer, but it's not their nor the scammer's fault. It's the fault of those who warned them.

Fuck logic. Let's use emotions instead!

[hannesnaude]

That is all you have? You only admit you have no real evidence and you can't back up your claim and I should just trust your assumption?

Are you trolling now? Or are you seriously saying that you need me to provide evidence that Pirate is indistinguishable from a Ponzi scheme? You know what Pirate said, right. You know what Ponzi schemes are, right? If you think they're distinguishable, why not just tell me what distinguishes them?

I'm arguing that something is absent that would be trivially identifiable if it existed. If you want to maintain that it exists, just point it out.

I mean, I can do a point by point comparison of what we know about Pirate and what we know about Ponzi schemes, but I've already done that at least five times. I don't see the point in doing it again.

Honestly, I think you've switched to trolling at this point. Or you are very seriously in denial.

+1
At first I thought he was just a little slow on the uptake, but right now I have no option but to believe that he realised that he can either come out of this looking like a scammer (if he knew it was a ponzi and encouraged others to invest) or like an idiot. He went with idiot, but is overplaying his hand if you ask me. If you really are that stupid IRL you are virtually guaranteed to do yourself an injury before reaching adulthood. That's how evolution works.

[JoelKatz]

Purely hypothetical...but it seems to me that if one runs in certain circles, one would know plenty of people willing to pay 90, 80, or even 70 cents on the dollar to clean/hide their money.  Maybe I'm missing something, but a steady stream of dirty funds wanting to be cleaned would certainly allow pirate someone to pay his 7%/week by running a BTC laundromat - no ponzi necessary.  Further, I think running a laundering scheme via BTC would be pretty durn complex...i.e., it couldn't be unwound quickly/easily/without significant loss if something unexpected occurs.

None of these require borrowing funds at way above fiat market rates over anything but the very shortest time frames. None of these require taking the huge exchange rate risks that Pirate takes by having debt denominated in an unstable currency. None of these work if your cash flow rate is forced by these kinds of exponentially increasing interest payments. Basically, if you can afford to borrow money at 3,000+%, your first priority would be paying down that debt.

The idea that he had some business that was so profitable that paying 3,000% was doable translates into an argument that Pirate had so much money, he could afford to needlessly give it away to people. And the people he picked to be the beneficiaries, for some reason, are people who would invest in something that looks exactly like a Ponzi scheme.

If you put your keys in your desk drawer, there's always a possibility someone moved them. Normally, we ignore this possibility because the odds of it happening are low and the affect it has is small. However, if my life depended on the keys being there, I'd probably check them. For unlikely events, you can assign a rough probability and ignore them unless you have some situation where their affect is dramatic.

If I had to assign a probability to Pirate being something other than a Ponzi scheme, I'd make it less than 1%. Unless I'm dealing with something that has an affect by more than a factor of 100+, I can ignore this possibility. If I was going to make some decision where I'd be killed if Pirate wasn't running a Ponzi scheme, then I'd have to consider the possibility that he's not. I have yet to encounter a situation where I can't ignore that possibility.

[Coinoisseur]

He said no by lowering interest rates, like a free market business should.  Too bad the FUD masters incited the herd to stampede for the exit .

Yeah, because the only bump he hit was that far into it... until just that point, he didn't need to adjust inflows of capital at all. Oh and is his completely legitimate enterprise still offering compounding interest while shutting down? That's the most mind boggling part, he admits he doesn't have the BTC to pay it all out yet doesn't announce interest of 0%.

Interesting you blame FUD for a stampede, didn't seem like the attitude of Pirateat40 skeptics changed much at all in intensity this whole time. Just maybe it was the opaque and seemingly unsustainable nature of Pirateat40's offer that created an easily spooked customer base.

[imsaguy]

Yeah, because the only bump he hit was that far into it... until just that point, he didn't need to adjust inflows of capital at all. Oh and is his completely legitimate enterprise still offering compounding interest while shutting down? That's the most mind boggling part, he admits he doesn't have the BTC to pay it all out yet doesn't announce interest of 0%.

What's with putting your text above the quote?

Pirate did at one point pay interest every 3 days instead of 7.

[Shadow383]

Yeah, because the only bump he hit was that far into it... until just that point, he didn't need to adjust inflows of capital at all. Oh and is his completely legitimate enterprise still offering compounding interest while shutting down? That's the most mind boggling part, he admits he doesn't have the BTC to pay it all out yet doesn't announce interest of 0%.

What's with putting your text above the quote?

Pirate did at one point pay interest every 3 days instead of 7.

Question:
Now that the fraud has finally collapsed and BS&T has defaulted on all its obligations, are you planning on making a public apology for your role?

[MPOE-PR]

Pirate's scheme from the getgo had all the hallmarks of a typical ponzi.  Without more information than what was and is known publicly, anyone who can think should and would have assumed it to be a ponzi.

Yes, some people have. (1, 2, 3)

The only reason I gave this scheme any credibility whatsoever was the fact that a lot of generally intelligent and (apparently at least ) even honest long timers on this forum gave it not only the benefit of the doubt, but full credibility.

The actual reason is explained in this scientific paper.

Here's a big thumbs up to the so called "bankers" as well as to the rest of the citizen finance Doolittle Brigade. Well done fellas, great treasure awaits.

[Frankie]

Purely hypothetical...but it seems to me that if one runs in certain circles, one would know plenty of people willing to pay 90, 80, or even 70 cents on the dollar to clean/hide their money.  Maybe I'm missing something, but a steady stream of dirty funds wanting to be cleaned would certainly allow pirate someone to pay his 7%/week by running a BTC laundromat - no ponzi necessary.  Further, I think running a laundering scheme via BTC would be pretty durn complex...i.e., it couldn't be unwound quickly/easily/without significant loss if something unexpected occurs.

None of these require borrowing funds at way above fiat market rates over anything but the very shortest time frames. None of these require taking the huge exchange rate risks that Pirate takes by having debt denominated in an unstable currency. None of these work if your cash flow rate is forced by these kinds of exponentially increasing interest payments. Basically, if you can afford to borrow money at 3,000+%, your first priority would be paying down that debt.

The idea that he had some business that was so profitable that paying 3,000% was doable translates into an argument that Pirate had so much money, he could afford to needlessly give it away to people. And the people he picked to be the beneficiaries, for some reason, are people who would invest in something that looks exactly like a Ponzi scheme.

+1

This is an especially terse and lucid explanation of why it makes no sense to pay so much for lending, even if you did have a fabulously profitable business that could cover it.

[SMTB1963]

Purely hypothetical...but it seems to me that if one runs in certain circles, one would know plenty of people willing to pay 90, 80, or even 70 cents on the dollar to clean/hide their money.  Maybe I'm missing something, but a steady stream of dirty funds wanting to be cleaned would certainly allow pirate someone to pay his 7%/week by running a BTC laundromat - no ponzi necessary.  Further, I think running a laundering scheme via BTC would be pretty durn complex...i.e., it couldn't be unwound quickly/easily/without significant loss if something unexpected occurs.

None of these require borrowing funds at way above fiat market rates over anything but the very shortest time frames. None of these require taking the huge exchange rate risks that Pirate takes by having debt denominated in an unstable currency. None of these work if your cash flow rate is forced by these kinds of exponentially increasing interest payments. Basically, if you can afford to borrow money at 3,000+%, your first priority would be paying down that debt.

Pirate's debt is denominated in BTC and his interest obligations are denominated in BTC.  I don't see how an "unstable currency" is a problem, as long as you make certain assumptions.

If pirate has a source of dirty capital willing to be cleaned at 70 cents on the dollar per week, it's a simple matter for him to pay "investors" 7% per week out of the 30%/week he earns.  Since he must pay interest on his BTC debt in BTC, all he has to do is be a net purchaser of BTC over the long term.  And when all his "investors" never withdraw squat, he can defray BTC purchases in the short term and be even more wildly profitable.

Since the scheme doesn't require borrowed BTC to sustain itself, why would pirate need any investors at all?  Keeping BTC prices stable limits his exchange rate exposure.  Controlling the exchange rate of an otherwise volatile currency is a good thing if you're planning on flushing a lot of $ in and out of BTC.

Consider (if you will) the following:

• You are a BTC sophisticate
• You are able to move large amounts of coin OTC (off exchange)
• You know a guy who knows some dude who's brother in law generates $1M/week in dirty money
• Guy's dude's brother in law will take $0.70 on the dollar to clean his money
• You see an opportunity to earn 1/.7 per week

but

• Your OTC customer base can't handle 100% of guy's dude's brother in law's volume
• Cleaning guy's dude's brother in law's money via the exchanges exposes you to more xrate risk/fees

however

• BTC exchanges are (relatively) illiquid/thinly traded - therefore easily manipulated
• If you can control enough coins, you can control BTC price

but you aints gots enough coins to control BTC price, so

• Offer 7%/week on bitcointalk.org marketplace for large deposits
• Deposits roll in; you now control enough coin to control BTC price
• xrate risk to launder guy's dude's brother in law's money is now minimized
• You enjoy the additional financial benefits of being the only elephant on the BTC dance floor

then

• Babies start screaming about how you won't take their candy, but you don't need any more coin to control BTC price
• Eventually decide that accepting babies' candy is ultimately good for business
• Farm out admin overhead for baby accounts to proxies

Rinse/repeat/vacation in Vegas

_________________________________

Look, I don't claim the above scenario reflects reality - so don't respond to it as such.  It's merely my latest thought experiment to figure out how BTCST might not be a ponzi.

Critiques welcome.  

[JoelKatz]

Pirate's debt is denominated in BTC and his interest obligations are denominated in BTC.  I don't see how an "unstable currency" is a problem, as long as you make certain assumptions.

Say the price of BTC doubles. Now, Pirate's customers need half as much BTC as they did before. Yet Pirate still has to pay the same amount of interest. Does he now double his customer base?