Let's assume a few things here:
<assumptions>
1) It's not a ponzi (or a proxy to a ponzi). The definition of which is a little tenuous since if you say you're running a ponzi, and you notify all of your "investors" that that's what you're doing, then are you actually a ponzi? <sarcasm> If the government says it's a ponzi, then it must be a ponzi</sarcasm>. Don't believe everything you hear, just follow the money or the deal.
At the moment we know little of Pirate's business plan, and if we knew more, and there were more competitors, then the interest rates would likely drop and likely without an additional decrease in risk exposure. That being the case, I'd just as soon he keep the secret. In fact, even if Pirate were to tell me right now, not only would I keep the secret, I probably wouldn't even try to compete with him, since I value my time differently than he does (or anybody else for that matter). It would have to be really really simple to get my attention and deal with all of the FUD that's spewed around here.
2) It's not drugs (or a proxy to drugs). I assume that would be both the legal and illegal kind. However, if it includes the "illegal" kind, that's just a matter of jurisdictional geography and you're legal again. Now I'm just rambling on, but whatever.
3) It's not insider currency exchange knowledge (or a proxy to insiders). Given the lack of transparency of the exchanges due to the psuedo-anonymous nature of bitcoin and the current lack of much regulation, this is possible. I'm sure others could address this issue better than I, so I'll leave it to them to work the numbers. Notwithstanding, I could really care less (nobody forced you to trade USD/BTC). Besides, if our benevolent Pirate "manipulator" can maintain some degree of stability (which we've had a little more of lately; correlation perhaps?), and make some money on the side, then more power to him. I value stability more than speculation anyway. Given his price-spike comment, so does he.
And even if stability isn't the desired side effect, and controlled volatility is (or some kind of bid-ask sniping, arbitrage, or algorithmic HFTs), then speculators can continue day-trading the market by predicting trends. Either way, most exchanges don't promise transparency anyway (maybe none?). If that's what you want, then make a better exchange (perhaps an OSS exchange) and convince people to join you. That way you could get transparency and decentralization in one fell swoop, yayyy!! Whatever floats yer boat I guess.
</assumptions>
Now that I've got all that out of the way, that narrows the playing field significantly. Nevertheless, I personally know of at least a half-dozen ways to make the kind of returns Pirate does, and they're relatively simple too (I'm busy and lazy), and I only spent about a week or two thinking about it (surfing the net helps). I however will not enumerate nor describe them here, since by divulging, it would likely make it more difficult for me to try them myself should I be so inclined. In any case, I'm sure if any of you had half a brain (an imagination helps), you could probably come up with a similar subset, and then some, given the nature of the financial "black box" Pirate operates within.
The only unknown I can't put a finger on is why use bitcoin when for the most part you can use fiat? To that, I can only venture to guess that bitcoin transactions are nearly frictionless (borderless) in the sense that there is less regulation, more anonymity, fewer adjudicated encumbrances leading to cheaper insurance costs -lowering operational overhead-, limited or advantaged market "commodity/currency" exposure, diminished creditor recourse (both good and bad), and perhaps a great disdain for government largesse and general interference. Besides, promoting bitcoin isn't such a bad idea anyway, right? That being the case, and a little bit of altruism (karma whore?), it's not impossible to imagine why Pirate might part with as much bitcoin as he does when he could likely keep more of it to himself. Be glad you're on the money train, and if you're not, stop the hating/FUDding/whining, or use pass-thrus. We're all "adults" here right?
All you should be concerned about is the "promise" and any nuanced contractual details.
On a side note: thanks Pirate for your patience and professionality. Seemingly a rare trait around here.
