Consider Pirate does not pay and does not sell

[zby]

Oh yes - they can default.  Lending money is not the only way to lose money - they can be hacked, get into legal trouble and last but not least one of their employee can run away with all the bitcoins in their accounts.

That's bankruptcy, not default. Default means one can't repay their debt, and apart from the small amounts deposited from time to time in one's account for the few minutes before a transaction, which are instrumental to the service provided, Mt Gox has no debt with anyone.

Hmm - I had to consult the Internet - but I think you are not correct.   I keep my funds on MtGox all the time and looking at the bid and ask walls there are many more people doing that.  If at some point in time MtGox does not have the funds to return them to the depositors - then this would be a default, after that - the legal proceedings - this is bankruptcy (http://www.quora.com/Economics/Whats-the-difference-between-default-and-bankruptcy , http://www.experian.com/ask-experian/20080319-the-difference-between-default-and-bankruptcy.html)  - but all that is really a technicality isn't it?

[RedGolpe]

all that is really a technicality isn't it?

First of all, I agree.

Hmm - I had to consult the Internet - but I think you are not correct.   I keep my funds on MtGox all the time and looking at the bid and ask walls there are many more people doing that.  If at some point in time MtGox does not have the funds to return them to the depositors - then this would be a default, after that - the legal proceedings - this is bankruptcy

Why in the world would MtGox "not have the funds to return" when they are not investing them? They are just keeping it there, or at least they should. If they don't, then it's fraud because they are actually "investing" (or whatever they're doing) some money not intended to be invested. In pure theory, Mt. Gox (or any other exchange) should have the funds ready to repay all deposits istantaneously, which is of course out of the question for any typical strictly-speaking debtor, including all sovereign Countries.

Also going back to wikipedia, "default occurs when a debtor has not met his or her legal obligations according to the debt contract". Mt Gox did not contract debt with anyone, as no one is lending money to them. I see the fact that there is an actual deposit of money AND btc managed by the exchange as a pure technicality, instrumental to the service they offer; still, I absolutely agree that both these deposits, or any number of subdeposits they managed to set up, can be hacked, stolen or whatever.

[Transisto]

Consider Pirate does not pay and does not sell

If I was owed upward of 20 000 btc I'd make sure personally that the person with control over my fund is protected from rubber hose attack.

If I was a criminal I would be making plans for the 500k btc target.

The risk of total lost increase everyday.

[Enigma81]

No sense considering any longer.  Pirate announced default with "no further information available".  Watch the price of bitcoin for your expected reaction...

Enigma

[Piper67]

No sense considering any longer.  Pirate announced default with "no further information available".  Watch the price of bitcoin for your expected reaction...

Enigma

Good. Now the wanker can stop trying to play god with the market and things will return to normal.

[kentrolla]

No sense considering any longer.  Pirate announced default with "no further information available".  Watch the price of bitcoin for your expected reaction...

Enigma

Good. Now the wanker can stop trying to play god with the market and things will return to normal.

by "normal" you mean another bubble right?

[Littleshop]

Well as far as we know he has no coins to sell.  I doubt he will be buying coins but that is the only option for him.  No downward pressure, some slight chance of upward pressure. 

[DeathAndTaxes]

Well as far as we know he has no coins to sell.  I doubt he will be buying coins but that is the only option for him.  No downward pressure, some slight chance of upward pressure.  

Assuming he has a large amount of USD it would be more efficient to simply take the spot price to convert the BTC debt into USD debt.   No splippage.  If the price is $10.00 USD per BTC and you got $1M you can't buy 100K BTC.  Maybe you can buy 85K BTC.  However you simply declare reapyment in USD, use the spot price as a conversion and avoid the slippage and fees.

Before those people cry "he can't do that he owes me BTC".   Read the front of a FRN.


Granted he may be holding nothing but air, in which case it doesn't really matter.  If he is hold mostly BTC well it is more efficient to repay it in BTC.  Even if someone won a lawsuit US courts can't force him to repay BTC (or gold, or rare baseball card).  Courts can simply award damages in ..... US Dollars (well technically Federal Reserve Notes).  The plaintiffs could then buy BTC with the awarded USD but they get hit with the slippage.

Now might be a good time to point out that Bitcoins Direct sells @ 1% below spot with no fees or slippage.

[ElectricMucus]

I haven't seen any indicator that pirate already sold his BTC though, if he were I don't think we would have rallied upwards in the last months...

There are simply too many coins not to be noticeable.

[sturle]

I haven't seen any indicator that pirate already sold his BTC though, if he were I don't think we would have rallied upwards in the last months...

He sold long ago and over time.  Not difficult at all in this market.  It was never 500k BTC, which would include interest, it was much less.  His personal spending habits were commented on back in May when the amount of new coins coming in still exceeded the amount of interest paid out:

Over the past few months, Pirate has started to get stupid about his IRL spending habits.  He has made some purchases that are probably going to raise some red flags.  His "legitimate" occupation will not stand up to scrutiny if the feds shine a light on him.  there is no way he can justify the amount of money he is pulling out. hes not keeping a clean head and people that know him can tell something isnt quite right. this is what really has me concerned, because he is just being too flashy.

[ElectricMucus]

I haven't seen any indicator that pirate already sold his BTC though, if he were I don't think we would have rallied upwards in the last months...

He sold long ago and over time.  Not difficult at all in this market.  It was never 500k BTC, which would include interest, it was much less.  His personal spending habits were commented on back in May when the amount of new coins coming in still exceeded the amount of interest paid out:

I can't see any evidence that he did sorry. He could have sold, if he were very careful not to affect prices too much, only selling at a bulge.
Yet that is pure speculation, and to saying yes he did, certainly, is deluging one self.

I personally doubt it, and even if it was "just" 200k Bitcoin, we rallied far too high and far to steep to support that hypothesis.
Added to that for pirate having BTC has some significant advantages. He certainly can use the increased privacy....


Anyway I have not created this thread to discuss that scenario either... It's counter-FUD against those idiots who try to encourage people to sell because of an imminent pirate dump (which I don't see happening as said before). It it just an argumentation tactic to say: "You know what pirate doesn't have those bitcoins anymore and here is why...[random vague quote related to pirate]"

tl;dr  you are spamming your agenda in the wrong thread.

[DeathAndTaxes]

Pirate stated earlier he didn't have the coins and it would take time to get them.  Reading between the lines I took that to mean he was long USD and short BTC.  Granted Pirate is a liar, a scammer, and a sociopath so that may not mean much.

Still there is no more evidence he does have the BTC than he doesn't.  200K BTC over the course of months wouldn't be much selling pressure.  Say one sold 200K BTC over 4 months that is 1,600 BTC per day.  Total market volume is ~80K BTC.  OTC is easily another 20K.  1,600 is a drop in the bucket.  Hell our company more in direct sales larger than that.

[ElectricMucus]

Alright lets say you are a grand scheme scammer on the run: What would you rather have: A swiss bank account or a brain wallet?

Occams Razor, pirate was smart enough to come up with his scheme don't you think he is smart enough to take advantage of bitcoins privacy?

[DeathAndTaxes]

Alright lets say you are a grand scheme scammer on the run: What would you rather have: A swiss bank account or a brain wallet?

Occams Razor, pirate was smart enough to come up with his scheme don't you think he is smart enough to take advantage of bitcoins privacy?

I don't think Pirate is smart.  He left a lot of trails both digital and physical.  I also don't think this started as a ponzi (a scam maybe but not a ponzi).  Just a sociopath borrowing more than he could handle at insane interest rates.

I agree a pro would prefer Bitcoins. A couple hundred thousand BTC would go a long way especially if they keep appreciating.  A pro also wouldn't be getting lawyers involved and keep coming back to the "scene of the crime".  A pro wouldn't involve another business entity (GPUMAX) which has other partners that can implicate him. A pro wouldn't do this under the online profile where he has real world contacts (Pirate sold GPU face to face with other members years ago).

If it was a pro there wouldn't even be an announcement of closing.  All contact would simply cease and there would be no trails to follow.  Hosting paid by gift card, IP addresses turn out to be VPN/TOR.  Nothing but a lot of missing Bitcoins.

Then again you might be right, I don't think it really matters anymore.
He won't be affected the market in any material way in either direction.

[ElectricMucus]

Then again you might be right, I don't think it really matters anymore.
He won't be affected the market in any material way in either direction.

Agreed.

Not in a direct way anyway. The people he scammed will still have an effect on the market.
The question is how they will react... Ragequit bitcoin or stick around.

[k9quaint]

I wonder if there is a Bitcoin user out there that has participated in every scam and ponzi scheme to date.

"This one will be different..."

[n8rwJeTt8TrrLKPa55eU]

I don't think Pirate is smart.  He left a lot of trails both digital and physical.  I also don't think this started as a ponzi (a scam maybe but not a ponzi).  Just a sociopath borrowing more than he could handle at insane interest rates.

Exactly.  Compare Pirate's trail to Satoshi's.  Quite the contrast!  Either Pirate is totally incompetent and overconfident, or (more likely) the whole thing started out as something completely small and legal, morphing (knowingly or not) into a ponzi monster as the demand for his deposits grew exponentially.

Borrowing small amounts at 1% per day for a few days, can be manageable and might even be occasionally profitable.  But it doesn't scale.  The moment he extended that model to unlimited sums, with lending maturities measured in weeks and months, he was either blinded by arrogance or knowingly decided to become a thief.

[ElectricMucus]

No he started it the way it ended. I am the guy who responded to his initial "Savings and Trust" thread with "Looks like a classical HYIP scam." directly after his OP.

Didn't help.

[sturle]

Pirate stated earlier he didn't have the coins and it would take time to get them.  Reading between the lines I took that to mean he was long USD and short BTC.  Granted Pirate is a liar, a scammer, and a sociopath so that may not mean much.

Still there is no more evidence he does have the BTC than he doesn't.  200K BTC over the course of months wouldn't be much selling pressure.  Say one sold 200K BTC over 4 months that is 1,600 BTC per day.  Total market volume is ~80K BTC.  OTC is easily another 20K.  1,600 is a drop in the bucket.  Hell our company more in direct sales larger than that.

7200 brand new coins are generated every day by mining.  A little more, since difficulty is increasing.  1600 is only 20% of that.