Going after Trendon Shavers, Pirateat40, BTCST

[BadBear]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As well as an official US legal opinion that bitcoin is legal tender?

What does legal tender have to do with it?

[ErebusBat]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As well as an official US legal opinion that bitcoin is legal tender?

What does legal tender have to do with it?

It was my understanding that there was no official US opinion on the fact.  There is now.

[BCB]

FYI,

This is being discussed here:
https://bitcointalk.org/index.php?topic=269612.msg2884152#msg2884152

[User705]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As well as an official US legal opinion that bitcoin is legal tender?

its not an official us government legal opinion.  It's just a court ruling that simply stated just because bitcoin is not officially sanctioned money doesn't mean one can accept it without responsibility.  The next interesting concept will be how to legally prove ownership of addresses and BTC inside it.

[BCB]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As well as an official US legal opinion that bitcoin is legal tender?

its not an official us government legal opinion.  It's just a court ruling that simply stated just because bitcoin is not officially sanctioned money doesn't mean one can accept it without responsibility.  The next interesting concept will be how to legally prove ownership of addresses and BTC inside it.

Again,  This will be a precedent setting case....

[User705]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As well as an official US legal opinion that bitcoin is legal tender?

its not an official us government legal opinion.  It's just a court ruling that simply stated just because bitcoin is not officially sanctioned money doesn't mean one can accept it without responsibility.  The next interesting concept will be how to legally prove ownership of addresses and BTC inside it.

Again,  This will be a precedent setting case....

+1

[superduh]

trendon should be behind bars - 30 years to life.
there is a difference between an honest business going bad and an obvious ponzi scheme meant to destroy investors and reward the perpetrators.
hopefully after SEC is done with him he goes to jail for a long time (after a criminal complaint is filed)

[BCB]

Regardless of what happens in the civil case I would expect criminal prosecution. 

"bitcoin is money"

He sole money from people.  And other may have been complicit in this effort.  There is a reason none of the PT's wanted to talk to the SEC. However they may already be cooperating with the government in exchange for leniency. 

Madoff took a whole slew of people down with him.

http://en.wikipedia.org/wiki/Participants_in_the_Madoff_investment_scandal

[Magazine]

I just read pretty much the whole thread, and boy am I shocked. This is my take on it, I guess he wanted to start out legit and run a legit operation but things didn't work out and he saw all the BTC coming in and just ran it as a Ponzi Scheme until he decided enough was enough and just ran with all the BTC.

[MelMan2002]

I just read pretty much the whole thread, and boy am I shocked. This is my take on it, I guess he wanted to start out legit and run a legit operation but things didn't work out and he saw all the BTC coming in and just ran it as a Ponzi Scheme until he decided enough was enough and just ran with all the BTC.

Legit operation?? What operation?  It was all a ponzi from start to finish.

[Magazine]

I just read pretty much the whole thread, and boy am I shocked. This is my take on it, I guess he wanted to start out legit and run a legit operation but things didn't work out and he saw all the BTC coming in and just ran it as a Ponzi Scheme until he decided enough was enough and just ran with all the BTC.

Legit operation?? What operation?  It was all a ponzi from start to finish.

Ah, you're probably right. I wasn't around when this stuff happened.

[User705]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As far as I know payb.tc was the only PT that directly worked with Pirate. Everyone else worked with GLBSE.

Nefario is not exactly going to be a good witness as a non-American who was deported while on holiday. And that would be if they could get him to the USA.

Theymos as a young American, and part owner of GLBSE might be, but he openly called for people to list PT's on GLBSE using this forum. I doubt he is going to want to work with the govt.

I have no idea if payb.tc is an American or not. If he is not and is not in the USA I kinda doubt they will go after him.

I'm not sure any other GLBSE owner is an American or who has access to that sort of stuff.

Also I'm going to assume that the PT's were acting in good faith and did not suspect pirate was a ponzi. If they did think this, then why not just keep the money if they knew it was to fail? I guess some of them could have done that, and that would be a way to prove guilt.

Well I'm not a lawyer but I do expect legal charges against pirate. After the SEC evidence it really is looking like he was doing a ponzi but his story on controlling the BTC price might explain his huge trading losses. Also 150,000 BTC the SEC can't track?  I do wonder if pirate started out as a ponzi or if his plan just failed and he just kept it going. Either way in the end it seems ponzi.

What's your take on your favorite person Matthew regarding this?  Didn't he offer some sort of insurance against Pirateat40 "securities"?

[User705]

This will continue to be a precedent setting case and I believe we'll see criminal prosecution of Trendon and maybe even some of the pass throughs.

As far as I know payb.tc was the only PT that directly worked with Pirate. Everyone else worked with GLBSE.

Nefario is not exactly going to be a good witness as a non-American who was deported while on holiday. And that would be if they could get him to the USA.

Theymos as a young American, and part owner of GLBSE might be, but he openly called for people to list PT's on GLBSE using this forum. I doubt he is going to want to work with the govt.

I have no idea if payb.tc is an American or not. If he is not and is not in the USA I kinda doubt they will go after him.

I'm not sure any other GLBSE owner is an American or who has access to that sort of stuff.

Also I'm going to assume that the PT's were acting in good faith and did not suspect pirate was a ponzi. If they did think this, then why not just keep the money if they knew it was to fail? I guess some of them could have done that, and that would be a way to prove guilt.

Well I'm not a lawyer but I do expect legal charges against pirate. After the SEC evidence it really is looking like he was doing a ponzi but his story on controlling the BTC price might explain his huge trading losses. Also 150,000 BTC the SEC can't track?  I do wonder if pirate started out as a ponzi or if his plan just failed and he just kept it going. Either way in the end it seems ponzi.

What's your take on your favorite person Matthew regarding this?  Didn't he offer some sort of insurance against Pirateat40 "securities"?

He claimed that pirate was not going to default and was going to back that claim up with BTC. He maybe let pirate sell off bad debt (or matthew sold off his debt) and later called the whole "bet" scam a "joke".  He got the scammers tag for this. Matthew still owes people millions of USD in BTC. I wonder if Matthew could get jailed for this crime. Hard to say as I am not a lawyer.

Well that insurance would probably be considered a "security" as well.  Total popcorn time.

[mp420]

I just read pretty much the whole thread, and boy am I shocked. This is my take on it, I guess he wanted to start out legit and run a legit operation but things didn't work out and he saw all the BTC coming in and just ran it as a Ponzi Scheme until he decided enough was enough and just ran with all the BTC.

Legit operation?? What operation?  It was all a ponzi from start to finish.

Not all of us are so sure on that. But in the end it does not really matter.

Those who aren't sure are fucking idiots. No legit business can offer the kind of returns he offered. I consider everyone who was defending Pirate when he was running his scam partially responsible for the scam growing so big.

[User705]

Pirate is being charged for running a ponzi not a security unless i just missed some giant detail?

A ponzi is an investment fraud crime because interest rate return was being offered.  Back in the old days before those laws came about it was considered hard to prove theft since people gave money willingly.
He is charged with violations of Securities Act of 1933 and Exchange Act of 1934.
http://www.sec.gov/litigation/complaints/2013/comp-pr2013-132.pdf

[Cyberdyne]

No legit business can offer the kind of returns he offered.

People who say "X is impossible" are amusing to me, regardless of X.

[mp420]

No legit business can offer the kind of returns he offered.

People who say "X is impossible" are amusing to me, regardless of X.

Okay, let's rephrase that. No legit business, absent rampant hyperinflation scenarios where the real interest rate is much lower, can offer the kind of returns he offered.

Reasoning:

1) Legit businesses do not operate in a vacuum. There's always competition, and even if there isn't, there's a risk of competition.
2) Credit is readily available for legit businesses. Even credit card debt is practically free of interest compared to what Pirate offered.
3) To hedge against the risk of someone else starting a competing business with much lower interest expenses, a legit business, if it ever issues debt at astronomical rates, MUST pay those high-interest loans off immediately when feasible. Actually it wouldn't have made sense to issue debt at those rates to begin with (which is why it was crystal clear from the beginning that BTCST was a ponzi scheme), but even if it had made sense, he would have had no other option than to pay the initial debt off completely very quickly after getting the business running.

It's astonishing how little financial common sense many Bitcoin ethusiasts have. No wonder all those suckers were so easily drawn into the scam.

[Cyberdyne]

No legit business can offer the kind of returns he offered.

People who say "X is impossible" are amusing to me, regardless of X.

Okay, let's rephrase that. No legit business, absent rampant hyperinflation scenarios where the real interest rate is much lower, can offer the kind of returns he offered.

Reasoning:

a legit business, if it ever issues debt at astronomical rates, MUST pay those high-interest loans off immediately when feasible.

Stuck in a loop: People who say "a legit business MUST X" are amusing to me, regardless of X.

It's like they've completely shut off the possibility that there could ever be people who know things about business that they don't know.

Everyone on the internet is automatically an expert at everything though.

[MPOE-PR]

Everyone on the internet is automatically an expert at everything though.

Yes, because they could be, which means they actually are. Welcome to contemporary America.

[Vandroiy]

This is still going on? Allow me to try once again.

You don't derive that BS&T was a Ponzi using only formal logic statements. Almost anything is somehow possible. If I claim to be an alien who has traveled to Mars and back yesterday, nobody can formally prove me wrong. Pirate's chances of being legitimate were just small -- not in a "I don't believe it" kind of way, but in the way a physicist uses the word. Let's do an example; there are much better combinations in the threads from back then, but this already shows the point:

• BS&T scaled on a smooth exponential, which means its reservoir of unfulfilled trades at horrible rates was really large compared to the entire market. I'd bet chances for that to be below 20%.
• Pirateat40 made statements that seem unbefitting for a qualified trader. I'd give it a maximum 40% that he is able to beat competition by such a wide margin.
• There are wealthy investors around who would finance an operation like his if explained under NDA. This would also help speed up the fundraising process to avoid competition. I'd give him 1:4 at best that he neither found a way to use a large investor nor had a situation in which he'd stop taking deposits and switch to his own funds.
• The above statements are independent.

With only this primitive reasoning, I already expect a maximum probability of legitimacy of 0.2 * 0.4 * 0.25 = 2%.

Go figure what happens when looking at more independent statements, such as the abundant warning signs of a Ponzi scheme! The possibility of legitimacy becomes bunk, nothing a serious analyst would care about. I could not assign a final probability to it because it becomes noise to the probability of myself being insane, among other things that become relevant at such low probabilities.

Now maybe some people disagree on the points above. But it shouldn't be hard to find three to four independent statements like this and conclude that "non-Ponzi" chances are just horribly low.