I've put together a timeline of everything that I believe was relevant in regards to BTCS&T, including some background information. If/when anyone gets around to contacting a proper lawyer, this will be important for making our case and for investigative purposes.
Please look over this and see if I have missed anything. If you see anything I missed, post here and if it's worthy of mention I'll add it in. Exact dates may also be helpful. Thanks!
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/znakaskaMichael Thalasinos:
https://www.linkedin.com/profile/view?id=191324706&pid=69812266&authType=name&authToken=_K83&trk=pbmap 
