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Author Topic: Starfish BCB - Loans and Deposits  (Read 56181 times)
Chang Hum
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October 28, 2012, 09:11:32 AM
 #641

I don't believe Patrick ever explicitly stated that these funds were vulnerable to any risks from the depositors perspective.  In most countries any ambiguities in contracts favor the person who did not write the contract, I.E. depositors.  He would have needed to explicitly state that these funds were vulnerable and he did not.
I'm not arguing that there's an ambiguity in the contract. I'm arguing that there's a common mistake underlying the contract.

The analogy would be two people who both believe that a ship sank in a particular place who contract to have one party recover the ship for a fixed fee. If it turns out that they were both incorrect and the ship was actually someplace else that is either more expensive or less expensive to recover, the disadvantaged party could not be equitably required to comply with the terms of the contract. The exception, of course, would be if the contract explicitly assigned this risk to one party or the other. The failure to assign this risk doesn't make the contract ambiguous, it just doesn't address this possibility because neither party to the contract considered it likely.

In this case, the common mistake was the belief that the loans were not subject to significant correlated risk. The contract doesn't appear to assign this risk to either party. It's not that it's ambiguous about who bears this risk, it simply didn't include assigning that risk inside its scope because neither party considered that risk likely.




What is the correlated risk you are talking about is it GLSBE? If so why would people borrow money at a 2% compounding interest rate to invest in flakey unregulated businesses on there when most of them yielded less than that and how is that the depositors fault?
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memvola
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October 28, 2012, 09:24:19 AM
 #642

I understood Patrick's guarantee to mean that my funds were guaranteed regardless of whether any or all loans went bad, correlated or uncorrelated. Any other kind of guarantee isn't a guarantee, it's pointless.
I don't believe you. If you have any evidence to suggest that you understood that there was a real risk that the loans were correlated, and that this risk was allocated to Patrick, please present it. All the evidence I have suggests that people either never considered that risk or rejected it as implausible. If you have any evidence that might change my mind, I'd be glad to take a look at it.


Yeah, it would be hard to prove what people in general perceived at some point in the past, though I'm not sure the burden is on the lender to prove their historical beliefs. FWIW, I certainly thought most loans would be correllated, regardless of "pirate exposure". That kind of high interest loans couldn't likely have diverse destinations. I admit that I considered there was a high-risk of this sort of thing happening but assumed the borrowers were prepared to pay out of their pockets. I certainly thought they should, even if they wouldn't.
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October 28, 2012, 03:47:41 PM
 #643

I understood Patrick's guarantee to mean that my funds were guaranteed regardless of whether any or all loans went bad, correlated or uncorrelated. Any other kind of guarantee isn't a guarantee, it's pointless.
I don't believe you. If you have any evidence to suggest that you understood that there was a real risk that the loans were correlated, and that this risk was allocated to Patrick, please present it. All the evidence I have suggests that people either never considered that risk or rejected it as implausible. If you have any evidence that might change my mind, I'd be glad to take a look at it.


Yeah, it would be hard to prove what people in general perceived at some point in the past, though I'm not sure the burden is on the lender to prove their historical beliefs. FWIW, I certainly thought most loans would be correllated, regardless of "pirate exposure". That kind of high interest loans couldn't likely have diverse destinations. I admit that I considered there was a high-risk of this sort of thing happening but assumed the borrowers were prepared to pay out of their pockets. I certainly thought they should, even if they wouldn't.

+1

At some point in time about every non-PPT asset issuer (including Patrick) has been accused of investing in pirate secretly, or having much higher indirect exposure than expected. The dependence on pirate has been discussed on this board repeatedly. The possible correlation of a lot of investments is a logical conclusion, which is hard to assume has not happened in the minds of at least some investors.


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October 29, 2012, 12:33:06 AM
 #644

What is the correlated risk you are talking about is it GLSBE?
GLBSE is one unforeseen correlated risk. Another is that a large number of borrowers were actually borrowing to invest in Pirate and thus many loans would go bad if Pirate went bad. This was especially disastrous because many people assumed they could use these kinds of loan portfolios specifically to diversify themselves against Pirate exposure. Hashking was a similar issue -- people specifically expected to use him to diversify to protect against Pirate exposure but actually only got themselves more Pirate exposure. It's possible that GLBSE's collapse is actually tied to the PPT collapse. So it may all tie back to unforeseen Pirate exposure.

Quote
If so why would people borrow money at a 2% compounding interest rate to invest in flakey unregulated businesses on there when most of them yielded less than that and how is that the depositors fault?
It's the depositors' fault because they refused to appreciate this risk even while folks like me were screaming in their faces that they were idiots to invest with Patrick because of these kinds of risks. And it's Patrick's fault because he continued to take deposits and make loans even while folks like me were screaming in his face that his business model made no sense. There is equal fault on both sides, I think.

I am an employee of Ripple.
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October 29, 2012, 08:19:03 PM
 #645

So... Morale of the story: Life's tough, money's tough, Bitcoin's tough.  Cool


I suppose trust is tough too.

Can't stop the Trance! Dance!! DANCE!!!
www.youtube.com/pixelfixgaming
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November 04, 2012, 04:20:41 AM
 #646

Patrick someone is calling you out as a scammer in the accusation forum.

https://bitcointalk.org/index.php?topic=121915.0
BorderBits
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November 04, 2012, 08:27:34 AM
 #647

Patrick someone is calling you out as a scammer in the accusation forum.

https://bitcointalk.org/index.php?topic=121915.0

I've been informed that Patrick has considered the charges against him and has since downgraded his investment program to AAA-   Within five days, if Patrick continues to fail to respond to the accusations, he will recalculate his rating to be AAA+ 
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November 04, 2012, 06:55:16 PM
 #648

Patrick someone is calling you out as a scammer in the accusation forum.

https://bitcointalk.org/index.php?topic=121915.0

Yes, I've seen that.  I have no intention of fanning the flames over there.  I find it interesting that one of the replies commending the accusation is someone I've never dealt with.  I did also note that there is a claim that the coins haven't moved, which shows someone doesn't know how to view the block chain.  That account is being paid back on the same basis as everyone else.

Note to BorderBits: Try harder, that's neither an effective troll or humour.  Micon was better.
Shadow383
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November 05, 2012, 01:16:32 AM
 #649

So roughly what percentage has now been paid back?
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November 05, 2012, 02:03:15 AM
 #650

So roughly what percentage has now been paid back?

In my case, 43.37% of the initial investment, so far.

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November 06, 2012, 11:55:44 PM
 #651

By the way, this was the same type of missed risk that resulted in the mortgage collapse. People who thought they were "diversified" didn't realize that a significant fraction of their assets were vulnerable to a drastic drop in the housing market because they were all ultimately tied to residential mortgages.

I'm glad you think it's the same. There have been hundreds of bank failures since 2008 in the USA due to correlated loans that went bad (mortgages). The FDIC guaranteed bank deposits. This guarantee was honored, regardless of whether the bad loans were correlated or not. Patrick also guaranteed his deposits.

http://www.fdic.gov/bank/individual/failed/banklist.html
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November 07, 2012, 12:39:58 AM
 #652

By the way, this was the same type of missed risk that resulted in the mortgage collapse. People who thought they were "diversified" didn't realize that a significant fraction of their assets were vulnerable to a drastic drop in the housing market because they were all ultimately tied to residential mortgages.

I'm glad you think it's the same. There have been hundreds of bank failures since 2008 in the USA due to correlated loans that went bad (mortgages). The FDIC guaranteed bank deposits. This guarantee was honored, regardless of whether the bad loans were correlated or not. Patrick also guaranteed his deposits.

http://www.fdic.gov/bank/individual/failed/banklist.html
The FDIC is specifically insurance and specifically assumes the risk of bank failures. In addition, there was no mistake on the part of the people whose funds the FDIC insured. So it would not have been equitable for the FDIC to split the losses with those it insures. (Also, even if equitable, it would have been politically infeasible. Any loss of confidence in the FDIC would defeat the point of the FDIC.)

Yes, Patrick guaranteed his deposits. But as he made quite clear, that guarantee was predicated on his belief that there was no significant correlated risk. (The transcript in the scammer accusation thread makes this clear.) So against someone who didn't make that same mistake, it would be enforceable. But against someone who did, it isn't. If Patrick is responsible for losses caused directly by this mistaken belief, so are others who have that same mistaken belief and it causes the same type of loss. (Unless the agreement was otherwise. It's possible he had different loans with different terms and some weren't predicated on the shared belief that he had limited Pirate exposure. You'd have to look on a case by case basis and decide in each case how to equitably divide the losses.)

I am an employee of Ripple.
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bigbox
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November 07, 2012, 12:56:55 AM
 #653

The FDIC is specifically insurance and specifically assumes the risk of bank failures.

Patrick specifically insured his deposits and specifically assumed the risk of loan failures.

In addition, there was no mistake on the part of the people whose funds the FDIC insured. So it would not have been equitable for the FDIC to split the losses with those it insures.

If the FDIC were named Patrick, you would probably say the depositors made the assumption that the banks loans weren't correlated, and thus should share in the losses. You would probably say that regardless of whether the depositors actually made that assumption.

It's possible he had different loans with different terms and some weren't predicated on the shared belief that he had limited Pirate exposure. You'd have to look on a case by case basis and decide in each case how to equitably divide the losses.)
Agreed. My deposit wasn't predicated on shared beliefs of what he would do with his loans, it was predicated on the shared belief that he guaranteed his deposits. He didn't specify exactly what he was going to do with the deposits, or who he was going to loan money to, so we couldn't have had shared beliefs on correlation which is irrelevant anyway. If he spent the money on hookers and blow, I would still expect him to honor the shared belief that he guaranteed his deposits.
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November 09, 2012, 05:01:26 AM
 #654

What has become obvious - in hindsight - is that the average level of honesty just isn't high enough.  That's without the scams, thefts, hacks and other crap that goes on.

The second layer of the pyramid defends the integrity of the first layer. Surprise, surprise. As fellow scammers you are quite concerned with protecting your bosses' rep. After all, keeping a steady stream of fish flowing in is how you make money. I see that some of you have reduced your cut over time. Not surprising, since you will need more and more inflows over time to support the pyramid. Can't wait till this blows up.

How much bitcoin is tied up with the scam, anyways? The blow up will negatively affect bitcoin prices if the scam is large scale and some of the fish have taken on bank debt in order to participate. Bitcoin debt crisis causes bitcoin price collapse. Fun times!

edited out some unnecessary stuff
The second layer of the pyramid defends the integrity of the first layer. Surprise, surprise.  Can't wait till this blows up.


I'm interested in your motivation - is it just to stir shit, you want to see those that can't afford to lose their bitcoin suffer, or do you want to gloat when it fails. Your posts do not appear to be genuine in warning (and has the impression of some religious crusade against evil).

(and while starfish are often idiots, this one expects some sort of disruption to the economy when BS&T finally closes it's doors)


In answer to your question, I wanted to help people get out while they still could. However, since most of you chose to ignore me. And now that my predictions have become
obvious - in hindsight -
I will have to settle for
gloat when it fails

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November 09, 2012, 05:05:52 AM
 #655

The above quotes were with reference to BS&T, but I don't expect people to bother to differentiate, and I also expect that you did have your moment of happiness when Pirate disappeared.
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November 09, 2012, 05:50:53 AM
 #656

(and while starfish are often idiots, this one expects some sort of disruption to the economy when BS&T finally closes it's doors)

obvious - in hindsight -

FTFY. Apparently you have a selective memory.

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November 15, 2012, 03:31:53 AM
 #657

I didn't receive a payment this week or last week.  Did I miss an announcement about this, or is it an oversight?

BorderBits
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November 16, 2012, 08:40:06 AM
 #658

I didn't receive a payment this week or last week.  Did I miss an announcement about this, or is it an oversight?

Don't worry, Patrick rated himself AAA+ so he's sure to pay out.  What could possibly go wrong? 
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November 16, 2012, 05:25:18 PM
 #659

The payments from hashking and patrick stopped at about the same time and they both disappeared... Whats the chances their the same guy and/or working together?

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November 16, 2012, 05:35:24 PM
 #660

Whoa, Patrick has a scammer tag?  Why, who ever could have seen the fact that he was a scammer well before all of this?

I do wonder.

I wonder how long my contrary viewpoint will last this time before someone erases it like the good little fascists they are.
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