To take a break from the arguments between forum members waiting for bit365 to show up here again, I decided now might be an interesting time to review some of the facts in the case. Using the data provided at the top of the Bitcoinsports web page under the “Invest” tab, I reconstructed the following plots. First, there is the raw data of the cumulative results since August 20.
A few features of these plots were particularly interesting to me.
• The initial amount invested was something close to 290 bitcoin. The “company” was treated as having an initial value of that much. Based on the price of bitcoin at that time, that would seem to be an entirely reasonable valuation. I might even be a bit concerned that it was too cheap. However, this built-in equity for bit makes the 15% commission seem more reasonable.
• The volume of bets being processed through the site accelerated dramatically in September, after the site began taking investements. However, that pace began slowing by late October, before investors began pulling out en masse.
• Some time around November 10, investments rapidly reversed. Unfortunately, due to the sparseness of the data I have around that time, I can’t be sure that it wasn’t several days earlier or slightly later. That maximum is the “Ponzi point” at which one would expect the meltdown to begin if invested funds were disappearing.
• The site’s profit followed the amount bet remarkably closely. One interesting exception, barely visible on this scale, occurred in the last 24 hours.
To make these salient features easier to see, I replotted the data.
http://photos.symmunity.net/bitcoinsports/Bitcoinsports_fraud_analysis_files/image008.jpgNote that the scale for the amount wagered (dashed blue line) is 15x larger than the scale for the other two data series. Plotted this way, it is apparent that the average profit has remained remarkably close to 1/15, i.e. roughly 6.5%.
This plot also shows that the amount withdrawn by investors over the past 3 weeks is already nearly equal to the total profits the site. If investors’ bitcoins had been lost somewhere, e.g. by converting them into hard currency just before the recent rally, then it would take months of the site operating at its peak to repay them.
http://photos.symmunity.net/bitcoinsports/Bitcoinsports_fraud_analysis_files/image010.jpg Since investments stopped paying out in mid-November, new wagers (shown in violet) have plummeted. This obviously makes repaying investors with profits hopeless unless confidence can be restored.
http://photos.symmunity.net/bitcoinsports/Bitcoinsports_fraud_analysis_files/image012.jpg This plot shows the performance of Bitcoinsports since the confidence crisis began. The scale on the (right) profit axis is again 15x smaller than the scale on the (left) wager axis. As you would expect, profits plummeted when people stopped placing wagers. At the current average of about 20 BTC of wagers per week, the 6.5% profit rate reported throughout the past two months would imply a weekly profit of 1.3 bitcoin for the site. With such a small profit, it doesn’t seem likely that it would be worth the site operator’s time.
Then something interesting happened. Although the total volume of wagers remained very low, profits shot rapidly upward. Suddenly, the site has become extraordinarily lucky. As I’m writing this, the average win rate on bets under 0.25 bitcoin over the past 24 hours is around the usual 5%. However, all 5 bets of 0.5 BTC or more were losers for the gambler and thus winners for bitcoinsports. This seems remarkably convenient, but there were only four of these larger bets; mathematically, I can't rule out the possibility that it really is just a coincidence.
