Bitcoin Savings and Trust is probably a Ponzi Scheme: A Petition

[Raoul Duke]

What are these other things that can explain the situation? Because I don't know of any. Other than a Ponzi scheme or demented charity, I know of no way to explain the rate of the return and the claimed lack of risk.

Who claimed lack of risk, Joel? You?
Don't go around putting words on other peoples mouths.
I'm pretty sure that any of Pirate's depositors is well aware of the risks(and accepts them) and doesn't need you fear mongers to tout it around relentlessly...
The fact is: Most people with a vested interest in whatever scheme Pirate runs don't feel the need to ask or spread FUD about it, so why should any of you feel that need? Butthurt?

[JoelKatz]

Who claimed lack of risk, Joel? You?

Actually, I had a specific citation in mind for that claim, and when I went to get it, I realized that I had misread it. I retract my claim about any claimed lack of risk. However, I don't think anyone has any idea what the risks are.

I'm pretty sure that any of Pirate's depositors is well aware of the risks(and accepts them) and doesn't need you fear mongers to tout it around relentlessly...

If that's true, that's coming from secret information that hasn't been shared with others. So far as I know, nobody but Pirate has any idea what the risks are.

The fact is: Most people with a vested interest in whatever scheme Pirate runs don't feel the need to ask or spread FUD about it, so why should any of you feel that need? Butthurt?

That's typical of many Ponzi schemes. That was, for example, exactly what people said about those how criticized Madoff. http://www.sequenceinc.com/fraudfiles/2012/02/red-flags-pointed-directly-to-madoff/

[Raoul Duke]

I'm pretty sure that any of Pirate's depositors is well aware of the risks(and accepts them) and doesn't need you fear mongers to tout it around relentlessly...

If that's true, that's coming from secret information that hasn't been shared with others. So far as I know, nobody but Pirate has any idea what the risks are.

The only risk is getting away empty handed, like all of you say.
You really think any of the depositors is not aware of that and doesn't accept it?
It's not like he's taking money right and left from any sucker on this forum, because he isn't...

[MarketNeutral]

Good question. It's typically assumed that bonds can be verified by an independent third party and the issuer can pass an audit, or at least have the proper accounting records to submit to an audit. (Who does the audit is another can of worms.)

Completely US-centric definition and therefore
irrelevant in the context of bitcoin.

Completely ignorant comment and therefore
irrelevant in the context of bitcoin.

Basic securities law doesn't differ that much from domicile to domicile, and my comment applies to most major financial jurisdictions. I've worked in many countries including Hong Kong, Cayman Islands, Switzerland, and other financial hubs, and their respective laws are all very similar to those of the United States. In fact, this applies to most countries without much deviation. There are differences here and there (Dodd-Frank, Basel accords, etc), and even differences like Napoleonic law versus English Common law, but overall, the basic foundations of securities laws are the same. Simply put, you have to prove you're not lying about what you're doing with other people's money. That's pretty basic stuff.

I'm not a lawyer.

And we're starting to veer into pointless minutiae.

You are missing my point entirely. This is not about any country.

Even if every country in the world had the same regulations around
what you call "bonds", it would be an entirely moot issue for bitcoin.

You are trying to argue that people are selling things they call 'bonds'
and you claim that it is wrong because it doesn't fit *your* definition
of the word.

Your definition happen to rely on some sort of government being around
to audit/verify/enforce stuff.

Point out *one* jurisdiction that is relevant to bitcoin in that it can enforce
anything about bitcoin and/or anything built around it.

The very system was designed to do ensure that no regulatory body can
stick its slimy fingers in the system.

Therefore, in the bitcoin ecosystem, the term 'bond' will be what people
make of it and no one gives a hoot about traditional/legal definition of
the term.

You're missing my point entirely.

You're the one that brought up US-centric, ok? Not me. I was simply explaining to you how these financial systems presently function, and how it's a global system, not a US-centric system.

And I do NOT agree with the present system. Don't shoot the messenger.
Why do you think I support bitcoin? Because it has the very virtues to which you allude––virtues that are decentralized and beyond the 'slimy fingers' of the system, such as a debt-based creation mechanism and governmental regulation.

Irrespective of any monetary ideal or the way things ought to be, there's a point where language and terminology does matter, simply to make sure we're all in agreement. You can't change definitions of words willy-nilly and expect to be taken seriously.

What if I agree to sell you ten apples, but I only deliver nine pears? When you object, can I claim you're wrong because I call this fruit an apple and this quantity ten? Sorry, but there are no refunds. These are apples whether you like it or not.

Try altering the meanings of the operands in a math equation and see what happens. Or try it with a programming language.

[Matthew N. Wright]

I don't know why anyone is even bothering to argue about this. Investments that aren't illegal or ponzi's have basic disclosures of activity. Show me where any of these disclosures are for any of the investments in Bitcoin? I'd say at this point 100% of the so-called investment schemes in Bitcoin are ponzi-like.

Vladimir's the only person I know so far (let me know if anyone else has done this for investments as I'm not sure how many others there are) who's actually taken things to the next level and gotten a formal investment disclosure in place for the ASIC bunker. This is the kind of crap that reflects poorly on all of us. Nobody talks about how the value of Bitcoin has risen since inception. Nobody talks about Bitcoin's usability. They talk about all the retarded, repeated scams and gullible suckers who will defend their investments in shady and opaque operations "because bitcoin".

We've had mining operators run out with the hardware or others claim that they got stolen, we've had online wallets claim to be hacked, we've got downright ponzis pretend to be arbitrage only to build half-assed arbitrage after-the-fact in order to save face. I've said this before during the BitScalper fiasco and I'll say it again:

Do we really want to support shady, anonymous and opaque shit as a community? If so, please provide a list of benefits of doing so, because in the world I come from, it only represents risk.

[P4man]

That's typical of many Ponzi schemes. That was, for example, exactly what people said about those how criticized Madoff. http://www.sequenceinc.com/fraudfiles/2012/02/red-flags-pointed-directly-to-madoff/

Nice link. To quote one particularly relevant paragraph:

Red Flag No. 4: Cheaper to borrow

Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.

[farfiman]

The people that are heavily invested in the pirate and his derivatives will defend their position to the death and  most others will defend the the other(ponzi) direction ( or else they would feel stupid in not investing in this).

Whatever the truth is the pirate must be smiling from ear to ear while reading this thread ....

[terrytibbs]

The people that are heavily invested in the pirate and his derivatives will defend their position

My personal favorite is imsaguy. What's yours?

[Tomatocage]

There's so many basic lines of logic that BTCST fails; the least of which is the smell test. Then you got Occam's Razor and the "If it sounds too good to be true..." thing. I dunno guys.  Just be careful.

[Matthew N. Wright]

But with that said, it seems that you are against this secrecy that is here.

Secrecy towards investors is nonsensical. "Here's a paycheck, don't ask where it came from."

So, I must ask, if you are against it, should Funding sources for ventures be transparent also?

Aren't they usually transparent? I'm at a loss for how this is related to telling investors how they are earning money on their investments.

some people like to remain anonymous in supporting ventures the will help the community.

So let them remain anonymous, but tell everyone that someone contributed. Saying "This money is here and don't ask how" is not a confidence builder.

When I read this, I found your statement ironic considering ALL the people that have benefited from Pirates venture.

I guess indirectly I have too, like if someone used their profit to buy a Bitcoin magazine or something, but that doesn't mean the investments are safe or that I would personally approve of investments that don't disclose details of the investment.

If evidence or actions comes to light, then lets talk.

I agree, but I still say this level of opaqueness is visible only in the mafia.

[coin_toss]

I don't know why anyone is even bothering to argue about this. Investments that aren't illegal or ponzi's have basic disclosures of activity. Show me where any of these disclosures are for any of the investments in Bitcoin? I'd say at this point 100% of the so-called investment schemes in Bitcoin are ponzi-like.

Vladimir's the only person I know so far (let me know if anyone else has done this for investments as I'm not sure how many others there are) who's actually taken things to the next level and gotten a formal investment disclosure in place for the ASIC bunker. This is the kind of crap that reflects poorly on all of us. Nobody talks about how the value of Bitcoin has risen since inception. Nobody talks about Bitcoin's usability. They talk about all the retarded, repeated scams and gullible suckers who will defend their investments in shady and opaque operations "because bitcoin".

We've had mining operators run out with the hardware or others claim that they got stolen, we've had online wallets claim to be hacked, we've got downright ponzis pretend to be arbitrage only to build half-assed arbitrage after-the-fact in order to save face. I've said this before during the BitScalper fiasco and I'll say it again:

Do we really want to support shady, anonymous and opaque shit as a community? If so, please provide a list of benefits of doing so, because in the world I come from, it only represents risk.

Of course we do not want to support shady, anonymous and opaque shit as a community. It is for that reason that I did not invest in bitscalper. Bitscalper refused to reveal his identity  while running an arbitrage service where he held onto large amounts of bitcoins. This was quite clearly a scam. Pirate on the other hand has willingly given his identity to his customers. Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges. As a customer I am perfectly happy with this explanation. I do not require a detailed audit of his transactions or a play-by-play run down of everything he does in order to trust him with my bitcoins.

The problem here is not with pirate - who has for 6 months provided exactly the service he claimed he would, paying all interest, answering all questions his customers have, and not blowing his top over slanderous threads like this. The problem is with a small number of people in the bitcoin community who insist on calling PONZI PONZI merely because someone is paying out 1% interest per day. Sorry but that is not proof of anything other than the fact that pirate's business model has been moderately successful. To make matters worse, most of these people haven't even bothered to read the Bitcoins Savings and Trust thread before they start slinging mud. Case in point:

Mysterious bonds sold via an irreversible currency by a mystery person who goes by the name Pirate? Caveat emptor.

1. Pirate does not, and has never, offered bonds. You are thinking of a seperate program set up by some of pirate's customers to 'rent out' their space with Bitcoin Savings and Trust.

2. Pirate is not a 'mystery person.' I and several other BS&T account holders have stated on numerous occasions that we know who pirate is.

3. Reading anything into the fact that he named himself 'pirate' is foolish. It has been said on numerous occasions that this is a reference to Warren buffet.


Furthermore, you are ignoring at least half the facts in this whole debate. Any theory about Bitcoin Savings and Trust needs to take into account GPUMAX as well. Pirate makes something like 10% on every purchase of hashing power made on GPUmax. I don't know exactly how many purchases go through GPUmax every day (perhaps one of the miners could clarify this) but i believe it to be a substantial number. People are chomping at the bit to get in to GPUMAX and get in on some of this action. My question to all the naysayers - why would somebody start both a ponzi and a legitimate business from the same bitcointalk account? If pirate runs off with customer funds, he loses something much more valuable. It doesn't make financial sense for pirate to do that. Hence, he is not running a ponzi.

[Matthew N. Wright]

Of course we do not want to support shady, anonymous and opaque shit as a community. It is for that reason that I did not invest in bitscalper. Bitscalper refused to reveal his identity  while running an arbitrage service where he held onto large amounts of bitcoins. This was quite clearly a scam. Pirate on the other hand has willingly given his identity to his customers. Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges. As a customer I am perfectly happy with this explanation. I do not require a detailed audit of his transactions or a play-by-play run down of everything he does in order to trust him with my bitcoins.

Thank you for the information. I was not aware that Pirate had already disclosed details of his operation and am now beginning to think the people calling it a ponzi are just jelly.

[bitlane]

Of course we do not want to support shady, anonymous and opaque shit as a community. It is for that reason that I did not invest in bitscalper. Bitscalper refused to reveal his identity  while running an arbitrage service where he held onto large amounts of bitcoins. This was quite clearly a scam. Pirate on the other hand has willingly given his identity to his customers. Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges. As a customer I am perfectly happy with this explanation. I do not require a detailed audit of his transactions or a play-by-play run down of everything he does in order to trust him with my bitcoins.

Thank you for the information. I was not aware that Pirate had already disclosed details of his operation and am now beginning to think the people calling it a ponzi are just jelly.

Matthew, I have to say that for a 4,000+ Post Member of this forum, I find it difficult to believe that you have never attempted to find out who Pirate actually is....?

All of his personal information is quite readily available to anyone willing to do the legwork if not satisfied with the basics.

[P4man]

Pirate on the other hand has willingly given his identity to his customers.

Did he give one, or has his identity actually been verified?

Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges.

Unfortunately, I dont see how that makes any sense. It would be way cheaper for Pirate to buy bitcoins - if needed with borrowed money. At least initially, but if his business is as profitable as his payouts suggest, he would need less and less loans. At this point, he shouldnt need any really. Moreover Pirate pays his lenders in bitcoins, so he needs to buy more bitcoins than he sells anyway, its not like he can avoid exchanges, so whats the advantage for him?

Its interesting to point out two parallels; First Clipse, who made the same claim initially to explain why he paid 115% on his pool. That explanation made even less sense than Pirate and after being thoroughly debunked, he withdrew that claim and instead mumbled about a secret business model. Now unlike Pirate, Clipse doesnt hold a lot of coins of others, and more importantly, his business model is easily explained by poolhopping, forwarding to gpumax or both. Done properly, that should allow him to pay 115 (or now 105%) easily, and make a nice profit on top of it. There is no big mystery as far as Im concerned. Quite unlike Pirate. But the story about selling coins locally was a big fat lie to cover up something else.

The second parallel is the quote I wrote above:

Red Flag No. 4: Cheaper to borrow

Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.

Pirate is paying FAR more than 12% annually.  But I guess you would have been happy with Madoff's explanation too.

Any theory about Bitcoin Savings and Trust needs to take into account GPUMAX as well.

I completely agree.

Pirate makes something like 10% on every purchase of hashing power made on GPUmax. I don't know exactly how many purchases go through GPUmax every day (perhaps one of the miners could clarify this) but i believe it to be a substantial number. People are chomping at the bit to get in to GPUMAX and get in on some of this action. My question to all the naysayers - why would somebody start both a ponzi and a legitimate business from the same bitcointalk account?

Recently Ive tried auctioning shares of a 80GH consortium of miners, not unlike gpumax, but I didnt get anything like what GPUmax is getting price wise. The same goes for just about anyone else who tried. When is the last time you saw short or medium term mining contracts sell for >140% of expected revenue anywhere else as on gpumax? Youd be lucky to get 110%.

So how can GPUmax find so many buyers for so much higher prices, when at the same time, it offers less flexibility than most other mining contracts?

The only plausible explanation I can think off, is that the main person buying at gpumax is no one else as Pirate himself. And that would also answer your question about why a ponzi would be completely complementary to GPUmax, and not a contradiction.

Im not claiming to know to how it all fits together exactly or what the end game would be, but I can see some possibilities for trying to combine a ponzi with a huge double spend attack. If anyone can come up with sensible alternatives that explain both his trust and gpumax, Im all ears.

[P4man]

Tell me who will lend to you (at sub-usurious rates) for doing a big bitcoin operation of any sort. Now tell me who will lend to you at any rate if your business model involves dealing with shady characters who don't want to leave paper trails.

At the rates Pirate pays, anyone can get a loan. If even Pirate is one of the only people on earth who wouldnt be able to get any credit card loans or personal loans and has nothing to mortgage (in which case, would you really trust him with your coins?), even then Im sure plenty of "shady characters" would be willing to lend pirate money at rates far lower than what he pays. Have you calculated the compound interests? Not even loan sharks ask that much.

[bitlane]

One advantage of borrowing from people on the internet is that unlike shady characters, we won't break his legs or murder his family if something goes wrong. We might sue him and such, but in the end he can declare bankruptcy if things go very far south.

Speak for yourself

[P4man]

One advantage of borrowing from people on the internet is that unlike shady characters, we won't break his legs or murder his family if something goes wrong. We might sue him and such, but in the end he can declare bankruptcy if things go very far south.

Ah, indeed, I quite agree. But then, if he is selling coins for cash at huge markups, how could he ever default?
See, if you follow your own logic, clearly Pirate thinks what he is doing is much more likely to go south than what your explanation would imply.

Next.

[Matthew N. Wright]

Of course we do not want to support shady, anonymous and opaque shit as a community. It is for that reason that I did not invest in bitscalper. Bitscalper refused to reveal his identity  while running an arbitrage service where he held onto large amounts of bitcoins. This was quite clearly a scam. Pirate on the other hand has willingly given his identity to his customers. Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges. As a customer I am perfectly happy with this explanation. I do not require a detailed audit of his transactions or a play-by-play run down of everything he does in order to trust him with my bitcoins.

Thank you for the information. I was not aware that Pirate had already disclosed details of his operation and am now beginning to think the people calling it a ponzi are just jelly.

Matthew, I have to say that for a 4,000+ Post Member of this forum, I find it difficult to believe that you have never attempted to find out who Pirate actually is....?

All of his personal information is quite readily available to anyone willing to do the legwork if not satisfied with the basics.

I've stayed far away from lending/investments/alt coins/gambling on this forum until recently.

[P4man]

Oh, I certainly think it's very risky business (did I ever claim otherwise?), not so much because pirate is dishonest (although there's obviously a chance of that, too; I've just spoken to him a lot more than most have so feel more comfortable there) but because of the nature of what he appears to be doing.

So what is the nature of what he appears to be doing? Selling bitcoins?

Also, in general, internet discussions proceed more fruitfully if you don't dismiss people who disagree with you with belittling things like "Next."

Okay, I apologize. Its just that Ive read a gazillion posters dismissing the possibility of Pirate running a ponzi by arguing things that make no sense. Ive yet to read a credible explanation for either his trust, or gpumax, let alone one that explains both, other than it being a elaborate scam.

Perhaps Ill be proven wrong one day, but until I hear a better explanation, Occam's Razor applies.

[bitlane]

Why doesn't everyone just leave it alone and let people do whatever they want ?