Starfish BCB - Loans and Deposits

[Otoh]

current time frame seems to be 10 October 2015

[1714941662]

1714941662

[1714941662]

1714941662

[1714941662]

1714941662

[1714941662]

1714941662

[gene]

As an example, I have 1000 coins with HashKing that I don't worry about,

Yeah, Patrick seems to be an honest fool. When he wises up, he'll still be trustworthy. Hopefully, it only took one lesson.

I think you are giving him too much credit. His other actions strongly suggest that he knows fully well the likely consequences. His posting tactics (including those of his wife -- sorry, it's true) seem to go a bit too far for him to be just an "honest fool."

[nimda]

So you're proposing something that is/was already happening, using ratings that people deride as being gameable (otc ratings), with the only noticeable different being a well organized website?

Exactly. If the ratings system sucks, someone else can come up with a better one (use eBay ratings or something). If someone wants to borrow but doesn't provide reputable rating sources, they can pay higher interest rates. And if someone doesn't do their research and invests in only one risky person and loses all their money, oh well. It won't affect everyone else.
The well organized website can provide the service of sorting loan applicants based on their risk, assign them an interest rate if it's not done bidding style, make it easy to split your investment across a whole bunch of borrowers within your chosen categories, process and distribute payment receipts, and do collections of defaulted loans if needed.
This forum doesn't come close to any of that.

The only rating that matters is a backed rating. Patrick's personal credit ratings (not the deposit-taker ones) were / are the best example of this. He was / is willing to put up his own money to back a borrower. That's a service worth using.

[PatrickHarnett]

The only rating that matters is a backed rating. Patrick's personal credit ratings (not the deposit-taker ones) were / are the best example of this. He was / is willing to put up his own money to back a borrower. That's a service worth using.

Note the past tense.  Until some of the other aspects of this gets sorted that is a low priority.

[nimda]

Patrick, can you please expose what you previously thought to be pirate's business model? If not, why not?

[PatrickHarnett]

Patrick, can you please expose what you previously thought to be pirate's business model? If not, why not?

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.


And on a competitive note, since BS&T closed shop, I have processed around 8000 BTC of withdrawals for Starfish customers. 

[JoelKatz]

   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.

This is the business model that Allan A. Ryan, Nelson Bunker Hunt, Yasuo Hamanaka, and countless others have tried. They've lost billions. It doesn't work. Fortunately, those guys all tried it with (mostly) their own money.

The problem is this: To move the price up, you must buy high. To move the price down, you must sell low. These things cause you to lose money. Once you get the price high, nothing stops anyone else from selling high and pushing the market back down. So you have to split the profits of your cornered and squeezed market with anyone who wants a cut of them. So you pay 100% of the costs of doing this and reap maybe 10% of the rewards.

And it's very seductive. When you lose money every time you try, you can easily convince yourself that if you just had a little more money, you could have made a profit. This is because whenever you leave the market, it will always do something later that would have made you money. It's easy to delude yourself after the fact into thinking that if you could have stayed in longer, you would have left at the right time. Of course, nobody ever knows the right time to leave.

Trying this "known to fail" strategy with other people's money would be despicable.

[PatrickHarnett]

Going off topic and picking up on a variety of points, it might simply not work.  I was piecing together bits and pieces but could never get the money flows correct until a few weeks ago.  The 3% is a guess based on observations from the last year (and is still a 400% return), not a prediction for the future because I don't think it would work on the current price/market cap level.  All those other questions probably have good answers, but nimda wanted to know what I thought.

Mr Copper I've heard about before (and it's normally referred to as Hunt brothers in the literature for the silver market), and their actions are normally breaches of the laws and financial markets that they work within.  Some markets allow corners and squeezes, others do not.  My view is that Bitcoin is more prone to it because it is small (copper trade is quite large, so is silver).  Exercise of market power is an interesting topic in its own right.

At various stages I've considered things that would work in a two tier economy.  One of my preferred options was around exchange of goods for bitcoin to avoid sales tax - but avoidance and evasion are different things, and you need the right circumstances and people to do it.  Taxes are usually a motivation for people to do a variety of interesting things.

[Monster Tent]

Going off topic and picking up on a variety of points, it might simply not work.  I was piecing together bits and pieces but could never get the money flows correct until a few weeks ago.  The 3% is a guess based on observations from the last year (and is still a 400% return), not a prediction for the future because I don't think it would work on the current price/market cap level.  All those other questions probably have good answers, but nimda wanted to know what I thought.

Mr Copper I've heard about before (and it's normally referred to as Hunt brothers in the literature for the silver market), and their actions are normally breaches of the laws and financial markets that they work within.  Some markets allow corners and squeezes, others do not.  My view is that Bitcoin is more prone to it because it is small (copper trade is quite large, so is silver).  Exercise of market power is an interesting topic in its own right.

At various stages I've considered things that would work in a two tier economy.  One of my preferred options was around exchange of goods for bitcoin to avoid sales tax - but avoidance and evasion are different things, and you need the right circumstances and people to do it.  Taxes are usually a motivation for people to do a variety of interesting things.

Cigarette taxes spring to mind. They are massive and if you had a supplier of tobacco who accepted bitcoin it would work on silk road.

Its not very moral though to supply cancer causing agents to people 

[JoelKatz]

Cigarette taxes spring to mind. They are massive and if you had a supplier of tobacco who accepted bitcoin it would work on silk road.

Its not very moral though to supply cancer causing agents to people 

There's no reason you'd need to borrow an ever increasing supply of other people's money to do that though, so you can't use it to hide a Ponzi scheme. That would be the only use of such a business model and it won't work for that use.

[Monster Tent]

Cigarette taxes spring to mind. They are massive and if you had a supplier of tobacco who accepted bitcoin it would work on silk road.

Its not very moral though to supply cancer causing agents to people 

There's no reason you'd need to borrow an ever increasing supply of other people's money to do that though, so you can't use it to hide a Ponzi scheme. That would be the only use of such a business model and it won't work for that use.

Patrick wasnt talking about a ponzi scheme. He is saying you could make good returns by avoiding regulation and taxation. You are right that it would be nuts to borrow massively past the bootstrap stage but you need to get financing from somewhere I guess. Its hard to find if you want to pay below the current market rates though

[Micon]

I have 100% faith in Mr. Starr

I have 100% faith that OP is a scammer and is running yet another Ponzi, borrowing an ever increasing about of BTC at extremely high interest rates.

I also wonder what strings Patrick is trying to pull behind the scenes with his wife and other shill-type accounts like this one with 77 posts.  These may even be real people, maybe even real investors in his scam - just blindly throwing support to him, just like BurtW or Payb.tc did for Pirate.

Wash, Rinse, Repeat the Pirate scam. 

Luckily it seems like through the hard work of users like Joel Katz we are slowly but surely killing the culture of HYIP scams on these boards.  A net positive for the entire community in many ways.

[hashking]

I have 100% faith in Mr. Starr

I have 100% faith that OP is a scammer and is running yet another Ponzi, borrowing an ever increasing about of BTC at extremely high interest rates.

I also wonder what strings Patrick is trying to pull behind the scenes with his wife and other shill-type accounts like this one with 77 posts.  These may even be real people, maybe even real investors in his scam - just blindly throwing support to him, just like BurtW or Payb.tc did for Pirate.

Wash, Rinse, Repeat the Pirate scam. 

Luckily it seems like through the hard work of users like Joel Katz we are slowly but surely killing the culture of HYIP scams on these boards.  A net positive for the entire community in many ways.

Go back to being a horrible poker player.

[Micon]

I have 100% faith in Mr. Starr

I have 100% faith that OP is a scammer and is running yet another Ponzi, borrowing an ever increasing about of BTC at extremely high interest rates.

I also wonder what strings Patrick is trying to pull behind the scenes with his wife and other shill-type accounts like this one with 77 posts.  These may even be real people, maybe even real investors in his scam - just blindly throwing support to him, just like BurtW or Payb.tc did for Pirate.

Wash, Rinse, Repeat the Pirate scam. 

Luckily it seems like through the hard work of users like Joel Katz we are slowly but surely killing the culture of HYIP scams on these boards.  A net positive for the entire community in many ways.

Go back to being a horrible poker player.

You just ran + defaulted on your own Ponzi scam:   https://bitcointalk.org/index.php?topic=66802.0

angrily posting about poker won't change this.

[jasinlee]

I have 100% faith in Mr. Starr

I have 100% faith that OP is a scammer and is running yet another Ponzi, borrowing an ever increasing about of BTC at extremely high interest rates.

I also wonder what strings Patrick is trying to pull behind the scenes with his wife and other shill-type accounts like this one with 77 posts.  These may even be real people, maybe even real investors in his scam - just blindly throwing support to him, just like BurtW or Payb.tc did for Pirate.

Wash, Rinse, Repeat the Pirate scam. 

Luckily it seems like through the hard work of users like Joel Katz we are slowly but surely killing the culture of HYIP scams on these boards.  A net positive for the entire community in many ways.

Yes yes you are incredibly awesome all bow before um him whatever his name is that seems to want to derail every thread I read and repeat himself often enough that people might start like to see his posts. Yeah hashking is doing shady stuff, let the dead horse rest in peace already. Your pontification is moving into forum defication, its getting old fast.

[makomk]

Damn. I really didn't want to believe I had been scammed, but if this was what pirate claimed his business model was, then I'll admit at this time to being completely had, because this strategy is impossible. I wish you had shared it with me a long time ago . Of course, I accept full responsibility here for my decisions.

Of course you wish he had. Why do you think that all the people like Patrick who were so insistent that they knew what Pirate's business model was and that he definitely wasn't a Ponzi were so reluctant to give actual details, and  why do you think many of the members of so-called Team Ponzi were so insistent that they needed to? The details would never have stood up to public scrutiny.

[PatrickHarnett]

Two points (and not wanting to feed the trolls), I only pieced the above arrangement together a few weeks ago, and second, while Pirate might have been busy growing deposits, I had finished doing that some time ago having reached a sensible level back in July to match the lending business that Starfish was working with.

Anyway, back to sorting out loan/investment recovery for repayments.

[coinft]

   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.

This is the business model that Allan A. Ryan, Nelson Bunker Hunt, Yasuo Hamanaka, and countless others have tried. They've lost billions. It doesn't work. Fortunately, those guys all tried it with (mostly) their own money.

The problem is this: To move the price up, you must buy high. To move the price down, you must sell low. These things cause you to lose money. Once you get the price high, nothing stops anyone else from selling high and pushing the market back down. So you have to split the profits of your cornered and squeezed market with anyone who wants a cut of them. So you pay 100% of the costs of doing this and reap maybe 10% of the rewards.

And it's very seductive. When you lose money every time you try, you can easily convince yourself that if you just had a little more money, you could have made a profit. This is because whenever you leave the market, it will always do something later that would have made you money. It's easy to delude yourself after the fact into thinking that if you could have stayed in longer, you would have left at the right time. Of course, nobody ever knows the right time to leave.

Trying this "known to fail" strategy with other people's money would be despicable.

For fun I tried this in game markets (MMORPGs). It can work in a niche market, but always required more capital than expected. If it works the earnings aren't that great, and the risk of a big loss is high. The market can easily squeeze you.

I very much doubt this can work with a capital drain of 7% per week and the large sum invested, because there's no way to sell high / buy low the total investment often enough per week to achieve this in the current markets, and I doubt its possible even with 1%.

[Micon]

The beloved PatrickHarnett pulled yet another classic scammer move, deleting your OP to cover up the month-over-month lies he used to post (something Pirate did too) why delete the financials that this community praised you for posting, saying that you were so open and honest about your borrowing program?

(any chance Joel Katz or Dooglus has the full list before he deleted?)

Here was the July 2012 claims, which are going to sorely contradict the current financial health of this scam:

July 2012 activity (updated 1 August 2012)
 - 14 loans repaid  (approx 7800BTC)
 - 32 loans current (approx 8800 BTC)
 - 66 deposits (total approx 15400)
 - deposits repaid during the month (at call) >3600

Total liabilities (Deposits + other commitments) = 19,700
Total assets (cash, BTC, investments) = 37,100
Net assets 17,400BTC

This deletion mixed with the line of unpaid cashouts + all of the users staying silent or that haven't requested a cashout means that yet again, the writing is on the wall...  yet again, another similar scam, and yet again another crop of shills, and yet again distributed pain to be felt in the BTC lending community.  

[Micon]

Anyway, back to sorting out loan/investment recovery for repayments.

So far every "Long-Term Offer"  has ended with a stallishly long recovery process of the investor monies and very little if any principle ever returned.... I wonder how long this culture of BTC HYIP scamming will continue.  I hope it's near it's end.