A Theory on what pirateat40 is doing

[apetersson]

So here is my guess:

Pirate was approached by "big players" that they want to invest USD in Bitcoin, but without moving the market.

They are committed to buy whatever amount he offers them, as long as the price stays low.

Pirate needs Bitcoins for two reasons:
1 - he sells them for a defined rate to the big players most likely at a high premium
2 - he uses bitcoins at strategic moments when the rate goes too high to create askwalls to push the price down gently. hopefully for him he does not actually sell them.

then he uses his USD to cover his expenses to pay the interest

their hope may be to aquire a significant amount of bitcoins without overpaying. and doing it that way it may actually work.

So my guess is, as long as the bitcoin rate stays relatively low his lending scheme will go on. once the price reaches his pain point (maybe 10 USD/BTC) he will start to unwind the loans and maybe even repay the lenders (or keep all the precious bitcoins himself). in my theory it could very well end with a drastic bitcoin rate increase which could spark another mania.

is this a possibility? is there any evidence which falsifies this theory?

[1714563279]

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[proudhon]

So here is my guess:

Pirate was approached by "big players" that they want to invest USD in Bitcoin, but without moving the market.

They are committed to buy whatever amount he offers them, as long as the price stays low.

Pirate needs Bitcoins for two reasons:
1 - he sells them for a defined rate to the big players most likely at a high premium
2 - he uses bitcoins at strategic moments when the rate goes too high to create askwalls to push the price down gently. hopefully for him he does not actually sell them.

then he uses his USD to cover his expenses to pay the interest

their hope may be to aquire a significant amount of bitcoins without overpaying. and doing it that way it may actually work.

So my guess is, as long as the bitcoin rate stays relatively low his lending scheme will go on. once the price reaches his pain point (maybe 10 USD/BTC) he will start to unwind the loans and maybe even repay the lenders (or keep all the precious bitcoins himself). in my theory it could very well end with a drastic bitcoin rate increase which could spark another mania.

is this a possibility? is there any evidence which falsifies this theory?

Ah, yes, that's why he recently announced that his interest rate will go down - he knows that the price is going to $10/BTC.  High five!

[hazek]

OP, ever heard of Occam's razor?

[Vladimir]

OP, ever heard of Occam's razor?

Exactly, what I wanted to say.

[apetersson]

yes, of course i know about occams razor. my speculation assumes the statements pirate made were actually true.

[bitdragon]

what do you make of:

    Unlimited Deposits

For Trust accounts starting at 5%.

[finkleshnorts]

I used to believe that too.

[coretechs]

http://www.youtube.com/watch?v=_CPM6wsHkT8

[DarkEmi]

In my humble opinion the activity that Pirate is doing has all the characteristics of a Ponzi.

I am often quite surprised that they are so many people that seems to think that his business is genuine

[Vladimir]

In my humble opinion the activity that Pirate is doing has all the characteristics of a Ponzi.

I am often quite surprised that they are so many people that seems to think that his business is genuine

“it is impossible to make a man see something that his `paycheck` depends upon him not seeing it.”

[hazek]

In my humble opinion the activity that Pirate is doing has all the characteristics of a Ponzi.

I am often quite surprised that they are so many people that seems to think that his business is genuine

“it is impossible to make a man see something that his `paycheck` depends upon him not seeing it.”

That's one of the most important truths out there.

[bulanula]

I know no one has brought this up or even thought of it, but would I be too bold to say? PONZi!!!!  lulz

Love how you are all getting your panties up in a bunch.

Also, BurtW in the other thread with the same behaviour : shouting ponzi,ponzi,ponzi,ponzi,ponzi etc.

Game is over soon for the pirate ...

Funny because I thought you were one of the most trustful guys on this forum, goat !

[Vandroiy]

is this a possibility? is there any evidence which falsifies this theory?

No. Just that he can do all of this with his own funds and get less than 12 weeks amortization time and exponential growth of his own funds, so why the hell is he giving away free money?

Stay in reality. A shady charity? Are you serious?

[Serge]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices at low rates for the time being? Or it doesn't make any sense? What do you guys think?

[pirateat40]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

[Bitcoin Oz]

I wonder who will be wearing a bathing costume when the tide recedes?

[Vladimir]

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

Infantry cannot hold the lines, cavalry to the rescue!

[bulanula]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

It just does not make sense mate.

Why did you lock the thread ? Feeling the pressure building up ? Can't hold off the accusations ?

Why not talk to BitPay which holds 50K from BFL sales nobody wants ? Or come to an early adopter like me and we can work something out.

I don't buy it, sorry.

Also, no more storage updates is weird.

[Vandroiy]

The reason Pirateat40 responded to Serge is because it draws attention to the wrong side of the problem, the one that takes more time to discuss.

Serge, an idea for the most profitable enterprise of all time is not the point of discussion here. The question is why would he continue to share it! Sure, in the beginning he might have lacked funds. But now? There's just no way any sensible person would now try to get as many investors as possible!

This argument kills it in one go. All counters have been quickly debunked. Wake up and help spreading the word already.

[naima53]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices at low rates for the time being? Or it doesn't make any sense? What do you guys think?

+100 You are very smart ..

[naima53]

I wonder who will be wearing a bathing costume when the tide recedes?

Catch the moment!

[Vladimir]

The reason Pirateat40 responded to Serge is because it draws attention to the wrong side of the problem, the one that takes more time to discuss.

Serge, an idea for the most profitable enterprise of all time is not the point of discussion here. The question is why would he continue to share it! Sure, in the beginning he might have lacked funds. But now? There's just no way any sensible person would now try to get as many investors as possible!

This argument kills it in one go. All counters have been quickly debunked. Wake up and help spreading the word already.

and this is undeniable

[cytokine]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

I've been avoiding commenting on this stuff because it's best practice not to discuss your competition, especially with 7%/week which no-one else can possibly compete with. However, I think the above is the most reasonable explanation yet, but with 2 missing pieces.

First, why pay such high rates to investors? It could be that pirate saves in USD not in BTC ( because he isn't 100% convinced that BTC is going to be successful long term ), and therefore it makes sense to pay out to his investors so that his volume can increase, thereby earning him increasing amounts of USD with subsequent transactions.

Second, why does pirate not allow investors to change their deposit address? Probably because one of the reasons he can charge a premium is because he promises not just large amounts of coins at a good rate, but also because he can promise ( unlike the exchanges ) that the coins cannot be traced back to the purchaser. I don't know the exact mechanics, but tracing deposit addresses and also acquiring fresh coins via gpumax would both help to achieve the the goal of anonymous coins. It's also possible that the purchasers like to buy in blocks of coins, each "independent" of the other block ( I have talked with several very wealthy people who wish to buy BTC, and this is exactly what they wanted to do, so that if it was ever discovered they owned a certain btc address, they would have backups that aren't tied to it. I'm talking about protection against the potential for an all-out war against BTC by the Feds. )

Of course, existing mixing services can provide this protection, but not if your goal is to buy millions of dollars worth. I can personally buy maybe 15K USD worth per month outside of the exchanges and have it mixed properly for about a 5% total commission rate, but nothing beyond that, and not below that rate. And I've shopped around a lot.

In any event, you won't hear anything more from me on this, but I just couldn't help but give out my 2 cents into the crowd since I find the topic very fascinating. However, I'll also take this opportunity to make a shameless plug for my fund, which is 100% pirate-free so it's perfect for skeptics. As for myself, I'm agnostic on it being a scam vs being real; as with any investment, investor beware. But I never invest in things when I don't know what the business is doing as a rule, since my fund always errs on the side of prudence. Many thanks.

[organofcorti]

Regardless of whether or not Pirate is running a Ponzi scheme, all of the posted ideas of how he could be making his money work fantastically, and I'm now living on a small Caribbean Island I own.

Just PM me if you want a 7% / week interest bearing account. This won't expose you to any risk of BS&T failing, but still provide a great return! In between sunbaking, and sipping mojitos and daiquiris, my staff and I will be only too happy to answer any questions you might have.

I can't tell you the secret of my investment strategy as this would impact it's effectiveness. I can guarantee however that not one coin of interest will be the result of any criminal activity.

Past performance is not a reliable indicator of future performance. I retain the right to any bitcoins invested with me. Caveat emptor.

I hope to god no one takes this seriously.

[Vladimir]

cytokine:

you premise is "Pirate wants to buy huge amount of Bitcoin and he does it by selling/shorting it". Is it correct summary of your long post?

See this:

Borrowing BTC denominated assets = expecting Bitcoin to go down in relation to some base asset, for example, USD or gold (assuming that profit is the objective here).

Now please explain how come one can accumulate large amount of some asset by shorting it?

I'd speculate that accumulating large amount of bitcoins by borrowing could work if and only if not returning the capital borrowed is in plans.

Next!

[bulanula]

cytokine:

you premise is "Pirate wants to buy huge amount of Bitcoin and he does it by selling/shorting it". Is it correct summary of your long post?

See this:

Borrowing BTC denominated assets = expecting Bitcoin to go down in relation to some base asset, for example, USD or gold (assuming that profit is the objective here).

Now please explain how come one can accumulate large amount of some asset by shorting it?

Next!

I used to have some respect for you... You should try to calm down a reread what he posted.

Hey, stop borrowing my lines

[Vladimir]

I used to have some respect for you... You should try to calm down a reread what he posted.

Well I never respected you if it means anything. However irrelevant it is.

Now "I respected you but not anymore" argument is not going to work as it is a logical fallacy. I do not give a damn about your respect. And ad hominem is not a valid argument.


If I got it wrong you either show exactly where and how or shut up or call for pirate to save the day.

[unclescrooge]

Regardless of whether or not Pirate is running a Ponzi scheme, all of the posted ideas of how he could be making his money work fantastically, and I'm now living on a small Caribbean Island I own.

Just PM me if you want a 7% / week interest bearing account. This won't expose you to any risk of BS&T failing, but still provide a great return! In between sunbaking, and sipping mojitos and daiquiris, my staff and I will be only too happy to answer any questions you might have.

I can't tell you the secret of my investment strategy as this would impact it's effectiveness. I can guarantee however that not one coin of interest will be the result of any criminal activity.

Past performance is not a reliable indicator of future performance. I retain the right to any bitcoins invested with me. Caveat emptor.

I hope to god no one takes this seriously.

PM sent. Kidding

I guess there's only one way to know and prove that it's not a ponzi, without saying what he does. It's a massive withdrawal of deposit + profit.

Then if everyone gets his coins back, you won't have any more "ponzi bashing" from anyone, promised

[hazek]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

The above explanation makes ZERO sense.

Here's why:
If such a group held USD and wanted to buy BTC and they went through pirate buying the BTC he borrowed, where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group?? If he takes their USD and goes to the exchanges, well how is this going to be any different of an effect on the price of BTC than if the group went directly passed him?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

And the fact that he pretends you're close when in fact your explanation makes zero sense is a huge red flag.

[Vladimir]

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

And the fact that he pretends you're close is when in fact your explanation makes zero sense is a huge red flag.

Indeed it is! walks like a duck...

[finkleshnorts]

where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group??

Maybe he just borrows it

Wait...

[hazek]

where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group??

Maybe he just borrows it

Wait...

Bingo. Hence the ponzi allegations.

[Serge]

The reason Pirateat40 responded to Serge is because it draws attention to the wrong side of the problem, the one that takes more time to discuss.

Serge, an idea for the most profitable enterprise of all time is not the point of discussion here. The question is why would he continue to share it! Sure, in the beginning he might have lacked funds. But now? There's just no way any sensible person would now try to get as many investors as possible!

This argument kills it in one go. All counters have been quickly debunked. Wake up and help spreading the word already.

My explanation to this dilemma is simple: you cannot take all returns to yourself in such a limited environment such as Bitcoin - it has great potential to devalue investments of those to whom he sells which could only mean trouble in the end.

[Serge]

Selling high volumes through lending is quite genius imo, even more so than any ponzi scheme

Keep in mind I'm just speculating and I don't dismiss pirate's op being a ponzi or some other scam. I've just tried to see what are the possibilities to run such operation legitimately and to find plausible explanation how it is done and interested in other's opinions on my findings

[Vladimir]

My having no respect for you is not an argument. It is a fact. :/

Stating irrelevant facts is not an argument either, actually it is another logical fallacy. Having delusions about your own "reputation" is not helping you at all too.

[finkleshnorts]

Selling high volumes through lending is quite genius imo, even more so than any ponzi scheme

Keep in mind I'm just speculating and I don't dismiss pirate's op being a ponzi or some other scam. I've just tried to see what are the possibilities to run such operation legitimately and to find plausible explanation how it is done and interested in other's opinions on my findings

I'm still curious how, in your scenario, Pirate could pay back his lenders without driving the price up and defeating his purpose. No sarcasm here, I'm really wondering.

[Serge]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

The above explanation makes ZERO sense.

Here's why:
If such a group held USD and wanted to buy BTC and they went through pirate buying the BTC he borrowed, where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group?? If he takes their USD and goes to the exchanges, well how is this going to be any different of an effect on the price of BTC than if the group went directly passed him?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

And the fact that he pretends you're close when in fact your explanation makes zero sense is a huge red flag.

This is a good and valid question. I would imagine pirate has large BTC and USD holdings present on exchanges himself or with a side deal with his clients/investors which gives them ability to "manipulate" the exchanges to keep exchange rates at fair, stable (target) levels, as we have seen this occur plenty of times in the past with great walls on both sides.  Without ability to keep exchange rate in sane levels my theory indeed would not make any sense. I just put 1 + 1 together:  market manipulation and high interest returns on borrowed bitcoins.

[sadpandatech]

Selling high volumes through lending is quite genius imo, even more so than any ponzi scheme

Keep in mind I'm just speculating and I don't dismiss pirate's op being a ponzi or some other scam. I've just tried to see what are the possibilities to run such operation legitimately and to find plausible explanation how it is done and interested in other's opinions on my findings

I'm still curious how, in your scenario, Pirate could pay back his lenders without driving the price up and defeating his purpose. No sarcasm here, I'm really wondering.

Maybe by buying highly tainted coins? I think the pool of taint woulda ran dry by now if that was the case. But am also curious...

[hazek]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

The above explanation makes ZERO sense.

Here's why:
If such a group held USD and wanted to buy BTC and they went through pirate buying the BTC he borrowed, where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group?? If he takes their USD and goes to the exchanges, well how is this going to be any different of an effect on the price of BTC than if the group went directly passed him?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

And the fact that he pretends you're close when in fact your explanation makes zero sense is a huge red flag.

This is a good and valid question. I would imagine pirate has large BTC and USD holdings present on exchanges himself or with a side deal with his clients/investors which gives them ability to "manipulate" the exchanges to keep exchange rates at fair, stable (target) levels, as we have seen this occur plenty of times in the past with great walls on both sides.  Without ability to keep exchange rate in sane levels my theory indeed would not make any sense. I just put 1 + 1 together:  market manipulation and high interest returns on borrowed bitcoins.

I don't understand, surely he must have lost a lot in the last 30 days then since the price is up about 30% and in a span of just 4 days jumped nearly 20%? Did his "investors" experience any loses recently? They should have if you are right..

[Serge]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

The above explanation makes ZERO sense.

Here's why:
If such a group held USD and wanted to buy BTC and they went through pirate buying the BTC he borrowed, where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group?? If he takes their USD and goes to the exchanges, well how is this going to be any different of an effect on the price of BTC than if the group went directly passed him?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

And the fact that he pretends you're close when in fact your explanation makes zero sense is a huge red flag.

This is a good and valid question. I would imagine pirate has large BTC and USD holdings present on exchanges himself or with a side deal with his clients/investors which gives them ability to "manipulate" the exchanges to keep exchange rates at fair, stable (target) levels, as we have seen this occur plenty of times in the past with great walls on both sides.  Without ability to keep exchange rate in sane levels my theory indeed would not make any sense. I just put 1 + 1 together:  market manipulation and high interest returns on borrowed bitcoins.

I don't understand, surely he must have lost a lot in the last 30 days then since the price is up about 30% and in a span of just 4 days jumped nearly 20%? Did his "investors" experience any loses recently? They should have if you are right..

As I've mentioned in my first post in this thread, I think his comfort zone is $5-7/BTC and while moving the rate steady up and down in this $5-7 range within months he and his clients additionally are able to profit on exchange rates while keep on their Bitcoin acquisition schedule.  It would be crazy to think that pirate is exposed on USD side for more than 10-24hrs. on borrowed bitcoins, given that he has available reserves (personal or not) on exchanges.  I also suspect he has neat bots working for him on exchanges catching all the dips and doing arbitrage and profiting on short term spreads.  Basically, in my opinion pirate has largest presence on exchanges and most of his competition now is invested in his Bitcoin Savings & Trust and through various pass throughs, leaving him sole market maker and mover =)  this part is a wild speculation though  

[hazek]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

The above explanation makes ZERO sense.

Here's why:
If such a group held USD and wanted to buy BTC and they went through pirate buying the BTC he borrowed, where the hell does he then get the BTC to pay back his "investors" once he sells the borrowed BTC to that group?? If he takes their USD and goes to the exchanges, well how is this going to be any different of an effect on the price of BTC than if the group went directly passed him?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

And the fact that he pretends you're close when in fact your explanation makes zero sense is a huge red flag.

This is a good and valid question. I would imagine pirate has large BTC and USD holdings present on exchanges himself or with a side deal with his clients/investors which gives them ability to "manipulate" the exchanges to keep exchange rates at fair, stable (target) levels, as we have seen this occur plenty of times in the past with great walls on both sides.  Without ability to keep exchange rate in sane levels my theory indeed would not make any sense. I just put 1 + 1 together:  market manipulation and high interest returns on borrowed bitcoins.

I don't understand, surely he must have lost a lot in the last 30 days then since the price is up about 30% and in a span of just 4 days jumped nearly 20%? Did his "investors" experience any loses recently? They should have if you are right..

As I've mentioned in my first post in this thread, I think his comfort zone is $5-7/BTC and while moving the rate steady up and down in this $5-7 range within months he and his clients additionally are able to profit on exchange rates while keep on their Bitcoin acquisition schedule.  It would be crazy to think that pirate is exposed on USD side for more than 10-24hrs. on borrowed bitcoins, given that he has available reserves (personal or not) on exchanges.  I also suspect he has neat bots working for him on exchanges catching all the dips and doing arbitrage and profiting on short term spreads.  Basically, in my opinion pirate has largest presence on exchanges and most of his competition now is invested in his Bitcoin Savings & Trust and through various pass throughs, leaving him sole market maker and mover =)  this part is a wild speculation though  

Occam's razor..

[bitcoinBull]

I've been avoiding commenting on this stuff because it's best practice not to discuss your competition, especially with 7%/week which no-one else can possibly compete with. However, I think the above is the most reasonable explanation yet, but with 2 missing pieces.

[...]

In any event, you won't hear anything more from me on this, but I just couldn't help but give out my 2 cents into the crowd since I find the topic very fascinating. However, I'll also take this opportunity to make a shameless plug for my fund, which is 100% pirate-free so it's perfect for skeptics. As for myself, I'm agnostic on it being a scam vs being real; as with any investment, investor beware. But I never invest in things when I don't know what the business is doing as a rule, since my fund always errs on the side of prudence. Many thanks.

My god, since pirate now everyone wants to start a HYIP scam. cytokine, your "debug output" and claims about "reviewing code resolving bugs" are utterly unconvincing. Since your business (like pirate's) also has a 'secret sauce' and we don't know what its doing either, then by your own advice we shouldn't invest.

[Vandroiy]

Yea @hazek. Look at the quote inception, and it still makes no sense. Occam's Razor is on a killing spree.

Serge, try to take Pirateat's place. You're making this excessively complicated by trying to look from the outside. If he ever needs investors for such operations, then only for a short time. The actual BS&T wants exponentially more investors, even though its own assets should grow exponentially!

Once you're done with a 5-page explanation as to why it could work in theory, I'll just say it again: hedging against risk is much cheaper than 7% a week. And the whole card-house comes tumbling down, no matter how neat its theories.

[minorman]

I think OP might be onto something.
I also highly doubt that everyone will get all their Bitcoin back from pirate.

This is one show I prefer to watch from the sidelines...

[bitcoinBull]

Once you're done with a 5-page explanation as to why it could work in theory, I'll just say it again: hedging against risk is much cheaper than 7% a week. And the whole card-house comes tumbling down, no matter how neat its theories.

Yeah and it will be a welcome moment when (not if) it does because I'm getting tired of all these pirate/GLBSE/HYIP threads.

[Francesco]

Regardless of whether or not Pirate is running a Ponzi scheme, all of the posted ideas of how he could be making his money work fantastically, and I'm now living on a small Caribbean Island I own.

Just PM me if you want a 7% / week interest bearing account. This won't expose you to any risk of BS&T failing, but still provide a great return! In between sunbaking, and sipping mojitos and daiquiris, my staff and I will be only too happy to answer any questions you might have.

I can't tell you the secret of my investment strategy as this would impact it's effectiveness. I can guarantee however that not one coin of interest will be the result of any criminal activity.

Past performance is not a reliable indicator of future performance. I retain the right to any bitcoins invested with me. Caveat emptor.

I hope to god no one takes this seriously.

I guess there's only one way to know and prove that it's not a ponzi, without saying what he does. It's a massive withdrawal of deposit + profit.

Then if everyone gets his coins back, you won't have any more "ponzi bashing" from anyone, promised

+1

[Stephen Gornick]

hedging against risk is much cheaper than 7% a week.

Speaking of:

Bitcoin Savings and Trust will default on or before July 31st, 2012.
 - http://betsofbitco.in/item?id=476

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

[Vladimir]

Too bad I never do any bets (yea I know, it could be a great hedging avenue for some, but I have nothing to hedge).

The problem with those bets is, there is at least one person who knows exactly the outcome or (maybe) can change the outcome depending on the odds at any point in time. I would not want to play against such kind of house edge.

[Bigpiggy01]

This

[sadpandatech]

mmmmmm, that sriracha hot sauce is the bestest!

[hazek]

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

Hmmm I think I'll take that bet for a few BTC.

[cytokine]

My god, since pirate now everyone wants to start a HYIP scam. cytokine, your "debug output" and claims about "reviewing code resolving bugs" are utterly unconvincing. Since your business (like pirate's) also has a 'secret sauce' and we don't know what its doing either, then by your own advice we shouldn't invest.

Sigh... this is why I shouldn't have ever commented here, just to get mixed up in the morass. It was a bad move that I now regret. In any event, normally I don't respond to abuse, but I've decided to make a proper rebuttal so that I can link to it from my main fund thread if necessary.

See here for proof on where over a third of the fund is invested. Also, we will become a transparent fund when possible, and/or have a trusted auditor sign the monthly reports when the GLBSE allows for read-only logins, which is coming. Also, last month I purchased GIGAMINING shares directly from friedcat and COGNITIVE shares (in exchange for BDK.BND shares) directly from Kluge here.

So my operations are very glass-box since other members of the forum can see my activity. Nefario knows I've been pinging him with coding questions quite frequently, and of course he can view the fund's holdings himself.

[Serge]

Yea @hazek. Look at the quote inception, and it still makes no sense. Occam's Razor is on a killing spree.

Serge, try to take Pirateat's place. You're making this excessively complicated by trying to look from the outside. If he ever needs investors for such operations, then only for a short time. The actual BS&T wants exponentially more investors, even though its own assets should grow exponentially!

Once you're done with a 5-page explanation as to why it could work in theory, I'll just say it again: hedging against risk is much cheaper than 7% a week. And the whole card-house comes tumbling down, no matter how neat its theories.

Ok, I've thought a little about presented dilemma. I think for anyone to understand it better why borrowing at these rates in order to sell at high premium rates works better than do it on your own we must go back in time when pirate started offering his selling service to his clients and to remember what was happening on exchanges at that time. I don't know exactly when pirate introduced his service, I think it will be safe to assume it all started somewhere last year. Market volatility was insanely wild at the time, there were huge fluctuations within single days, no one knew to which price one would wake up the next morning.

Supposedly pirate closes a deal, back in 2011, and by the time he's ready to re-buy market moved so much leaving him little to no profits even with his high premium rates. That's where his initial client rates came from - comfortable for his clients and leaving him enough margin to get few percentages out of a deal himself. We can be sure he had some good and some bad trades all due to market fluctuation (unless he already had enough reserves to allow him some time to catch as many dips as possible more or less safely). As business started picking up with increasing volume this was hard and tedious work always monitoring exchanges and doing trades like a bot in order to stay on profitable levels while selling at premium rates to his clients; market manipulation was much riskier too even if it was accessible to him at that time. Until one day pirate realized "Hey, I can borrow bitcoins at significantly lower rates than what I'm paying on exchanges to re-buy them fueling swings and causing small panic disturbances! While this gives me an opportunity to re-buy on my own at slower pace without much of market disturbance! ARHH Brilliant!!" he exclaimed =)  BTCST concept was born.  

Before BTCST, although he had access to liquid Bitcoins, the rates were unpredictable.  After BTCST he pretty much has predictable and controlled stream of BTC available at his disposal at predictable rates (not guaranteed but more or less stable). Volatility became manageable, his competition which drove him mad at times on exchanges with unpredictable fluctuations now is on his side being his BTC suppliers/lenders. He can slowly move market up or down 20% for time being and is making lots of money for many others who lend to him at the same time. Life became less stressful and the endeavor less risky.

I maybe wrong though

[conspirosphere.tk]

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

"This assertion is true if Bitcoin Savings and Trust is unwilling or unable to pay out requested deposits on or before December 31st, 2012 according to the opinion of Bitcointalk.org members on the Bitcoin Savings and Trust Forum Thread. "

Which members? Or who counts them and how?
And how much one would win betting 1 BTC? Another BTC?

[Vandroiy]

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

Oh, what happened? Someone placed money against it?

That's strange, wouldn't Pirateat yield more? Anyway, time to make an account there!

Edit: tx underway. Bring it on, I'll face more than just even odds until I can't trust the site with more! Sadly, with a young anonymous site it's not that much but people are unlikely to bet anyway.

If more people get a trustworthy third party for this bet, I can raise more!

[kneim]

Have red the article about "Ponzi Scheme" in the Bitcoin Magazine. Wonder if there are enough stupids to have a large effect on Bitcoins. I believe in Bitcoins, but that makes me pondering silence. 3400% a year? Thought we are against Wall Street and money printing! Or is this a big lie alltogether?

[Stephen Gornick]

Thought we are against Wall Street and money printing! Or is this a big lie alltogether?

Umm ...  Bitcoin (the open source digital currency project) != Bitcoin Savings and Trust  (the topic of this thread) or any other sites and services that use bitcoin as their form of money.

This is just like how Bitcoin is not Bitcoinica, Mt. Gox, SatoshiDICE, Silk Road, Casascius, Butterfly Labs, etc.,

[elux]

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

Oh, what happened? Someone placed money against it?

Curious. Earlier today it was something like 10:1 for BTCST defaulting in 2012.

[hazek]

3400% a year?

It's because people first don't know how to annualize compound interest of 7% per week and second they have no fking clue just how ridiculous 3400% annually is. The sad part is that usually these economically and financially illiterate people can least afford to lose their hard earned money.

[hazek]

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

Oh, what happened? Someone placed money against it?

Curious. Earlier today it was something like 10:1 for BTCST defaulting in 2012.

I followed it a bit and after 10:1, someone bet ~50 against and now some bet ~20 for..

I considered betting when it was 10:50 but I'd have to lock up my funds for who knows how long so I decided against it.

[Vladimir]

Compound interest is very simple guys.

Finally my endless posts today may be of value to some:

Rule of 72

If you have interest of N over some fixed period of time, divide 72 by N. This will give you amount of those fixed periods needed to double your money with compounding the interest.

For example, say, Pirate is paying 7.2% per week. 72/7.2 = 10. This means you should double your money every 10 weeks.

week 1  -  1000 BTC
week 10 -  2000 BTC
week 20 -  4000 BTC
week 30 -  8000 BTC
week 40 - 16000 BTC
week 50 - 32000 BTC

and more

week  60  -    64 000 BTC
week  70  -   128 000 BTC
week  80  -   256 000 BTC
week  90  -   512 000 BTC
week 100 - 1 024 000 BTC

week 110 -  2 048 000 BTC
week 120 -  4 096 000 BTC
week 130 -  8 192 000 BTC
week 140 - 16 384 000 BTC
week 150 - 32 768 000 BTC

Enjoy!

It takes only 3 years and you are the winner!

 

[Francesco]

If you really

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

Oh, what happened? Someone placed money against it?

Curious. Earlier today it was something like 10:1 for BTCST defaulting in 2012.

I followed it a bit and after 10:1, someone bet ~50 against and now some bet ~20 for..

I considered betting when it was 10:50 but I'd have to lock up my funds for who knows how long so I decided against it.

Why bet when Pirate can multiply your money much faster? I really wonder if Pirate from time to time searchs for BTCST related bets and bets against to simulate trust. But again, if people were rational we wouldn't be even discussing here, so maybe the bets are genuine!

[organofcorti]

For example, say, Pirate is paying 7.2% per week. 72/7.2 = 10. This means you should approximately double your money every 10 weeks.

week 1  -  1000 BTC
week 10 -  2000  2004.3 BTC 
week 20 -  4000 4016.9 BTC
week 30 -  8000 8051 BTC
week 40 - 16000 16136 BTC
week 50 - 32000 32340 BTC

Enjoy!

FTFY - that approximation leads to errors which due to the wonderful nature of compound interest get out of hand very quickly. Not a bad rule for short term interest though.

[Vladimir]

what a pedant, lol, but yes

try to calculate those in under 10 seconds without any computer aid, now.

[hazek]

Fking unnatural exponential function, rapes so many people in the ass just because it's so intuitive and most listen to their intuition instead of reason and evidence.

[organofcorti]

what a pedant, lol, but yes

try to calculate those in under 10 seconds without any computer aid, now.

Hey! I still have my slide rule! I'm ready to lend bitcoin during the computer apocalypse! Oh, wait ...

[drakahn]

I still don't see anywhere where it says it will be 7%/week for a year with unlimited deposits, so no, it isn't 3300%/year

[humanitee]

There's no post to the contrary either (as far as I know). He's still offering 7% to the pass throughs and whatnot.

[hazek]

I still don't see anywhere where it says it will be 7%/week for a year with unlimited deposits, so no, it isn't 3300%/year

Definition of 'Annualize'
1. To convert a rate of any length into a rate that reflects the rate on an annual (yearly) basis. This is most often done on rates of less than one year, and usually does not take into account the effects of compounding. The annualized rate is not a guarantee but only an estimate, and its accuracy depends on the variance of the rate. This rate is also known as "annualized return" and is similar to "run rate".

2. To convert a taxation period of less than one year to an annual (yearly) basis. This helps income earners to set out an effective tax plan and manage any tax implications.

Read more: http://www.investopedia.com/terms/a/annualize.asp#ixzz1zhUplMwv

[drakahn]

I still don't see anywhere where it says it will be 7%/week for a year with unlimited deposits, so no, it isn't 3300%/year

Definition of 'Annualize'
1. To convert a rate of any length into a rate that reflects the rate on an annual (yearly) basis. This is most often done on rates of less than one year, and usually does not take into account the effects of compounding. The annualized rate is not a guarantee but only an estimate, and its accuracy depends on the variance of the rate. This rate is also known as "annualized return" and is similar to "run rate".

2. To convert a taxation period of less than one year to an annual (yearly) basis. This helps income earners to set out an effective tax plan and manage any tax implications.

Read more: http://www.investopedia.com/terms/a/annualize.asp#ixzz1zhUplMwv

So then it should be 365% per year you're saying?

[hazek]

I'm not sure if you are really asking or just trolling.

[drakahn]

specifically, your quote says "and usually does not take into account the effects of compounding. "

[hazek]

specifically, your quote says "and usually does not take into account the effects of compounding. "

Last I checked usually != always. Clearly the above is not true in our case.

[drakahn]

specifically, your quote says "and usually does not take into account the effects of compounding. "

Last I checked usually != always. Clearly the above is not true in our case.

And yet, Clearly it should be... as 3300% is not going to happen and nowhere has it been claimed that it will be 7%/week with unlimited deposits for a year... compounding is not how it is meant to be (although reinvesting is allowed, that is not the same thing as it being compounding interest, just the same effect)

[hazek]

specifically, your quote says "and usually does not take into account the effects of compounding. "

Last I checked usually != always. Clearly the above is not true in our case.

And yet, Clearly it should be... as 3300% is not going to happen and nowhere has it been claimed that it will be 7%/week with unlimited deposits for a year... compounding is not how it is meant to be (although reinvesting is allowed, that is not the same thing as it being compounding interest, just the same effect)

Ok fair enough, point to a week when the rate he paid wasn't 7% and when "reinvesting" wasn't allowed and you will prove I made a mistake.

[zyk]

 June 27, 2012, 10:51:06 PM
Quote from: zyk on June 27, 2012, 10:46:44 PM

Dear pirate,

Sorry, i ment 1.5 trillion missing from the pentagon and of course good storys got be enjoyed not critisised

Impeccable services got to be advertised the whole world over, instead of kept secret in blocked threads..no?

Especially Europe now needs an alternative currency , secure and safe banks.....exactly which is written in the subject :


 BTCBitcoin Savings and Trust | HomeBTC


Its only there, where german savings are not to be confiscated by profiligate GS alumni like Draghi, Monti or the hell what other mafiosi

yeah lets get the new reserve bank rock !!!.....coming from 24% monthly thats lasts another 2000 years before reaching 0,15 % yearly

this time no lip quivering asshole at the helm but a pirate

D´accord ?

Zyk





Uh.... I gotta stop drinking.  I didn't follow any of that.




Being a drunken european newbee to the bitcoin scenery am a bit concerned about the agressive FUDS thrown around in the " community ".

Haven´t you all recognized that the world lives in a huge american dollar ponzi scheme since the Fed in 1913 was given the right to loan your aircraft carriers into existence??

This FUD broke 2008, its barely growing now and of course only the deptenslavery of our unborn children and studentloans are enforced, cause they are the last members which

haven´t been used up in this chain letter. The TBTF and the responsible criminals are still at the helm, trying to get out of dodge.


Right along comes the Bitcoin, supposedly immun to inflation at will, trying to be the new worldwide accepted and decentralised medium of exchange, leaving out the fraudsters.

Hammering away on pirate doesn´t serve the common purpose, which is, as i ve been coming to experience since now, the trustworthy and honorful conduct of the users

of bitcoin. Really ashamed that Burt W is able to sell bad loans:-)


Bitcoin in and of itself is the new ponzi in town and pirate happens to be somebody who has become with GPUmax and BST a centralising force in the scene.

As far as i can judge him by the things he wrote, its rather unlikely, that he just wants to be a thief but he is, and thats apparently not just my concern, not able

or willing to extrapolate or projecting a coherent story about his dealings ......the bitcoin world is still small, but international and of course could be growing by 10 per cent

weekly....did you see the different prices in the countries and those arbitrage opportunities?.....

Problem in my view is, that  the pirate by not percieving his buiseness  a ponzi scheme, involuntarily delivers the community to the old world and their machinations because

he declines to speak about the motives of his clients.....if they are just served...alright.....but if he takes sides with them rather then comforting himself in the position as our

unelected leader, lets get him knee holed :-)


P.S dear pirate.... don´t start drinking, not just yet:-)


When perpetrating a ponzi and dependent on exponentiell growing client participation, he should not close the BCST thread and run to IRC.......the thread was the main international

advertising site.   Yes bitcoin in and of itself is a ponzi which priate safed last autumn  singlefootedly and could have found a conduct that wants to funnel money into bitcoin universe...

its growing all over the world and the early adaptors reaping gains......seven percent weekly won´t be possible in all eternaty but much longer then the critics here believe ...its just

dependent of bitcoin reputation and conduct.......so just invent a coherent story for all the little investors that the operation can last a lifetime!!!....instead of fighting against ponzi

accusations......if not ,your clients or may it be yourself have yourself by your balls rather soon......and you will need to default (crashing Bitcoinquote) before  buying  back all coins you

owe your lenders!   or is the pot already big enough to collude with your passthroughs, take the money and run ?


Hoping on the clever- and faithfulness of the captain.....but seeing him secretly silent is a doubtful strategy to spark more interest and curioisity in bitcoin.....

Come on pirate even only 40.. you took on the ship..now stear it!!


Zyk

[drakahn]

specifically, your quote says "and usually does not take into account the effects of compounding. "

Last I checked usually != always. Clearly the above is not true in our case.

And yet, Clearly it should be... as 3300% is not going to happen and nowhere has it been claimed that it will be 7%/week with unlimited deposits for a year... compounding is not how it is meant to be (although reinvesting is allowed, that is not the same thing as it being compounding interest, just the same effect)

Ok fair enough, point to a week when the rate he paid wasn't 7% and when "reinvesting" wasn't allowed and you will prove I made a mistake.

IIRC it started out as 10%, I wish I had the coins back then, and the lower payments for lower accounts is also new I think, and then there are the changes to come in a few weeks...

And newer accounts have been (reportedly) deleted to make room for older accounts reinvesting.

We both have the same amount of evidence here (none) so... its kind of getting pointless

[hazek]

We both have the same amount of evidence here (none) so... its kind of getting pointless

I'm sorry, how is the last 7 or 8 months of him running his business a lack of evidence on my part as to what I should annualize his rate to?

[drakahn]

We both have the same amount of evidence here (none) so... its kind of getting pointless

I'm sorry, how is the last 7 or 8 months of him running his business a lack of evidence on my part as to what I should annualize his rate to?

well, as far as 'annualise' the deleted accounts and changed rules are there, but i was talking bigger picture, the ponzi/legit side of it

[hazek]

We both have the same amount of evidence here (none) so... its kind of getting pointless

I'm sorry, how is the last 7 or 8 months of him running his business a lack of evidence on my part as to what I should annualize his rate to?

well, as far as 'annualise' the deleted accounts and changed rules are there, but i was talking bigger picture, the ponzi/legit side of it

yeah me too, the annualized rate as per the evidence of the last 7 or 8 months suggests an abnormally high rate of return which is a serious red flag. I wouldn't call that nothing.

[organofcorti]

June 27, 2012, 10:51:06 PM
Quote from: zyk on June 27, 2012, 10:46:44 PM

... twenty pages of gibberish removed ...

Zyk

Weird post is weird.

And yet it contains many of the same weirdnesses it did last time he posted a similar rant: https://bitcointalk.org/index.php?topic=50822.msg994981#msg994981

Can't tell if it's pro or con pirate. Is "Lip quivering" a good thing or a bad thing?

[zyk]

June 27, 2012, 10:51:06 PM
Quote from: zyk on June 27, 2012, 10:46:44 PM

... twenty pages of gibberish removed ...

Zyk

Weird post is weird.

Afraid to see the bigger implications of ponzi schemes ? even afraid to read between the lines?

Then you better trust your social security trust fund than BCST....

weird really

[humanitee]

Zyk's next post:

World is ponzi

[Vladimir]

zyk, is it "Mavrody's school of ponzi" stance these days? Ohh banks runs the biggest ponzi scheme on the planet. It makes it ok to for us to plunder pensioners.

[zyk]

June 27, 2012, 10:51:06 PM
Quote from: zyk on June 27, 2012, 10:46:44 PM

... twenty pages of gibberish removed ...

Zyk

Weird post is weird.

And yet it contains many of the same weirdnesses it did last time he posted a similar rant: https://bitcointalk.org/index.php?topic=50822.msg994981#msg994981

Can't tell if it's pro or con pirate. Is "Lip quivering" a good thing or a bad thing?

Lip quivering is what the chairman is doing when he spreads FUD....never seen on 60 minutes?

do you live in a world of right and wrong of good and evil?...need somebody to tell you what to think?  then really my posts ar from  outerspace:-)

[Bitcoin Oz]

Its a bad thing for one entity to control the majority of any market so I choose to sit this out. Only because it makes them a target imho.

[organofcorti]

June 27, 2012, 10:51:06 PM
Quote from: zyk on June 27, 2012, 10:46:44 PM

... twenty pages of gibberish removed ...

Zyk

Weird post is weird.

And yet it contains many of the same weirdnesses it did last time he posted a similar rant: https://bitcointalk.org/index.php?topic=50822.msg994981#msg994981

Can't tell if it's pro or con pirate. Is "Lip quivering" a good thing or a bad thing?

Lip quivering is what the chairman is doing when he spreads FUD....never seen on 60 minutes?

do you live in a world of right and wrong of good and evil?...need somebody to tell you what to think?  then really my posts ar from  outerspace:-)

Hey, I wasn't judging. It's just that we don't get many Dadaists in the speculation thread.

[humanitee]

LOL 

Thanks for that.

[zyk]

June 27, 2012, 10:51:06 PM
Quote from: zyk on June 27, 2012, 10:46:44 PM

... twenty pages of gibberish removed ...

Zyk

Weird post is weird.

Afraid to see the bigger implications of ponzi schemes ? even afraid to read between the lines?

Afraid to read something that vaguely looks like English from afar
but feels like it was translated from Uyghur by a machine once you
actually try to read it.
 

sorry, its a  german mind process delivered in typ(o)ing and no fast food small talk:-)


yep, your muslim for oil killing Us dollar imperial ponzi could be threatened, if pirate would only think in inventing the greater common purpose of his ponzi !

the old kleptocracy and power stucture can be made obsolete because as " he who controls the money supply of a nation need not to care about any rules"

whom you entrust your savings and pensions has the power over the collective and could grow pensions initially by 7 % weekly by taking the haircut to the unfunded ones.

what i speculate then is, that pirate is (if still not bought out) to decide when and how he takes sides, having to choose between his lenders and his clients

we should better try to collectively cover his back intellectually, before becoming screwed from the outside.

Hope that somebody understands

Zyk

[mem]

hedging against risk is much cheaper than 7% a week.

Speaking of:

Bitcoin Savings and Trust will default on or before July 31st, 2012.
 - http://betsofbitco.in/item?id=476

Bitcoin Savings and Trust will default before the end of 2012
 - http://betsofbitco.in/item?id=433

If the balance of that bet gets large enough I can see Pirate keeping the ponzi scheme alive (if they even are ponzi scheme) until after the bet date (and sinking a large chunk of btc on False).

[thezerg]

OP: As other posters have suggested, he would still need to acquire BTC on the market to pay it all back so offering 7% a week is a pretty high price for a little price stability.  So personally I think its a ponzi.  But to continue the OP's business model idea (which is interesting, regardless) what if his "exit" strategy is to pay everyone back (all at once) in fiat?  You could even put this in fine print in the loan contract "option to close out the loan at the Mt. Gox BTC/USD price + 2%" for example, and it would probably be mostly ignored as an unlikely CYA-type clause.  In this manner he could provide a large investor a significant amount of BTC (say at 8 USD) when a buy like that would drive the markets much higher.  So it would be sort of a ponzi in BTC backed by fiat.  Then just before going truly ponzi he could pay everybody back in fiat.  Of course, if all that fiat went straight back into BTC it would drive the price through the roof.  So the investor ends up accumulating a lot more BTC then would be possible on the open market.  So that's the purpose of the "loan" agreement (with a fiat clause in there it is actually a call option).

As long as the BTC price stays 7% below the baseline he can buy BTC back on the open market and keep going indefinitely.

The problem with this entire thing of course is the initial assumption: it presupposes the existence of some investor (or broker) who is too lazy to put buy orders in periodically.  You'd make a lot more $ that way... or more accurately if pirate IS that broker he's being paid too well for the effort involved.  And you'd expect to see dark buy orders on places like campBX.  And you could do it at a much lower interest rate.

[mp420]

Offering 7% interest PER ANNUM is extremely generous and, as such, more than slightly suspicious. When the interest is advertised per week it is a scam. Make no mistake.

[smoothie]

Compound interest is very simple guys.

Finally my endless posts today may be of value to some:

Rule of 72

If you have interest of N over some fixed period of time, divide 72 by N. This will give you amount of those fixed periods needed to double your money with compounding the interest.

For example, say, Pirate is paying 7.2% per week. 72/7.2 = 10. This means you should double your money every 10 weeks.

week 1  -  1000 BTC
week 10 -  2000 BTC
week 20 -  4000 BTC
week 30 -  8000 BTC
week 40 - 16000 BTC
week 50 - 32000 BTC

and more

week  60  -    64 000 BTC
week  70  -   128 000 BTC
week  80  -   256 000 BTC
week  90  -   512 000 BTC
week 100 - 1 024 000 BTC

week 110 -  2 048 000 BTC
week 120 -  4 096 000 BTC
week 130 -  8 192 000 BTC
week 140 - 16 384 000 BTC
week 150 - 32 768 000 BTC

Enjoy!

It takes only 3 years and you are the winner!

I thought that was funny in red. "the winner"

[Dalkore]

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices at low rates for the time being? Or it doesn't make any sense? What do you guys think?

Seems plausible and sound being that Bitcoins have a fixed and diminishing amount available.   

[R-]

I'm still curious how, in your scenario, Pirate could pay back his lenders without driving the price up and defeating his purpose. No sarcasm here, I'm really wondering.

Hm. paying people with other people's money.

[apetersson]

I'm still curious how, in your scenario, Pirate could pay back his lenders without driving the price up and defeating his purpose. No sarcasm here, I'm really wondering.

• Buying on the exchanges, when the price dips. That would explain some of the recent unusual stability.
• Also, buying on the OTC market to save on fees.
• Maybe he is also contacting Bit-Pay directly, they have the need to aquire USD from BTC and are interested in a stable Bitcoin Price. They were able to sell their BFL orders suspicously fast without the price taking a hit.
• he uses excess Bitcoins to manipulate markets downwards through askwalls in "safe" regions like 4-sigma above current price levels. they seem to work psychologically.

so these are all tasks an everyday millionaire would not like to micro-manage. he hires staff for that.

[finkleshnorts]

This has been nagging me...

Why wouldn't he tell us what he does? How many of us know millionaires willing to invest in bitcoin, especially those who pay in cash? It's not like somebody can just snatch that market right up.

[Raoul Duke]

This has been nagging me...

Why wouldn't he tell us what he does? How many of us know millionaires willing to invest in bitcoin, especially those who pay in cash? It's not like somebody can just snatch that market right up.

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

[R-]

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

Staff should have a neutral position on the subject. This board sends the wrong message at times. Of course they are entitled to their opinion, but staff represent the board, for the better or the worse.

[finkleshnorts]

This has been nagging me...

Why wouldn't he tell us what he does? How many of us know millionaires willing to invest in bitcoin, especially those who pay in cash? It's not like somebody can just snatch that market right up.

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

I don't understand what you are saying here, forgive me

[Raoul Duke]

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

Staff should have a neutral position on the subject. This board sends the wrong message at times.

What Staff? I'm me. I'm not the forum.
Also, it won't be a child like you to tell me what my position should be in any subject.

This has been nagging me...

Why wouldn't he tell us what he does? How many of us know millionaires willing to invest in bitcoin, especially those who pay in cash? It's not like somebody can just snatch that market right up.

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

I don't understand what you are saying here, forgive me

You don't understand that there are early adopters/miners who have more than 100k BTC they could spare and do the same as Pirate?

[R-]

Also, it won't be a child like you to
Children could take you seriously Psy if you could type properly without the help of google translate.

[finkleshnorts]

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

Staff should have a neutral position on the subject. This board sends the wrong message at times.

What Staff? I'm me. I'm not the forum.
Also, it won't be a child like you to tell me what my position should be in any subject.

This has been nagging me...

Why wouldn't he tell us what he does? How many of us know millionaires willing to invest in bitcoin, especially those who pay in cash? It's not like somebody can just snatch that market right up.

Because they don't need to be millionaires.
You'll find that an early adopter having 100k BTC to spare and start doing the same he's doing isn't that farfetched.

I don't understand what you are saying here, forgive me

You don't understand that there are early adopters/miners who have more than 100k BTC they could spare and do the same as Pirate?

That has nothing to do with what I originally said.

[Raoul Duke]

Also, it won't be a child like you to
Children could take you seriously Psy if you could type properly without the help of google translate.

Everybody would take you seriously if you weren't such a spoiled brat begging for attention.
I'm not your dad...

[R-]

Where the heck did this come from? "I'm not your dad..."

Also, thank the lord.

[R-]

Also, it won't be a child like you to
Children could take you seriously Psy if you could type properly without the help of google translate.

Everybody would take you seriously if you weren't such a spoiled brat begging for attention.
I'm not your dad...

Dear Daddy,

Please use the ignore button and stop feeding the trolls.  They give me scary dreams.

Love,

reeses

Hi reeses,
 I enjoy eating reeses peanut butter cups. Thank you for the love letter.

Love,
Satoshi

[kentrolla]

Here's my theory:  

Assuming pirate's operation is not a ponzi and he's not doing anything illegal, then he obviously wants the price of BTC to go down.

"I'd Gladly Pay You Tuesday for a Hamburger Today" - J. Wellington Wimpy

This famous quote is referring to the idea that people taking loans and paying interest are betting on the value of whatever they are borrowing to go down. In pirate's case he's betting on the value of BTC to go down.

Have you ever seen him say anything bullish? I see him talking about "risk management" saying that he is prepared for BTC to have no value in the future by using them in an analogy that refers to BTC as "pet rocks" here: https://bitcointalk.org/index.php?topic=82849.msg918162#msg918162

Even if pirate wasn't betting on the price going down initially, if he gets enough loans in BTC, (which he already has) he will have enough volume to corner the market and have enough influence on the price to MAKE it go down.

This really isn't a risky move for him because if somehow the price of BTC rises out of his control, (which i find unlikely because he clearly stopped the rally today) then his business model either turns into a ponzi (when the only income comes from new investors) and he can just take all the BTC and run. or if he decides to do this legally, he already has enough influence on the price of BTC that i think he can make enough fiat through market manipulation to pay back his investors still with a lot of profit for him.

His investors are basically lending him BTC to sell for fiat to drive the price down.

Assuming this is the case, if I were an investor I would withdrawal my coins before the price makes any movements up or down, because both scenarios are risky for you.

Don't get me wrong, there is still potential to earn money through investing in BS&T as long as you get out in time. But, i think its a bad bet and, in any case, i think it's a bad thing for Bitcoin to have people "Centralizing" where the Bitcoins are. This picture here: https://bitcointalk.org/index.php?topic=85687.msg1015662#msg1015662  clearly shows that the market is already backed up into a corner.

[Serge]

Pirate's selling at high premiums removes this supply (100-200k (?) BTC weekly) from the market at current rates, his clients won't be selling on the market at negative profit margin. Although it is in his best interest keeping or having price low, he's effectively extinguishes the available supply at any given rate, so at some point prices will have to move up due to limited supply availability especially if his own business demands increase. If his business is indeed legit and does what he claims it does - it has overall positive effect on the market as it steadily absorbs all low priced inventory.

[ErebusBat]

Pirate's selling at high premiums removes this supply (100-200k (?) BTC weekly) from the market at current rates, his clients won't be selling on the market at negative profit margin. Although it is in his best interest keeping or having price low, he's effectively extinguishes the available supply at any given rate, so at some point prices will have to move up due to limited supply availability especially if his own business demands increase. If his business is indeed legit and does what he claims it does - it has overall positive effect on the market as it steadily absorbs all low priced inventory.

Not to mention that once he is 'done' the price should skyrocket, making us all more money

[Vandroiy]

Uh... are we talking about 6-digit shorts here? While this is theoretically possible, it's insanely risky. BTC ask is illiquid. If nothing causes a price panic, the funds just get burned and that's that.

Sales to customers don't work either, at least not on this scale. 200k was Gox weekly volume the last two weeks. Nope, he cannot have bought back that much there, unless he is the only remaining buyer for the whole week.

[Francesco]

The funny part is that even if his activities were perfectly legit, it simply cannot work due to the nature of bitcoins.

Bitcoin offer is illiquid -not only this, it is limited by its very nature; and he states he converts his bitcoins to fiat. So he has to convert them back to pay his lenders -and the amount he would need to convert is by now enormous, and growing fast.
If he had to pay them all at once, the price would go over the roof quite quickly... so however big is the pile of USD he's sitting over, he would default on a bank run, as the fact itself that he repays pushes the prices up until it's impossible to repay.

Which rules out the possibility of an orderly shutdown... and so makes sure, since nothing can last forever, that when this all ends it will be with a default, at least partial. Even if he is really making the insane amount of profits (in USD) he is claiming he is!
Unless of course BTC price crashes really low... but ther's no sign this is ever gonna happen.

He cannot not be aware of this. So the fact that he seems certain of an orderly shutdown, which is objectively really unlikely, is another point in favour of the idea he's simply lying, and his activity is indeed a Ponzi.

[proudhon]

The funny part is that even if his activities were perfectly legit, it simply cannot work due to the nature of bitcoins.

Bitcoin offer is illiquid -not only this, it is limited by its very nature; and he states he converts his bitcoins to fiat. So he has to convert them back to pay his lenders -and the amount he would need to convert is by now enormous, and growing fast.
If he had to pay them all at once, the price would go over the roof quite quickly... so however big is the pile of USD he's sitting over, he would default on a bank run, as the fact itself that he repays pushes the prices up until it's impossible to repay.

Which rules out the possibility of an orderly shutdown... and so makes sure, since nothing can last forever, that when this all ends it will be with a default, at least partial. Even if he is really making the insane amount of profits (in USD) he is claiming he is!
Unless of course BTC price crashes really low... but ther's no sign this is ever gonna happen.

He cannot not be aware of this. So the fact that he seems certain of an orderly shutdown, which is objectively really unlikely, is another point in favour of the idea he's simply lying, and his activity is indeed a Ponzi.

[riX]

Tldrifyed: An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore. He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneeded is of course in the grey zone, but that's why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka. Mr A, with the aforementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses. P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilize the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.

[organofcorti]

Tldrifyed:
An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore.

He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneded is of course in the grey zone, but thats why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka.

Mr A, with the abovementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses.

P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilise the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.

Semi-FTFY. You can do the typos.

[hazek]

Tldrifyed: An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore. He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneeded is of course in the grey zone, but that's why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka. Mr A, with the aforementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses. P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilize the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.

This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

[Raoul Duke]

Tldrifyed: An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore. He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneeded is of course in the grey zone, but that's why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka. Mr A, with the aforementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses. P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilize the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.

This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

What part of PHYSICAL CASH didn't you understand, dumbfuck?

[riX]

This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

From the outside it looks like Mr A sold bitcoins to Mr P. If authorities ask, Mr A says he mined them. Borrowing a lot of btc enables you to create your own btc tumbler, efficient enough that a blockchain analysis never holds up in court. Early adopters might have some coin unused since they were mined, check out the blockchain for interesting stuff..

[hazek]

This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

From the outside it looks like Mr A sold bitcoins to Mr P. If authorities ask, Mr A says he mined them. Borrowing a lot of btc enables you to create your own btc tumbler, efficient enough that a blockchain analysis never holds up in court. Early adopters might have some coin unused since they were mined, check out the blockchain for interesting stuff..

And what is Mr P going to tell the authorities about where he got the 90% he used to "buy" the bitcoins from Mr A?

[riX]

That he sold bitcoins. Just claim they were mined two years ago.
Of course, everything depends on blockchain analysis not holding up in court.

[jwzguy]

For a 7 page thread there's remarkably little in the way of actual theorizing. Ponzi's hack at this point...no need to keep repeating it.

Maybe he's helping migrant workers move cash back home safely.

[mp420]

Reality check:

A stranger says to you: "If you lend me money, I can pay back in double, in three and a half months' time." He doesn't quite tell you how he's going to achieve this. Do you trust him?

This is exactly what's happening.

In a ponzi scheme, he's not even lying, if the scheme is succesful. He doesn't have any incentive to stop paying out interest and the withdrawals of principal as long as the grand total of his funds keeps on growing. As soon as the growth dies out, though, if he's at all smart, he's going to vanish with all the money.

Some of the earliest investors may have turned profit at that point, if they've been smart enough to not reinvest. Everyone else loses.

[btcprophet]

A stranger says to you: "If you lend me money, I can pay back in double, in three and a half months' time." He doesn't quite tell you how he's going to achieve this. Do you trust him?

Also, he calls himself a pirate. There certainly is a sucker born every minute and I guess in a way Mr Pirate deserves his plunder.

[dlasher]

Theory:
-- considers BTC as a consumable item?
-- prefers cash to purchase BTC?
-- enjoys anonymity?
-- is legal?

He takes cash for BTC at (some magic percentage >7%) above the market price, uses the cash to buy more coin, takes his percentage, rinse and repeat. He needs the coin (BTCS&T/GPUMAX) so he has enough coins on hand to fulfill demand, then buys via gox/dark/etc to renew the coin pool.

Perhaps bitcoin-only gambling operations?

RE: Who Pirate is, where he is, etc:

In 5 minutes of focused Googling, you can find a trail of 3 people.. You could call them "The Idea", "Zee Code", and "Money", or T, Z, and M for short.

[scomil]

Instead of trying to second guess whatever Pirate is doing in order to justify the interest rates that he offers, lets assume that he is running a ponzi (most likely the correct assumption). How much damage will the unraveling of this cause? The last thing the Bitcoin community needs at this point is for another blow up, this time from a massive ponzi-scheme, undermining confidence once again.

[Vladimir]

The most plausible explanation I see of some people announcing "huge dump" and then dumping large amount of BTC to the marked at bid is eve-like "lottery" where someone is playing with borrowed money that was never intended to be paid back.

IF pirate converts borrowed BTC into USD, now it is all the more difficult to covert it back to pay those "dividends", if not why the hell to try to sell then?

And one final question? How does it feel to sell so much BTC 1$ below market price just to get some more popularity points among already captive audience.

[mp420]

If Pirate wasn't running a ponzi scheme, he definitely would try to grow his net wealth by repaying the high-interest debts with all the profit he'd be getting from his extremely profitable enterprise. Come on, every repayment of principal would earn him 7% per week.

Actually. If I had a business idea that would (in medium term) generate 10% per week ROI for up to (say) one million dollar investment, I would borrow the money from somewhere other than the bitcoin community. I'm a pretty poor chap but I figure I'd get at least $150,000 loan from my bank at less than 5% fixed annual rate. (I have a small property I could put up as collateral). If that wasn't enough for an initial investment, I'd have to shop around a bit or maybe find a business partner with more liquidity on hand.

[Technomage]

I don't think that it comes as a surprise to almost anyone if pirate's operation turns out to be a ponzi. Each and every person investing in his operations should keep in mind that the money might vanish any day. Any investor who is not completely fine with losing everything deserves to lose every penny.

[mem]

I don't think that it comes as a surprise to almost anyone if pirate's operation turns out to be a ponzi. Each and every person investing in his operations should keep in mind that the money might vanish any day. Any investor who is not completely fine with losing everything deserves to lose every penny.

Investing with pirate is like investing with bitcoinica, except pirate has a higher interest rate. 
Likely hood of getting your money back is about the same

[Raoul Duke]

I don't think that it comes as a surprise to almost anyone if pirate's operation turns out to be a ponzi. Each and every person investing in his operations should keep in mind that the money might vanish any day. Any investor who is not completely fine with losing everything deserves to lose every penny.

Investing with pirate is like investing with bitcoinica, except pirate has a higher interest rate. 
Likely hood of getting your money back is about the same

We were still missing the neighborhood looney here. Welcome, Lunatic!

[jgarzik]

Outside of popular forum theories like ponzi, my current favorite guess is gambling-related lending or trading -- bitcoins for pokerstars or whatnot.  Depending on the US state (hello, Nevada), it might be legal or at least a grey area, rather than obviously illegal.

[thezerg]

I think that that's the best legal, not-a-scam theory.  He's basically offering a line of BTC credit "hard money" in the unlikely event that the house loses.  Because the slippage would be huge to acquire it on the open market to cover a loss.  A bigger reserve in the vault allows the gambling houses to cover bigger bets or more simultaneous players (in fact there are laws defining these amounts in physical gambling locations).  If the house loses pirate pays out but then has an entire month to buy back on the open market.  Or more likely, the house simply stops converting their advantage (collected in BTC) to USD for a while and so little if anything needs to be done on the open market.  If gambling houses are backing any loans drawn with USD, that would explain why pirateat40 wants price stability. 

The kicker is that he could actually sell the SAME BTC reserve to multiple houses, so long as there is an automatic (instantaneous) way to inform every house about changes in his ability to cover.  This would mean that in theory he could offer a lower rate to each house then their own cost to hoard BTC.  The only problem with this entire theory is this service really worth 1% or even .1% per day?  Probably not.  And why not use his own $ or USD loans?  The only possibility there is that he's got every USD line of credit he can find fully tapped but the BTC gambling market growth is faster then his ability to borrow USD.

[Rygon]

Someone running a very large bitcoin ponzi is IMO unavoidable,
due to the very nature of the bitcoin ecosystem:

      - pseudo anonymity
      - valuable super liquid commodity
      - a herd of financially clueless btc holders

I disagree here. A lot of people are attracted to Bitcoin because they understand the financial system well and see the potential in a decentralized currency. It's still a very small community, and requires a certain level of financial and technical knowledge to even get through the front door. Grandma isn't getting fooled by a Bitcoin Ponzi scheme because she can't figure out what Bitcoin is, much less how to put all of her savings in it.

You are right about Ponzi schemes being unavoidable. But is really such a bad thing? Sure it's gambling, but it's even more exciting than a slot machine or playing the lottery. Just look at all the forum threads here, and the emotions and energy. It's exciting! No matter how it all plays out, people will be talking about it for years, I'm sure of that.

[notme]

Someone running a very large bitcoin ponzi is IMO unavoidable,
due to the very nature of the bitcoin ecosystem:

      - pseudo anonymity
      - valuable super liquid commodity
      - a herd of financially clueless btc holders

I disagree here. A lot of people are attracted to Bitcoin because they understand the financial system well and see the potential in a decentralized currency. It's still a very small community, and requires a certain level of financial and technical knowledge to even get through the front door. Grandma isn't getting fooled by a Bitcoin Ponzi scheme because she can't figure out what Bitcoin is, much less how to put all of her savings in it.

Knowledgeable != Clueful

Head on to the speculation sub-forum for an endlessly renewed proof.

We're already on the speculation sub-forum.

[notme]

Someone running a very large bitcoin ponzi is IMO unavoidable,
due to the very nature of the bitcoin ecosystem:

      - pseudo anonymity
      - valuable super liquid commodity
      - a herd of financially clueless btc holders

I disagree here. A lot of people are attracted to Bitcoin because they understand the financial system well and see the potential in a decentralized currency. It's still a very small community, and requires a certain level of financial and technical knowledge to even get through the front door. Grandma isn't getting fooled by a Bitcoin Ponzi scheme because she can't figure out what Bitcoin is, much less how to put all of her savings in it.

Knowledgeable != Clueful

Head on to the speculation sub-forum for an endlessly renewed proof.

We're already on the speculation sub-forum.

See what I mean ?

If I say no, I prove your point about cluelessness and am wrong.

If I say yes, I disprove your point about cluelessness and am wrong.

Maybe .

Also, I'm no longer entertained by all this pirate FUD.  Now it's boring.  Anyway, carry on.

[Raize]

It is either money laundering (for Sinaloa or Zetas cartels most likely) or it's a Ponzi.

If it's money laundering, this is how it is happening:


I think I'd be willing to pay 1 BTC to see someone take this flow chart and make it more suitable for a magazine or info-graphic. PM me if you  would be willing to do this.

[hazek]

It is either money laundering (for Sinaloa or Zetas cartels most likely) or it's a Ponzi.

If it's money laundering, this is how it is happening:


I think I'd be willing to pay 1 BTC to see someone take this flow chart and make it more suitable for a magazine or info-graphic. PM me if you  would be willing to do this.

Likely problems with the above scheme:
1. can money launderers just move money into Bitcoin via monitored bank accounts and not hurt those who receive this money i.e. pirate?
2. can miners satisfy his demand for clean coins given the huge amounts he gets with BS&T plus the cartel coins that need to be washed
3. can you really fool the dwolla and gox with "smurf" accounts given their strict verification processes?
4. do you just hope the exchange rate doesn't fall for when you need to sell bitcoins in order to return USD to "underbosses"


So your theory is he either runs this highly complicated scheme which needs to work perfectly or he is running a simple HYIP ponzi scheme? Yeah... I'll go with ponzi.

[ArticMine]

It is either money laundering (for Sinaloa or Zetas cartels most likely) or it's a Ponzi.

If it's money laundering, this is how it is happening:


I think I'd be willing to pay 1 BTC to see someone take this flow chart and make it more suitable for a magazine or info-graphic. PM me if you  would be willing to do this.

Let me get this straight. pirateat40 is alleged to be laundering money to the tune of $18 - $39 billion a year using a currency that has a total capitalization of $85 million? I do not think so. www.nytimes.com/2012/06/17/magazine/how-a-mexican-drug-cartel-makes-its-billions.html

[bulanula]

It is either money laundering (for Sinaloa or Zetas cartels most likely) or it's a Ponzi.

If it's money laundering, this is how it is happening:


I think I'd be willing to pay 1 BTC to see someone take this flow chart and make it more suitable for a magazine or info-graphic. PM me if you  would be willing to do this.

Let me get this straight. pirateat40 is alleged to be laundering money to the tune of $18 - $39 billion a year using a currency that has a total capitalization of $85 million? I do not think so.

Guys, forget Occam because he did not have a clue what he was talking about.

Raize has it all figured out ! GPUMAX leased work is getting fewer and fewer so this theory does not seem likely.

Also, the man himself said GPUMAX is not involved and he does not do ML.

Respect

[Raize]

Hazek, all three of your first three questions basically come down to saying: "Really?" So my answer is "Yes". You're responsible for verifying these things yourself, I thought I gave sufficient enough information that one could easily verify such a thing is possible, and probable given how well it would work.

1. can money launderers just move money into Bitcoin via monitored bank accounts and not hurt those who receive this money i.e. pirate?

Yes, authorities track money, but it's almost always moved again before they can close accounts if they choose to do so. In these cases, it could be cartels and their families using family accounts and even possibly legitimate business accounts that they think/know the authorities are monitoring (but not closing) Keep in mind, when you have $1-2 billion in cash lining the walls of your home as an underboss, you're certainly paying that DEA agent who gets crappy pay to tell you which of your bank accounts are being watched or about to.

As to the rest of your question about who they hurt, uhh, the chart explains how they don't know or cannot prove it is him. By the time it gets to Pirate, it's all online and all Bitcoin. He doesn't even have to know they are cartels or that they are specifically laundering, which he claims is often the case. But I bet they've asked him specifically for clean/mined coin. The few times people receive payments from BS&T is the *only* time he has to clean the money via a third party, the rest of the time he can operate it like a huge ponzi, when the ponzi explodes, he can give all the whales uncleaned coin and forgo the external "cleaning" service costs. It's possible that service doesn't exist and he just uses his own mixer of some sort anyway, or maybe even simply dumps the coins in Silk Road and then extracts them right back out.

2. can miners satisfy his demand for clean coins given the huge amounts he gets with BS&T plus the cartel coins that need to be washed

This question shows you've never had an account at GPUMax. Yes, there were often more miners wanting to mine than people wanting mining work done anymore.

It has dried up especially in the last few weeks as a VERY RECENT thing, and it is as a result of people thinking BS&T is a scam. Because there's no new money, it doesn't get moved into GPUMax. Surprise surprise, the chart looks even more legitimate. I think that if Pirate is laundering for a cartel, yes, he is presently having a very difficult time doing so right now because of the dry spell in loans, no wonder he's so distraught about it, it's hurting his ability to make money.

3. can you really fool the dwolla and gox with "smurf" accounts given their strict verification processes?

You haven't learned about money laundering apparently. The answer is yes, the justification is: you don't know what a smurf is or why launders would use them. Smurfing isn't trying to fool anybody, it's entirely legitimate and above board, Dwolla has no regulatory authority, and if they want to make money, they aren't going to care.

4. do you just hope the exchange rate doesn't fall for when you need to sell bitcoin in order to return USD to "underbosses"?

This is probably the most relevant question you asked, because yes, volatility would hurt Pirate's business. Especially with what is happening now, it makes it more difficult to smurf with a rising Bitcoin price, but your mined coin is certainly more valuable. Doesn't mean it's not happening, though. Also, no underboss is going to be happy if he gives you $2 million to move and you give him back only $750,000. They'd be far more willing to attempt to launder using their own crappy businesses if they knew the returns were so horrible.

If I were advising them, I'd recommend maybe throwing money into some of these Bitcoin-based businesses or GLBSE in general, that way they actually get to start having ownership in something.

Keep in mind, I'm just saying this is how I would be cleaning coin if I were Pirate. I'm saying he's doing this, but I do have reason to believe he could, and such a service would be invaluable. Ultimately, I still think it's just a regular old Ponzi, but his very first message indicating why he set up GPUMax was because he said he was approached by a group of shady people that needed clean coin. He's since went back and deleted some of those posts. I think it behooves us to consider the fact he may have been telling the truth back then.

to the tune of $18 - $39 billion a year

Hold your horses, ArticMine, I made NO such claim. They could easily launder via the traditional method too. But Bitcoin absolutely can be used to launder a few million every couple weeks.

[556j]

You don't even understand money laundering. After you cash out a bitcoin and have the USD in your hand is when the laundering comes into play, your whole chart is useless before that for the purpose of laundering drug money. Bitcoin is useful to separate a crime from the currency but not to launder it.

[hazek]

You don't even understand money laundering. After you cash out a bitcoin and have the USD in your hand is when the laundering comes into play, your whole chart is useless before that for the purpose of laundering drug money. Bitcoin is useful to separate a crime from the currency but not to launder it.

Well not really because as far as I know no one is going to ask you where you got your bitcoins.. so once you sell them those USD are "legitimate" because you can show where you got them.

[notme]

You don't even understand money laundering. After you cash out a bitcoin and have the USD in your hand is when the laundering comes into play, your whole chart is useless before that for the purpose of laundering drug money. Bitcoin is useful to separate a crime from the currency but not to launder it.

Well not really because as far as I know no one is going to ask you where you got your bitcoins.. so once you sell them those USD are "legitimate" because you can show where you got them.

Why wouldn't they ask you where you got the bitcoins?

[hazek]

Why wouldn't they ask you where you got the bitcoins?

What answer could they possibly reject as legitimate to such a question?

[notme]

Why wouldn't they ask you where you got the bitcoins?

What answer could they possibly reject as legitimate to such a question?

They could reject mining if you can't prove you've had the hardware to do it.  They could reject trading if you can't provide the records of such trades.

What answer could you give that would stop their investigation cold?

[556j]

teller: sir we noticed $100,000 USD deposit and need to know where it came from and how you earned it along with accompanied tax documents
launder: oh that, I made that selling bitcoins on MtGox
teller: on ok then, carry on.

Nice dream... it would work on very small amounts or a one time thing, but this guy was saying "couple mil a week" and pirates operation is paying out what $600,000+ a month in interest now? Yah, this is not happening.


The whole chart is made with the flawed idea that the currency itself is what's "dirty" and somehow needs to be changed for "clean" currency. But that would only be the case in something like ransom, extortion or similar. For laundering drug money, all that cash came from individual customers from all over the world so no way it's being traced. The whole purpose of laundering drug money is to prove it was earned (and taxed) legitimately, which is not explained at all in said chart.

[notme]

teller: sir we noticed $100,000 USD deposit and need to know where it came from and how you earned it along with accompanied tax documents
launder: oh that, I made that selling bitcoins on MtGox
teller: on ok then, carry on.

Nice dream... it would work on very small amounts or a one time thing, but this guy was saying "couple mil a week" and pirates operation is paying out what $600,000+ a month in interest now? Yah, this is not happening.


The whole chart is made with the flawed idea that the currency itself is what's "dirty" and somehow needs to be changed for "clean" currency. But that would only be the case in something like ransom, extortion or similar. For laundering drug money, all that cash came from individual customers from all over the world so no way it's being traced. The whole purpose of laundering drug money is to prove it was earned (and taxed) legitimately, which is not explained at all in said chart.

Exactly.

[Mageant]

So here is my guess:

Pirate was approached by "big players" that they want to invest USD in Bitcoin, but without moving the market.

They are committed to buy whatever amount he offers them, as long as the price stays low.

Pirate needs Bitcoins for two reasons:
1 - he sells them for a defined rate to the big players most likely at a high premium
2 - he uses bitcoins at strategic moments when the rate goes too high to create askwalls to push the price down gently. hopefully for him he does not actually sell them.

then he uses his USD to cover his expenses to pay the interest

their hope may be to aquire a significant amount of bitcoins without overpaying. and doing it that way it may actually work.

So my guess is, as long as the bitcoin rate stays relatively low his lending scheme will go on. once the price reaches his pain point (maybe 10 USD/BTC) he will start to unwind the loans and maybe even repay the lenders (or keep all the precious bitcoins himself). in my theory it could very well end with a drastic bitcoin rate increase which could spark another mania.

is this a possibility? is there any evidence which falsifies this theory?

The numbers don't add up.

If we assume Pirate has about 300k BTC in deposits now, then if we add up the BTC that Pirate would have sold to these "big players" over the last half year or so (remember, the entire amount of deposits get sold to these people *each week*), we would get about 5 million sold to these people.

That would be half of all available BTC. That doesn't seem credible if you look at the number of BTC addresses holding Bitcoins. Also a lot of the addresses haven't moved/have remained unchanged for longer than half a year.

[notme]

So here is my guess:

Pirate was approached by "big players" that they want to invest USD in Bitcoin, but without moving the market.

They are committed to buy whatever amount he offers them, as long as the price stays low.

Pirate needs Bitcoins for two reasons:
1 - he sells them for a defined rate to the big players most likely at a high premium
2 - he uses bitcoins at strategic moments when the rate goes too high to create askwalls to push the price down gently. hopefully for him he does not actually sell them.

then he uses his USD to cover his expenses to pay the interest

their hope may be to aquire a significant amount of bitcoins without overpaying. and doing it that way it may actually work.

So my guess is, as long as the bitcoin rate stays relatively low his lending scheme will go on. once the price reaches his pain point (maybe 10 USD/BTC) he will start to unwind the loans and maybe even repay the lenders (or keep all the precious bitcoins himself). in my theory it could very well end with a drastic bitcoin rate increase which could spark another mania.

is this a possibility? is there any evidence which falsifies this theory?

The numbers don't add up.

If we assume Pirate has about 300k BTC in deposits now, then if we add up the BTC that Pirate would have sold to these "big players" over the last half year or so (remember, the entire amount of deposits get sold to these people *each week*), we would get about 5 million sold to these people.

That would be half of all available BTC. That doesn't seem credible if you look at the number of BTC addresses holding Bitcoins. Also a lot of the addresses haven't moved/have remained unchanged for longer than half a year.

Why make the assumption in bold?  Couldn't he just as easily charge 20%.  He could justify it since bitcoin is so wildly volatile.  Also, who's to say the buyers aren't spending any of their coins?

[smoothie]

The mere fact that there is so much discussion on what pirate is or isn't doing just shows me that he has gotten what he wanted....you guessing and speculating. Thus he can more likely predict the sentiment of the overall forum and make moves based on that.

Perhaps we should stop talking about him and focus on getting bitcoin noticed by more businesses and people...more mainstream.

This is what will make bitcoin successful, not whether or not Pirate is running a ponzi or not. Worse things have happened already and bitcoin is alive and well..

[notme]

The mere fact that there is so much discussion on what pirate is or isn't doing just shows me that he has gotten what he wanted....you guessing and speculating. Thus he can more likely predict the sentiment of the overall forum and make moves based on that.

Perhaps we should stop talking about him and focus on getting bitcoin noticed by more businesses and people...more mainstream.

This is what will make bitcoin successful, not whether or not Pirate is running a ponzi or not. Worse things have happened already and bitcoin is alive and well..

+21000000

[finkleshnorts]

The mere fact that there is so much discussion on what pirate is or isn't doing just shows me that he has gotten what he wanted....you guessing and speculating. Thus he can more likely predict the sentiment of the overall forum and make moves based on that.

Perhaps we should stop talking about him and focus on getting bitcoin noticed by more businesses and people...more mainstream.

This is what will make bitcoin successful, not whether or not Pirate is running a ponzi or not. Worse things have happened already and bitcoin is alive and well..

Great quote.

[ArticMine]

...

to the tune of $18 - $39 billion a year

Hold your horses, ArticMine, I made NO such claim. They could easily launder via the traditional method too. But Bitcoin absolutely can be used to launder a few million every couple weeks.

First lets do some math here:

BTC per block 50 BTC
Blocks per hour 6.17
Hours is a day 24
Days in a month 31 (I will be generous here)
BTC mined in a month total 50x6.17x24x31 = 229524 BTC

Now for the exchange rate. I will be generous and take say 1 BTC = 10 USD. We have not reached this recently but we could soon. This gives me 2295240 USD a month in the USD value of all the freshly mined  BTC. Now according to your flow chart the mined Bitcoin is the source of clean cash for our "major drug cartel"?

So my questions are:
1) A few million every couple of weeks in which currency?
2) What percentage of the BTC network hashrate does pirateat40 control in order to clean a "few million" of said currency every two weeks?

Seriously if one wants to make a money laundering theory behind what pirateat40 is doing it can be a plausible theory (It is not however my theory at this point); however it would have to be on behalf some very small player, not some major drug cartel. The numbers otherwise simply do not add up.

[mccorvic]

The mere fact that there is so much discussion on what pirate is or isn't doing just shows me that he has gotten what he wanted....you guessing and speculating. Thus he can more likely predict the sentiment of the overall forum and make moves based on that.

Perhaps we should stop talking about him and focus on getting bitcoin noticed by more businesses and people...more mainstream.

This is what will make bitcoin successful, not whether or not Pirate is running a ponzi or not. Worse things have happened already and bitcoin is alive and well..

This this this this +1000

[ArticMine]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

[smoothie]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

[Vladimir]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

lol, indeed appears as a valid "squeeeze the pirate" strategy. Withdraw all from pirate, list for sale at 10.12345$ (or better yet in cold storage for a decade).

[ArticMine]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

lol, indeed appears as a valid "squeeeze the pirate" strategy. Withdraw all from pirate, list for sale at 10.12345$ (or better yet in cold storage for a decade).

I very much doubt 10.12345 USD will break pirateat40. The rest can work. Taking delivery is one sure way to push a short to the wall.

[smoothie]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

lol, indeed appears as a valid "squeeeze the pirate" strategy. Withdraw all from pirate, list for sale at 10.12345$ (or better yet in cold storage for a decade).

I very much doubt 10.12345 USD will break pirateat40. The rest can work. Taking delivery is one sure way to push a short to the wall.

Change the $10 amount to X where X is much above the most recent price action. This will fix your doubts.

[adamstgBit]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

lol, indeed appears as a valid "squeeeze the pirate" strategy. Withdraw all from pirate, list for sale at 10.12345$ (or better yet in cold storage for a decade).

I very much doubt 10.12345 USD will break pirateat40. The rest can work. Taking delivery is one sure way to push a short to the wall.

a bank run on pirate's bank would defiantly break him ATM

he would need to convert his usd into bitcoin to satisfy everyone's bitcoin requests

and since the recent rise in bitcoin value, and the fact the he needs to buy more to could easily push us over 12-15$

and maybe he wouldn't be able to afford to buy back EVERYONE's bitcoin at this time

his only hope ATM is that everyone stick with him and hope he can once again use the huge funds to make profit and recover...

[ArticMine]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

lol, indeed appears as a valid "squeeeze the pirate" strategy. Withdraw all from pirate, list for sale at 10.12345$ (or better yet in cold storage for a decade).

I very much doubt 10.12345 USD will break pirateat40. The rest can work. Taking delivery is one sure way to push a short to the wall.

a bank run on pirate's bank would defiantly break him ATM

he would need to convert his usd into bitcoin to satisfy everyone's bitcoin requests

and since the recent rise in bitcoin value, and the fact the he needs to buy more to could easily push us over 12-15$

and maybe he wouldn't be able to afford to buy back EVERYONE's bitcoin at this time

his only hope ATM is that everyone stick with him and hope he can once again use the huge funds to make profit and recover...

In a bull market yes. pirateat40 can be very much at risk. In a bear market no. In fact in a bear market his profits go up. One must keep in mind that a lot of his reputation was built with regular payments during a bear market or a least a market that was stable or rising very slowly.

[Raize]

A couple of things regarding the chart:
1. I still think it is more likely a Ponzi, I only made the chart to show how it could be done as a legitimate but still not legal investment scheme, because the issue was brought up. The two particular Bitcoin-based businesses that Pirate chose to implement very well could work hand-in-hand towards these ends, but it does not mean they *do* work to these ends.

2. I am not making the claim this is a couple million per week, I'm saying it could be a few million every couple of weeks. MtGox alone handled 11.5 million in the last 30 days. At least a handful of estimates stated BS&T handled ~300k coins. These are reasonable estimates based on other's estimates, I'm not manufacturing anything new with regards to the amount of money that could be cleaned via this manner.

3. The title of this thread contains the direction of the discussion, the chart is relevant towards such discussion. Giving pirate the right or wrong kind of attention is irrelevant to the chart.

4. Nearly everyone that has responded saying it is impossible he is doing this does not understand smurfing. Smurfing is exactly why no one ever asks any questions, and a compromise at this level is how a launder will eventually be "caught". Some recent smurfing methods don't even have the smurf know what they are doing, many of them think they are handling financial accounts for online "work-at-home" companies, you've no doubt seen these reports in the media. More info is here: http://money.howstuffworks.com/money-laundering2.htm

5. It doesn't have to be a huge cartel, but it could be, these guys have millions lying around accumulating, and they've tried real world laundering methods that do not work. They could easily try something Bitcoin-based and not be worse off, but yes, they would very much want more and more business, and it would explain why pirate was absolutely livid when people accused him of a Ponzi. Less interest in BS&T means less profit. But that said, it could just as easily be a Bitcoin hacker or hacking group laundering through him.

6. Many of the people complaining the most about MtGox->Dwolla delays seem to be miners, maybe some traders. Some mine at GPU Max, others do not. This is worth noting. The more recent the coin, the more scrutiny I would give to it being immediately sold on Mt Gox if I worked in law enforcement. I would especially be watching people who are withdrawing money from MtGox that have absolutely no technical or economic background at all if I thought this was an elaborate money-laundering scheme. And yes, a laundering scheme *has* to be at least somewhat elaborate, because if it isn't, it won't be profitable.

I just want to end on a final note where I again reiterate I don't necessarily think any money laundering is being done, but if I was asked to provide "clean" coin, this is exactly how I would have developed my system.

[adamstgBit]

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

[Serge]

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

genius

[smoothie]

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

If I had the money I would do the same. I would buy slowly over time.

[adamstgBit]

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

If I had the money I would do the same. I would buy slowly over time.

and you get someone with 500,000BTC on hand. and make a deal to have him help keep the price down with huge ask walls, as you buy slowly

it makes perfect sense, think about whats been happening on the market
some how the market was tricked into dumping 30,000coins at 6.55 ~200,000$

https://bitcointalk.org/index.php?topic=85687.msg966751#msg966751
the same huge buy small price bump has been happening for 2 months

the price actually dropped after that buy.
https://bitcointalk.org/index.php?topic=85687.msg970293#msg970293  <- 1 day after the big 6.55 bid wall gets sold into

look at the quot for that picture

"My wall was sold out? Oh, lets jut put another."

[adamstgBit]

they supported the market at 5$

they saw they had bought enough coins at 5$ so that if they hold them the market slowly rises

they Pump the price over 6$, and get huge wall after huge wall sold into

the market moves up, Huge ask walls are put in place to drive the price down again.

they Buy as much coins as they can at the lowest price they can push it down too

they are in it for the long term, and are playing smart

they won.

[Serge]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

[ArticMine]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

But why borrow 250000 BTC at 7% per week in order to do this?

[adamstgBit]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

But why borrow 250000 BTC at 7% per week in order to do this?

who borrowed 250000 BTC ?

[smoothie]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

But why borrow 250000 BTC at 7% per week in order to do this?

who borrowed 250000 BTC ?

I wanna borrow 250k btc!

[ArticMine]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

But why borrow 250000 BTC at 7% per week in order to do this?

who borrowed 250000 BTC ?

Is not 7% per week that pirateat40 is paying? As for the 250000 BTC that is approximately what it would take to drive the price down on MtGox to 1.80 USD to 1 BTC.

<proudhon> pirateat40, could you stop another "rally" if one were to ignite right now and buy up above $10?
<pirateat40> proudhon, i could take use to 1.80 if i needed to.

[adamstgBit]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

But why borrow 250000 BTC at 7% per week in order to do this?

who borrowed 250000 BTC ?

Is not 7% per week that pirateat40 is paying? As for the 250000 BTC that is approximately what it would take to drive the price down on MtGox to 1.80 USD to 1 BTC.

<proudhon> pirateat40, could you stop another "rally" if one were to ignite right now and buy up above $10?
<pirateat40> proudhon, i could take use to 1.80 if i needed to.

he needs all these coins to put put huge ask walls / sell some, when he needs the price to go down

[adamstgBit]

bitcoin broke a record yesterday

Most Volume in Currency in a 6 hour time frame

[CoinCidental]

It is a legitimate topic of discussion for the speculation board because if pirateat40 does get caught up in a short squeeze, he is a big enough player that it will have an impact on the price at least in the short term.

Here is a helpful tip:

1. Withdraw your money and profits with him (if you have any with him) ASAP.

2. Don't sell below $10 in the short term.

Here is another view on things  :

1. Move all your disposable cash to pirates 7.2% deal

2. Enjoy the interest rates while they last ,every 4 months  you double your outcome

3. If you are worried pirate will default ,withdraw the interest every week and invest it in something safer until you have 100 % of your stake back (then your only gambling with money
 you made from pirates "program " anyway )

If the wheels fall off ,pirate may return your coins or he may steal them but show me some deal that has no risk attatched and similarly enormous weekly  payouts  ? didnt think so.....

[ArticMine]

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.

But why borrow 250000 BTC at 7% per week in order to do this?

who borrowed 250000 BTC ?

Is not 7% per week that pirateat40 is paying? As for the 250000 BTC that is approximately what it would take to drive the price down on MtGox to 1.80 USD to 1 BTC.

<proudhon> pirateat40, could you stop another "rally" if one were to ignite right now and buy up above $10?
<pirateat40> proudhon, i could take use to 1.80 if i needed to.

he needs all these coins to put put huge ask walls / sell some, when he needs the price to go down

This is very true, but only for the last 7 months. Why? What changed in the market?

Let me explain: pirateat40 is fundamentally a bear. He has however built a business that involves selling BTC to his clients who are bulls. In order to run his business he needs an inventory of BTC estimated from more than one source to be say 250000 BTC. Now like any business he needs to finance his inventory. He has two choices:
1) Borrow USD
2) Borrow BTC
(1) is cheap; however he runs the risk of a sudden drop in the BTC price leaving him with a warehouse full of worthless BTC and 2.5 million USD in debt. Let us remember we are dealing with a bear here. So instead he chooses option (2) and pays a premium rate of 7% a week to borrow BTC. He has now effectively hedged his downward risk. If the price of BTC were to drop to zero tomorrow he can repay his lenders in the now worthless BTC together with the 7% per week interest also denominated in BTC.

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory. Now in a bull market is where the situation starts to get interesting. I suspect he can tolerate a small rise in the market, but not a sharp sudden rise so he has to use ask walls in order to moderate a rise in the market and apparently has been doing this quite well for the last 7 months. There is a serious risk here. A long term well capitalized investor who does not mind paying a small premium say 10% - 15% over market comes is out of the blue and buys out his ask wall. Now he is effectively short not only the BTC sold to the client but also the BTC from the now sold ask wall in a rising market. This is when the fun and the real risk of a short squeeze starts.

There is no need here for a ponzi or any kind of money laundering to explain this theory.

By the way I have deduced all of this from pirateat40's own comments, the comments of both his supporters and detractors and correlating these comments with the historical market behavior, as part of my own due diligence on Bitcoin.

[Cluster2k]

Here is another view on things  :

1. Move all your disposable cash to pirates 7.2% deal

2. Enjoy the interest rates while they last ,every 4 months  you double your outcome

3. If you are worried pirate will default ,withdraw the interest every week and invest it in something safer until you have 100 % of your stake back (then your only gambling with money
 you made from pirates "program " anyway )

If the wheels fall off ,pirate may return your coins or he may steal them but show me some deal that has no risk attatched and similarly enormous weekly  payouts  ? didnt think so.....

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

[conspirosphere.tk]

2. Enjoy the interest rates while they last ,every 4 months  you double your outcome

If you compound, you double the investment in 10 weeks (if you are lucky).
http://en.wikipedia.org/wiki/Rule_of_72

[CoinCidental]

Here is another view on things  :

1. Move all your disposable cash to pirates 7.2% deal

2. Enjoy the interest rates while they last ,every 4 months  you double your outcome

3. If you are worried pirate will default ,withdraw the interest every week and invest it in something safer until you have 100 % of your stake back (then your only gambling with money
 you made from pirates "program " anyway )

If the wheels fall off ,pirate may return your coins or he may steal them but show me some deal that has no risk attatched and similarly enormous weekly  payouts  ? didnt think so.....

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

[Serge]

This is very true, but only for the last 7 months. Why? What changed in the market?

Let me explain: pirateat40 is fundamentally a bear. He has however built a business that involves selling BTC to his clients who are bulls. In order to run his business he needs an inventory of BTC estimated from more than one source to be say 250000 BTC. Now like any business he needs to finance his inventory. He has two choices:
1) Borrow USD
2) Borrow BTC
(1) is cheap; however he runs the risk of a sudden drop in the BTC price leaving him with a warehouse full of worthless BTC and 2.5 million USD in debt. Let us remember we are dealing with a bear here. So instead he chooses option (2) and pays a premium rate of 7% a week to borrow BTC. He has now effectively hedged his downward risk. If the price of BTC were to drop to zero tomorrow he can repay his lenders in the now worthless BTC together with the 7% per week interest also denominated in BTC.

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory. Now in a bull market is where the situation starts to get interesting. I suspect he can tolerate a small rise in the market, but not a sharp sudden rise so he has to use ask walls in order to moderate a rise in the market and apparently has been doing this quite well for the last 7 months. There is a serious risk here. A long term well capitalized investor who does not mind paying a small premium say 10% - 15% over market comes is out of the blue and buys out his ask wall. Now he is effectively short not only the BTC sold to the client but also the BTC from the now sold ask wall in a rising market. This is when the fun and the real risk of a short squeeze starts.

There is no need here for a ponzi or any kind of money laundering to explain this theory.

By the way I have deduced all of this from pirateat40's own comments, the comments of both his supporters and detractors and correlating these comments with the historical market behavior, as part of my own due diligence on Bitcoin.

Very plausible explanation how it could be done without it being a ponzi.

[Cluster2k]

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

If history is any guide then one of three things is likely to happen:

1) Interest decreases to a sustainable level as the market adjusts and reacts to the trader with all the coins.  This is the best case scenario.

2) The market moves against the trader in a way the trader didn't anticipate, realising a large loss of customer bitcoins.  Not everyone can be paid out.

3) The trader disappears / gets hacked / whatever and the customers lose their bitcoins.

If it sounds too good to be true, it probably is.  It's not really different this time.  It's not a new paradigm where all the old rules no longer apply.

Watching the market action with interest.

[smoothie]

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

If history is any guide then one of three things is likely to happen:

1) Interest decreases to a sustainable level as the market adjusts and reacts to the trader with all the coins.  This is the best case scenario.

2) The market moves against the trader in a way the trader didn't anticipate, realising a large loss of customer bitcoins.  Not everyone can be paid out.

3) The trader disappears / gets hacked / whatever and the customers lose their bitcoins.

If it sounds too good to be true, it probably is.  It's not really different this time.  It's not a new paradigm where all the old rules no longer apply.

Watching the market action with interest.

+1

Pirates operation will have to end sooner rather than later. Just like Vladimir said once...you could in fact get all the bitcoins (21million) in three years with just starting with...i think it was 1000BTC and compound that for 3 years at 7.5%....

yeah yeah yeah his interest rate will go down soon...and will likely go down again 1, 2, or 3 months after that again.

[Mageant]

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

If history is any guide then one of three things is likely to happen:

1) Interest decreases to a sustainable level as the market adjusts and reacts to the trader with all the coins.  This is the best case scenario.

2) The market moves against the trader in a way the trader didn't anticipate, realising a large loss of customer bitcoins.  Not everyone can be paid out.

3) The trader disappears / gets hacked / whatever and the customers lose their bitcoins.

If it sounds too good to be true, it probably is.  It's not really different this time.  It's not a new paradigm where all the old rules no longer apply.

Watching the market action with interest.

+1

Pirates operation will have to end sooner rather than later. Just like Vladimir said once...you could in fact get all the bitcoins (21million) in three years with just starting with...i think it was 1000BTC and compound that for 3 years at 7.5%....

yeah yeah yeah his interest rate will go down soon...and will likely go down again 1, 2, or 3 months after that again.

Another possibility is that he stops accepting new deposits and pays out all interest. Then he can go on indefinitely.

[CoinCidental]

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

If history is any guide then one of three things is likely to happen:

1) Interest decreases to a sustainable level as the market adjusts and reacts to the trader with all the coins.  This is the best case scenario.

2) The market moves against the trader in a way the trader didn't anticipate, realising a large loss of customer bitcoins.  Not everyone can be paid out.

3) The trader disappears / gets hacked / whatever and the customers lose their bitcoins.

If it sounds too good to be true, it probably is.  It's not really different this time.  It's not a new paradigm where all the old rules no longer apply.

Watching the market action with interest.

+1

Pirates operation will have to end sooner rather than later. Just like Vladimir said once...you could in fact get all the bitcoins (21million) in three years with just starting with...i think it was 1000BTC and compound that for 3 years at 7.5%....

yeah yeah yeah his interest rate will go down soon...and will likely go down again 1, 2, or 3 months after that again.

Another possibility is that he stops accepting new deposits and pays out all interest. Then he can go on indefinitely.

I dont know if i follow this correctly .........
everyone gets bought out of the pyramid with their stake  + interest  but pirate stays in alone to reap further benefits  ?

[Vladimir]

[lots of BS skipped]
 He has now effectively hedged his downward risk.
[lots of BS skipped]

This is a new kind of hedge. Let's now borrow at 3000% APR to hedge some insignificant risk. This is some genius hedging here, lets pay 3000$ to remove risk of losing 100$ Right! Here is a simpler option, get idiots greedy brainless "investors" to give you BTC, sell half on open market, keep fiat, pay the rest back to those greedy brainless "investors" in weekly instalments  until there is no money left.

Now look, no need to waste a few pages to explain some convoluted unworkable and completely pointless scheme. Just one-two sentences and it is all simple and clear.

[Vladimir]

I have neither money nor desire nor need to make any bets. All "bets" I wanted to make are made already (long before most of you heard of Bitcoin for the first time).

[hazek]

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

I'm sorry to be this blunt but your theory is down right stupid.

Not only is he borrowing BTC that could be on an exchange sitting in an ask wall, suppressing the price but he is borrowing to pay back interest at a rate of double what he borrowed in just 10 weeks. So not only is there less supply available for exchange then there could be otherwise but there's even more demand because he needs to buy BTC to pay interest.

And now under these circumstances you think that his tiny little wall of 30kBTC is going to stop the price from rising? Is that why we went from $5 to $9.2 in the last month and a half? Is this him being successful?? 


Please, give it a rest already, whether money laundering or buying in at a certain price NO THEORY MAKES SENSE ANYMORE GIVEN THE RECENT PRICE CHANGE.

[CoinCidental]

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

And now under these circumstances you think that his tiny little wall of 30kBTC is going to stop the price from rising?

how do we know exactly how many coins he has to manipulate the market/force trends and make walls  ? I would imagine its waaay higher than 30k btc

[hazek]

Nice of you to cut out the most important part of my post, but just so that we can keep the context of my post you quoted I'll post it again.

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

I'm sorry to be this blunt but your theory is down right stupid.

Not only is he borrowing BTC that could be on an exchange sitting in an ask wall, suppressing the price but he is borrowing to pay back interest at a rate of double what he borrowed in just 10 weeks. So not only is there less supply available for exchange then there could be otherwise but there's even more demand because he needs to buy BTC to pay interest.

And now under these circumstances you think that his tiny little wall of 30kBTC is going to stop the price from rising? Is that why we went from $5 to $9.2 in the last month and a half? Is this him being successful??  


Please, give it a rest already, whether money laundering or buying in at a certain price NO THEORY MAKES SENSE ANYMORE GIVEN THE RECENT PRICE CHANGE.

As for your question, I think it's pretty simple: have you ever seen a bigger ask wall that could possibly be his? Remember that the theory says that he doesn't actually sell these coins, just display them as a threat in order to suppress the price.

[CoinCidental]

Nice of you to cut out the most important part of my post, but just so that we can keep the context of my post you quoted I'll post it again.

I have a new theory!

Pirate is allowing ovr X million dollars of new money to enter the market below 10$ ( by keeping the price down as much as possible as he buys over 1 million coins )

once he's done his investors (wtv you wana cal them) will simply hold on to over 1million coins and watch the market naturally rise to over 50$ each!

I'm sorry to be this blunt but your theory is down right stupid.

Not only is he borrowing BTC that could be on an exchange sitting in an ask wall, suppressing the price but he is borrowing to pay back interest at a rate of double what he borrowed in just 10 weeks. So not only is there less supply available for exchange then there could be otherwise but there's even more demand because he needs to buy BTC to pay interest.

And now under these circumstances you think that his tiny little wall of 30kBTC is going to stop the price from rising? Is that why we went from $5 to $9.2 in the last month and a half? Is this him being successful??  


Please, give it a rest already, whether money laundering or buying in at a certain price NO THEORY MAKES SENSE ANYMORE GIVEN THE RECENT PRICE CHANGE.

As for your question, I think it's pretty simple: have you ever seen a bigger ask wall that could possibly be his? Remember that the theory says that he doesn't actually sell these coins, just display them as a threat in order to suppress the price.

the way i see it ,if you have the most of anything you can manipulate its market value
nobody knows how many coins pirate is effectively in control off so he could easily
create highs and lows to buy and sell at his own advantage (if he has shitloads of btc )

I dont have his accounts so i dont know but i know the money/btc  i get every week is real

the only thing i dont know is where its coming from /ponzi new investors /trading stock markets ,money laundering for drug cartels etc etc  or how long he can keep doing it

its interesting to watch anyway, but dont bet what you cant lose 

[Mageant]

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

If history is any guide then one of three things is likely to happen:

1) Interest decreases to a sustainable level as the market adjusts and reacts to the trader with all the coins.  This is the best case scenario.

2) The market moves against the trader in a way the trader didn't anticipate, realising a large loss of customer bitcoins.  Not everyone can be paid out.

3) The trader disappears / gets hacked / whatever and the customers lose their bitcoins.

If it sounds too good to be true, it probably is.  It's not really different this time.  It's not a new paradigm where all the old rules no longer apply.

Watching the market action with interest.

+1

Pirates operation will have to end sooner rather than later. Just like Vladimir said once...you could in fact get all the bitcoins (21million) in three years with just starting with...i think it was 1000BTC and compound that for 3 years at 7.5%....

yeah yeah yeah his interest rate will go down soon...and will likely go down again 1, 2, or 3 months after that again.

Another possibility is that he stops accepting new deposits and pays out all interest. Then he can go on indefinitely.

I dont know if i follow this correctly .........
everyone gets bought out of the pyramid with their stake  + interest  but pirate stays in alone to reap further benefits  ?

No, he just keeps the size of his deposits stable.

Let's say he has 300k BTC in deposits.  Then he just keeps that amount constant and pays out 18k BTC interest (or whatever) per month to the lenders.

The interest does not get reinvested *and* he doesn't accept any *new* deposits.

Then he can go on forever.

[mp420]

The reason I'm certain he's a scammer is that if he's the genius enterpreneur he's implying he is, he would not borrow bitcoins at 3000% annual rate but he'd get a loan in fiat from a bank with far less than 10% annual interest rate. Even if his business is not legitimate if he's as resourceful as he lets on, he can work around that and get the loan papers signed.

And voilà; he can keep all the insane returns. He borrows $1M and in a year he has $50M or more. (With $1M he could have bought at least 250kBTC. In retrospect, that would have been a succesful strategy even if he did not have any kind of business plan; by now he could have paid off all of the initial loan and still have $1M worth of bitcoins.)

[hazek]

Exactly, hardly any amount of risk is worth sacrificing 3300% per annum of profit as he claims he does by using other people's money as a hedge against risk.

[Vladimir]

As I said, paying 3000$ to mitigate some risk of loss of 100$ is just plain insane. Whoever thinks that this is a genius plan needs to think again.

[bulanula]

No way this is a ponzi guys.

He would not want to do anything illegal since his identity is public.

Oh wait ... "but Bitcoin".

Just hope GPUMAX coins won't be blacklisted or some other crap after this folds.

Carry on pirate !

[zyk]

what should fold then?

[ArticMine]

what should fold then?

A sharp rise in the BTC / USD price particularly if his ask walls are bought out and the price rise is driven by well capitalized long term investors as opposed to short term high risk speculators. This can set up pirateat40 for a brutal Bitcoin short squeeze.

[smoothie]

No way this is a ponzi guys.

He would not want to do anything illegal since his identity is public.

Oh wait ... "but Bitcoin".

Just hope GPUMAX coins won't be blacklisted or some other crap after this folds.

Carry on pirate !

And we should listen you because you have a scammer tag? LOL!

[sunnankar]

There is a serious risk here. A long term well capitalized investor who does not mind paying a small premium say 10% - 15% over market comes is out of the blue and buys out his ask wall. Now he is effectively short not only the BTC sold to the client but also the BTC from the now sold ask wall in a rising market. This is when the fun and the real risk of a short squeeze starts.

There is no need here for a ponzi or any kind of money laundering to explain this theory.

By the way I have deduced all of this from pirateat40's own comments, the comments of both his supporters and detractors and correlating these comments with the historical market behavior, as part of my own due diligence on Bitcoin.

Very plausible explanation how it could be done without it being a ponzi.

For those who did not see my 9 June 2012 post, when BTC was around $5.50, then I would recommend it in light of these two comments.

[jimbobway]

There is a serious risk here. A long term well capitalized investor who does not mind paying a small premium say 10% - 15% over market comes is out of the blue and buys out his ask wall. Now he is effectively short not only the BTC sold to the client but also the BTC from the now sold ask wall in a rising market. This is when the fun and the real risk of a short squeeze starts.

There is no need here for a ponzi or any kind of money laundering to explain this theory.

By the way I have deduced all of this from pirateat40's own comments, the comments of both his supporters and detractors and correlating these comments with the historical market behavior, as part of my own due diligence on Bitcoin.

Very plausible explanation how it could be done without it being a ponzi.

For those who did not see my 9 June 2012 post, when BTC was around $5.50, then I would recommend it in light of these two comments.

Thanks for pointing back to your posts.  But, can you connect the dots for us and tell us exactly what you think is going on?  I imagine you believe some HNWIs are investing in Bitcoin through a middleman you know.  And you are suggesting that perhaps this will take out pirate?

[sunnankar]

But, can you connect the dots for us and tell us exactly what you think is going on?

No.

[jimbobway]

Ok, so here some points based partially on ArticMine's theory.

- It is known that pirate is asking for more bitcoins for his fund.  Normally when things are going good you don't have to ask for more bitcoins.  So I will be assuming pirate did something wrong and needs more bitcoins to be profitable.

- ArticMine says pirate is going short.  So if pirate went short recently it means pirate sold some bitcoins and has mostly USD in reserve.  pirate wants the price of bitcoins to drop so he can rebuy more bitcoins (and repay his investors the weekly 7%).

- Since the price of bitcoin is stable, and did not drop as pirate expected it put pirate in a very uncomfortable position.  he may have to buy back the bitcoins at a loss resulting in a short squeeze.

- sunnakar chimed in and mentioned HNWIs.  If pirate has access to a lot of USD from HNWI then it is possible pirate could be slowly accumulating bitcoins.  If this is the case it is possible that pirate could still continue to be successful if bitcoin prices go up, and he would not be short squeezed.

[CoinCidental]

Ok, so here some points based partially on ArticMine's theory.

- It is known that pirate is asking for more bitcoins for his fund.  Normally when things are going good you don't have to ask for more bitcoins.  So I will be assuming pirate did something wrong and needs more bitcoins to be profitable.

- ArticMine says pirate is going short.  So if pirate went short recently it means pirate sold some bitcoins and has mostly USD in reserve.  pirate wants the price of bitcoins to drop so he can rebuy more bitcoins (and repay his investors the weekly 7%).

- Since the price of bitcoin is stable, and did not drop as pirate expected it put pirate in a very uncomfortable position.  he may have to buy back the bitcoins at a loss resulting in a short squeeze.

- sunnakar chimed in and mentioned HNWIs.  If pirate has access to a lot of USD from HNWI then it is possible pirate could be slowly accumulating bitcoins.  If this is the case it is possible that pirate could still continue to be successful if bitcoin prices go up, and he would not be short squeezed.

theres no way any sensible business person would leave himself open to a "short squeeze" while paying 3400% interest on investments

[notme]

Ok, so here some points based partially on ArticMine's theory.

- It is known that pirate is asking for more bitcoins for his fund.  Normally when things are going good you don't have to ask for more bitcoins.  So I will be assuming pirate did something wrong and needs more bitcoins to be profitable.

- ArticMine says pirate is going short.  So if pirate went short recently it means pirate sold some bitcoins and has mostly USD in reserve.  pirate wants the price of bitcoins to drop so he can rebuy more bitcoins (and repay his investors the weekly 7%).

- Since the price of bitcoin is stable, and did not drop as pirate expected it put pirate in a very uncomfortable position.  he may have to buy back the bitcoins at a loss resulting in a short squeeze.

- sunnakar chimed in and mentioned HNWIs.  If pirate has access to a lot of USD from HNWI then it is possible pirate could be slowly accumulating bitcoins.  If this is the case it is possible that pirate could still continue to be successful if bitcoin prices go up, and he would not be short squeezed.

theres no way any sensible business person would leave himself open to a "short squeeze" while paying 3400% interest on investments

But everybody's assuming he's a crook .

[BoardGameCoin]

theres no way any sensible business person would ... pay... 3400% interest on investments

(Although assuming he has a cap that he actively maintains and thus avoids compounding, the reality is more like 360% interest, but the point still stands, especially these days when you can get capital for < 3%)

[JoelKatz]

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory.

How does he generate 10% a week exactly? Sure, if you have some magic way to generate 10%/week, you can offer people 7%/week interest. But that's a mighty big if.

[smoothie]

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory.

How does he generate 10% a week exactly? Sure, if you have some magic way to generate 10%/week, you can offer people 7%/week interest. But that's a mighty big if.

Most businesses small and large don't even make 10% a week. Even the best investors of all time don't make returns consistently like that for years.

This house of cards will fall soon. Probably before December 31st, 2012 at 11:59:59pm.

[jimbobway]

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory.

How does he generate 10% a week exactly? Sure, if you have some magic way to generate 10%/week, you can offer people 7%/week interest. But that's a mighty big if.

It might be possible pirate made 100% already and he is just paying it out a little at a time at 7% a week.  If he bought at $4.5 and it goes to $9 then that's 100% profit.

[2_Thumbs_Up]

[lots of BS skipped]
 He has now effectively hedged his downward risk.
[lots of BS skipped]

This is a new kind of hedge. Let's now borrow at 3000% APR to hedge some insignificant risk. This is some genius hedging here, lets pay 3000$ to remove risk of losing 100$ Right! Here is a simpler option, get idiots greedy brainless "investors" to give you BTC, sell half on open market, pay the rest back to those greedy brainless "investors" in weekly instalments  until there is no money left.

Now look, no need to waste a few pages to explain some convoluted unworkable and completely pointless scheme. Just one-two sentences and it is all simple and clear.

Vlad should make a 5000 BTC bet if he really thinks this way

And a 150.000 BTC hedge on his bet.  

[notme]

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory.

How does he generate 10% a week exactly? Sure, if you have some magic way to generate 10%/week, you can offer people 7%/week interest. But that's a mighty big if.

It might be possible pirate made 100% already and he is just paying it out a little at a time at 7% a week.  If he bought at $4.5 and it goes to $9 then that's 100% profit.

Except his liabilities are in BTC, so to make 100% profit trading he would need to sell high and buy lower.  However, I don't believe that trading the volatility is the source of pirate's income.

[Francesco]

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory.

How does he generate 10% a week exactly? Sure, if you have some magic way to generate 10%/week, you can offer people 7%/week interest. But that's a mighty big if.

It might be possible pirate made 100% already and he is just paying it out a little at a time at 7% a week.  If he bought at $4.5 and it goes to $9 then that's 100% profit.

The fact that people can reason this way gives me a measure of how well a Ponzi can prosper. Doubling of price is a 50% LOSS for him for every Bitcoin  that he converted to fiat then, stop. But he’s smarter than this, and probably kept them all in his wallet ready to pay dividends at due time 

[JoelKatz]

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory.

How does he generate 10% a week exactly? Sure, if you have some magic way to generate 10%/week, you can offer people 7%/week interest. But that's a mighty big if.

It might be possible pirate made 100% already and he is just paying it out a little at a time at 7% a week.  If he bought at $4.5 and it goes to $9 then that's 100% profit.

If he could accomplish that miracle, it would sustain his business for about two months. Perhaps he could stretch that to three if he didn't take any new deposits.

[Timbo925]

Well after a couple of month I'm currently only risking my profit. So every week I take the interest out as pure profit.
So ponzi or not I'm a happy man 

[JoelKatz]

Well after a couple of month I'm currently only risking my profit. So every week I take the interest out as pure profit.
So ponzi or not I'm a happy man  

That is not true. You risk a lot more than that if you continue to intentionally receive fraudulent transfers of other people's money. Willful ignorance is not a defense.

http://utahsecuritiesfraud.com/2010/08/02/clawback-lawsuits-how-investing-in-a-ponzi-scheme-can-bite-you-twice/
http://newyork.cbslocal.com/2012/05/30/victims-of-li-ponzi-scheme-not-out-of-the-woods-yet/

CBS 2′s Lou Young spoke with Greg Ameo, who said that the trustee handling Cosmo’s collapsed investment firm is demanding even more money.

“Fifteen grand, and I lost over $160,000. I think I’m getting screwed twice, basically,” Ameo said.

The recent charges are part of a claw-back proceeding. Anybody who withdrew money from their accounts at Agape World, Cosmo’s Ponzi front, within 90 days of its collapse, can be ordered to pay it back. The claw-back even applies to money that was part of the original investment, officials said.

[ArticMine]

Here is a thought. From the information on this forum it is fair to say that pirateat40 is a US Person and that Income from Bitcoin Savings and Trust is subject to US Tax Withholding on Foreign Persons. http://www.irs.gov/businesses/small/international/article/0,,id=106981,00.html Bottom line the IRS will want its share of the 7% per week interest, and if the lenders have not filed that proper paperwork with pirateat40 and pirateat40 has not sent the appropriate withholding taxes to the IRS this can get real interesting.

[ArticMine]

Here is a thought. From the information on this forum it is fair to say that pirateat40 is a US Person and that Income from Bitcoin Savings and Trust is subject to US Tax Withholding on Foreign Persons. http://www.irs.gov/businesses/small/international/article/0,,id=106981,00.html Bottom line the IRS will want its share of the 7% per week interest, and if the lenders have not filed that proper paperwork with pirateat40 and pirateat40 has not sent the appropriate withholding taxes to the IRS this can get real interesting.

The deposits and interest are in Bitcoin. There is no tax code for Bitcoin.

I doubt very much that the IRS would take that point of view here, otherwise this sets a very dangerous precedent. Pay people in Bitcoin and legally avoid taxes. By the way barter transactions are taxable are they not?

[ArticMine]

Here is a thought. From the information on this forum it is fair to say that pirateat40 is a US Person and that Income from Bitcoin Savings and Trust is subject to US Tax Withholding on Foreign Persons. http://www.irs.gov/businesses/small/international/article/0,,id=106981,00.html Bottom line the IRS will want its share of the 7% per week interest, and if the lenders have not filed that proper paperwork with pirateat40 and pirateat40 has not sent the appropriate withholding taxes to the IRS this can get real interesting.

The deposits and interest are in Bitcoin. There is no tax code for Bitcoin.

I doubt very much that the IRS would take that point of view here, otherwise you set a very dangerous precedent. Pay people in Bitcoin and legally avoid taxes. By the way barter transactions are taxable are they not?

Yes, barter is taxable. The question becomes, when do you tax Bitcoin earnings? I would have to assume at the point of conversion to fiat, but I am not a CPA (and I doubt they know either).

Edit: Or possibly at the point of "possession". But I seriously doubt the IRS is capable of dealing with any Bitcoin related taxation at the present, and probably not for quite some time.

My understanding is the fair market value in USD at the time of the transaction. In this case when the interest is paid.  As for the IRS been able to deal with this, it may be as simple as an IRS agent typing "bitcoin exchange rate" into a search engine, getting the BTC / USD market rate from MtGox and assessing and auditing accordingly.

[ArticMine]

I suppose it also depends on whether Bitcoin is a currency or commodity. Apparently this has been discussed elsewhere, perhaps you could find pertinent information there.

I very much suspect this has little to do with whether Bitcoin is "currency", "virtual currency", "money", "a commodity", "stored value" etc., as the issue here is whether or not US withholding taxes were withheld and paid to the IRS on US source income to non US persons. In what form this income was paid may turn out to be moot. The potential liability can be up to 30% of all the interest paid by BST, with a valuation in USD based on the BTC / USD exchange rate at the time the interest was paid.

Why this is relevant for those of us that have no relationship with piratat40 or BST and in fact may not even live in the United States is that because of the size of BST relative to the Bitcoin economy, an IRS audit of pirateat40 and BST can have an impact on the BTC / USD exchange rate. How it will impact the BTC / USD exchange rate is not clear to me at all.

[dust]

http://www.corporationwiki.com/Unknown/Unknown/gpumax-technologies-llc/101278778.aspx
Zach Nakaska - Managing Member
Trendon Shavers - Managing Member
Michael Thalasinos - Managing Member
http://www.linkedin.com/pub/michael-thalasinos/54/a8/396
President/Owner
Jetpack Cayman
"February 2012 – Present (7 months) Grand Cayman"
Searching for "Jetpack Cayman" doesn't turn up much besides a 3 like facebook page and a few videos from a jetpack vendor

This is quite a suspicious place to start a business after launching service that resembles a money laundering scheme (GPUMAX) and one that resembles a ponzi (BTCS&T)

[cbeast]

It's probably investing in HYIP sites.

[dust]

It's probably investing in HYIP sites.

I doubt it.  Why operate a HYIP passthrough when you could be the HYIP yourself?

[Vandroiy]

It's probably investing in HYIP sites.

I doubt it.  Why operate a HYIP passthrough when you could be the HYIP yourself?

Yes. In addition, his paper volume is too large -- illiquid exchanges would hinder buying back from Fiat.

Also, for a pass-through to a larger HYIP, the starting phase with forced withdrawals and general growth limiting would make no sense. And he'd profit less.

It's direct.

[Otoh]

OK - it's Otoh time to speculate on what pirate is up to again:

He runs or facilitates a high stakes gambling op, every week he sells about 21,000 BTC as chips to the participants, ie atm about $248,000 which with a couple of dozen or less professional & high rollers doesn't seem at all unfeasible to me, these players can be based anywhere in the world but are most likely local just as he states, can be anon, no paper trails or tax issues, no needing to have $0.25M cash sitting around & needing private security plus risking confiscation, pirate arranges the exchange to BTC for each weekly session & manages the cash/deposit handling from each of the participants individually & also cashes out any BTC winnings that they may wish to make, note these sorts of games are usually played at weekends, happy pirate day is right after that on Mondays.

This also explains why other ppl can & apparently do offer similar services based in other parts of the world & are not in direct competition because they have their own pool of punters, maybe locally/culturally sourced.

He sells the chips/BTC for spot plus 10% + to cover his banking/facilitating/overheads etc & so a 7% per week pay out is np as long as the games continue, he doesn't want to borrow or use (LOL @) "not USD or any other random ponzi fiat funny money" (TY BurtW) which makes sense as perhaps some of these players may get rather upset if anything were to happen with that, but this way he can keep the risks down while still playing Wall Street II.

It's just another wild speculative guess at what this might be or partly be, I haven't even looked in to how this would pan out longer term than he's run it so far or with increasing BTC price, he says that the next 6 months are looking good I believe so I'll let you guys take it from here if you'd care to give any feedback on this - welcome from fans & detractors both.

BTW - I'm celebrating my first 100% of pirate returns last Monday, having started modestly on 1st March & now have been seriously participating for a while.

Actually I believe that it's much more likely to be closer to Serge's guess, wealthy Texan oil barons planning a letter day Hunt bros on BTC:

If pirate ends up running not a Ponzi but instead does what he says: selling BTC at high premium, Bitcoin could be taken for a nice ride within next few years.

All Ponzi speculation aside, we know this theory has a merit and high probability it may be one. Are there any other plausible explanations to pirate's operation with such great returns?

At first I couldn't imagine who would want to buy bitcoins at high premium and why. do you know?! Besides drug cartels, money laundry and some three letter agency questionable special covert ops funding?

What if there are smart and wealthy individuals who realized great potential of Bitcoin and decided to get in. Their target may be significant amount of bitcoins without driving exchange rate through the roof and they are ready to invest several million dollars. Although they could have gone through exchanges and probably buy bitcoins even at $10-20/BTC wouldn't it make sense to setup bitcoin lending operation and purchase at 10-15% premium all sub $10 bitcoins - given that they don't want to spend significant amounts of time on exchanges to acquire bitcoins at slow steady pace. They want to sign a check each week and get their bitcoins. Here comes the pirate and ready to sell at 10-15% premium. Pirate alone or conspiring with these individuals to keep bitcoin rate as sane prices (sub $10/BTC for instance) throughout their acquisition period. Bitcoin prices at $4-7 seem fair and pretty stable. Sub $4-3 prices - and everyone wants in so the rate isn't stable; over $8 and there is a risk of another bitcoin hype and explosion which could potentially get out of their control.
Once these individuals hit their target and complete acquisition they will start telling about Bitcoin to all their other wealthy buddies or simply start a new hype, or they don't even have to do anything if they have managed to acquire all available sub $10 bitcoins and the price will naturally start to rise (through the roof) to mid double or maybe even up to triple digits.

$5-6/BTC + 10-15%   better than over $10 BTC when purchasing, is it not?

Could this possibly work while providing great interest rates to lenders at the same time manipulating exchanges with great psychological walls to keep bitcoin prices as low rates for time being? Or it doesn't make any sense? What do you guys think?

Oh boy!!!  Someone is stepping close to treasure.  ATTACK!!!!!

Edit: I've now read the whole thread for the first time & also like ArticMine's theorem:

This is very true, but only for the last 7 months. Why? What changed in the market?

Let me explain: pirateat40 is fundamentally a bear. He has however built a business that involves selling BTC to his clients who are bulls. In order to run his business he needs an inventory of BTC estimated from more than one source to be say 250000 BTC. Now like any business he needs to finance his inventory. He has two choices:
1) Borrow USD
2) Borrow BTC
(1) is cheap; however he runs the risk of a sudden drop in the BTC price leaving him with a warehouse full of worthless BTC and 2.5 million USD in debt. Let us remember we are dealing with a bear here. So instead he chooses option (2) and pays a premium rate of 7% a week to borrow BTC. He has now effectively hedged his downward risk. If the price of BTC were to drop to zero tomorrow he can repay his lenders in the now worthless BTC together with the 7% per week interest also denominated in BTC.

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory. Now in a bull market is where the situation starts to get interesting. I suspect he can tolerate a small rise in the market, but not a sharp sudden rise so he has to use ask walls in order to moderate a rise in the market and apparently has been doing this quite well for the last 7 months. There is a serious risk here. A long term well capitalized investor who does not mind paying a small premium say 10% - 15% over market comes is out of the blue and buys out his ask wall. Now he is effectively short not only the BTC sold to the client but also the BTC from the now sold ask wall in a rising market. This is when the fun and the real risk of a short squeeze starts.

There is no need here for a ponzi or any kind of money laundering to explain this theory.

By the way I have deduced all of this from pirateat40's own comments, the comments of both his supporters and detractors and correlating these comments with the historical market behavior, as part of my own due diligence on Bitcoin.

Very plausible explanation how it could be done without it being a ponzi.

[mp420]

Makes zero sense. You suggest he's giving away money to those who would otherwise fall for scams.

Also, congrats to managing to be early adopter enough to actually profit from the scam. In case you're withdrawing your initial investment, of course.

[zyk]

Can´t one view the potential of bitcoin as the new world reserve currency ?

There is the precious truth which lies in the heart of any ponzi ( spoken by Amsel Mayer Rothschild himself( the old Frankfurt school of monatary theory tyranny) :-)

"Let me control the money supply of a nation and i don´t care about any law or rule". --  Because the "elected" cronies are all bought up.

In Bitcoinworld nobody even pretends to be elected, everybody should and is worshipping pirate cause he now controls the moneysupply and is at the helm

to decide when how and who is busted and who is been saved....everybody to the rows!! 7 % newbies a week in bitcoinland should be attainable for quite a while...

and after that coming down from 3600 % interest to 0.6 % yearly may take easily another 100 years before the best ponzi in town needs to bust...but by the there is still some quantitative easing invented to transfer in the blockchain.


Long live pirate....let us built him a memorial!!

Zyk

[markm]

Is it possible that having all this HYIP activity might be driving up the price of bitcoins?

I have long had the impression that being used for HYIPs can be quite effective promotion for an online currency, albeit as in e-gold's case it can also maybe have a downside eventually.

Could it be that Pirate, or the powers behind pirate, have a few million bitcoins, or maybe more than a few millions, and hit upon the idea of giving some of them away as "interest" as a way to increase interest in bitcoins and actually drive up the price of them as more and more people buy some in order to get in on these high "interest" rates?

I haven't checked all his exact terms; if I was free to pay back everyone at any moment and shut down cleanly thereby, and had a way to make over 7% a week, maybe it would be useful to borrow at 7%, make over 7%, taking my cut of the profit in fiat, then do so again next week rather than risk any of my own profit, safely stored as fiat, in the next week's operation? As soon as I hit a bad week I could shut down or decide I have enough reserves built up to risk another week...


-MarkM-

[Gyrsur]

i guess with his volume he is always sell high at peaks putting the price down and then buy back at a lower price, he will do it again and again. this approach push the price up for bitcoin which is not so bad at all.

[adamstgBit]

his would be dump, turned into a rally

pirate40 must be shitting bricks!

[rebuilder]

[ldrgn]

Is it possible that having all this HYIP activity might be driving up the price of bitcoins?

There's another thread about this exact same topic with a title along the lines of "The current bubble is a Pirate bubble."  Personally, I agree but I don't have anything to back it up other than speculation.

Could it be that Pirate, or the powers behind pirate, have a few million bitcoins, or maybe more than a few millions, and hit upon the idea of giving some of them away as "interest" as a way to increase interest in bitcoins and actually drive up the price of them as more and more people buy some in order to get in on these high "interest" rates?

This is a cool idea but it still doesn't beat just opening a business or investing in a business.  In the plan you've described he can come out ahead but only because the value of the BTC he didn't give away as interest increased.  If he started a BTC business not only would the BTC price go up from increasing the BTC economy but he'd be able to make back the BTC he gave away/invested.

make over 7%

I think I've found the flaw in your plan.  I'm not saying earning 7% a week is impossible but it's pretty hard.  You've still got to handle temporary swings in supply and demand.  Pirate's never (until yesterday!) fiddled with the interest rates to account for these short-term swings (something a legitimate business would have done often, probably every week or day).  Finally, his debt is denominated in Bitcoins and the price has doubled in the past three months.  That means he's got to bring in more and more new business just to pay the interest for a constant amount of customers.  His customer base hasn't been constant, though - it's been rapidly increasing.  No business can run with this terrible of an outlook so Pirate gets around those limitations by running a Ponzi.

[waspoza]

LOL this is just perfect. 

[Tomatocage]

Anybody know what happened to MtGox's dark pool book after it ceased operating? Gosh, I wonder.

[Bigpiggy01]

Or it could be that both moves were his to get him "the weekend off" by slowing everything down a bit

[smoothie]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

[aq]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

Great, now continue repeating it, until you start to believe it yourself

[zby]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

They are kind of preselected for that.

[Gyrsur]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

Great, now continue repeating it, until you start to believe it yourself

it did work for me. i now believe in it! 

[smoothie]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

Great, now continue repeating it, until you start to believe it yourself

LOL and why would I not believe it?

I have 0..i repeat...0 bitcoins with any PPT or other "scheme".

Can you say that same?

[cypherdoc]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

Great, now continue repeating it, until you start to believe it yourself

it did work for me. i now believe in it! 

here's that link you asked for back on some other thread:  https://bitcointalk.org/index.php?topic=68655.msg1078140#msg1078140

[Epinnoia]

I can guarantee however that not one coin of interest will be the result of any criminal activity.

That says quite a bit right there... 

[zvs]

i spent the $20.32 i had in gox on a market order with ask @ $7.75, commencing this dead cat bounce

[cbeast]

I will say this again:

All of these PPT's and interest earning "schemes" that are going on will likely not end pretty.

Someone will get burned and will lose big time in their bitcoin investment.

And the funny thing is people on this forum are so willing to send their bitcoins to said-operator of the "scheme" with no signed contract/paperwork.

Mark my words, someone will get burned.

They are kind of preselected for that.

All these get rich schemes and scams are causing me to drop some forum topics.

[candoo]

In god we trust!!

Hope to get back all my coins ASAP

[zyk]

In god we trust!!

Hope to get back all my coins ASAP

wasn´t it you who sold them already for 30 cents on the dollar to yup?

[drakahn]

In god we trust!!

Hope to get back all my coins ASAP

wasn´t it you who sold them already for 30 cents on the dollar to yup?

he is yup.

[zyk]

did the deal then take place or are they still owned by the one candoo or yup or whoever has paid them in?

mind to clarify please yup.candoo:-)

[ErebusBat]

He didn't sell to me as I made a ridicuilsly low offer; however if he thought that pirate wasn't going to payback then my 175 goxUSD was better than nothing.

I also suspect the legitimacy of the ss, but never got to the point to very of wi paybtc.

[ThePok]

i think Pirate pays back....after he bought all the btcst accounts for pennys on the dollar throu puppets after he generated even more panic under his "investors"

Its a bad but smart idea to get rich

[Vladimir]

i think Pirate pays back....after he bought all the btcst accounts for pennys on the dollar throu puppets after he generated even more panic under his "investors"

Its a bad but smart idea to get rich

Only until one or more "investors" lawyer up and/or press criminal charges.

[amgomez]

I do not know about pirate, but BTCTS passthrough at GLBSE has already defaulted:

https://bitcointalk.org/index.php?topic=82573.msg1120679#msg1120679

[thebaron]

i think Pirate pays back....after he bought all the btcst accounts for pennys on the dollar throu puppets after he generated even more panic under his "investors"

Its a bad but smart idea to get rich

Only until one or more "investors" lawyer up and/or press criminal charges.

Even if it's a scam, it was marketed as a loan (his post IS in the lending section, not securities: https://bitcointalk.org/index.php?topic=50822.0). You can't be charged criminally in the US for not repaying one.

So then, you have to sue whoever pirateat40 is. Can you prove who he is to a judge? Good luck with that.

[sadpandatech]

i think Pirate pays back....after he bought all the btcst accounts for pennys on the dollar throu puppets after he generated even more panic under his "investors"

Its a bad but smart idea to get rich

Only until one or more "investors" lawyer up and/or press criminal charges.

Even if it's a scam, it was marketed as a loan (his post IS in the lending section, not securities: https://bitcointalk.org/index.php?topic=50822.0). You can't be charged criminally in the US for not repaying one.

So then, you have to sue whoever pirateat40 is. Can you prove who he is to a judge? Good luck with that.

umm, i sure hope you're trolling.

The name alone proves your little idea wrong. Bitcoin Savings and Trust.. And Pirate directly has stated it as being a FUND from the onset of acquiring what you would wish to term as 'loans'.

[stick_theman]

Someone's buying from 9.5 to 10.  Sold at 15, and buy back in between 9.5 to 10.  I say, pirate is in for some profit (minus the interest payouts)... Maybe not a big one, but he surely is in for the lulz.

[anu]

Someone's buying from 9.5 to 10.  Sold at 15, and buy back in between 9.5 to 10.  I say, pirate is in for some profit (minus the interest payouts)... Maybe not a big one, but he surely is in for the lulz.

He did not sell at $15 because there wasn't nearly the depth for that.

[DeathAndTaxes]

Someone's buying from 9.5 to 10.  Sold at 15, and buy back in between 9.5 to 10.  I say, pirate is in for some profit (minus the interest payouts)... Maybe not a big one, but he surely is in for the lulz.

He did not sell at $15 because there wasn't nearly the depth for that.

Or more specifically he didn't sell a lot at $15.00.  Even if we assume he was the only one selling last Friday.  Only ~10K BTC changed hands above $14.00.  About double that above $13.00.  Hell even if you down to $11 only about 50K BTC changed hands.

[Vladimir]

Anyone can see charts and volume. Whoever was selling large amounts on that big dump at best got 12$ average. There is no way all the coins can be bought back  below that. Once the market senses the blood it will not let wounded player off the hook.

Huge tankers can not ride circles around small tug boats, it is just how it works. Huge players cannot sell big on open market and then buy big and stay in profit. They can only push profitably in one direction and move slow and steady.

That charts shows an irrational player panicking.

[Killerpotleaf]

Someone's buying from 9.5 to 10.  Sold at 15, and buy back in between 9.5 to 10.  I say, pirate is in for some profit (minus the interest payouts)... Maybe not a big one, but he surely is in for the lulz.

He did not sell at $15 because there wasn't nearly the depth for that.

Or more specifically he didn't sell a lot at $15.00.  Even if we assume he was the only one selling last Friday.  Only ~10K BTC changed hands above $14.00.  About double that above $13.00.  Hell even if you down to $11 only about 50K BTC changed hands.

it makes no sense, why wouldn't he of let the price go higher and higher, slowly selling off all the coins?
my guess is he was doing that from 9 to 15, at 15 he had to do Something to cause panic, so he dumped
now hes keeping the price below 10$ in the hopes that once he sold off most of the coins, the market naturally will go down.

hes going to sell all the coins, causing a bearish market for a few weeks, which could cause some panic selling too..
but his target of 7.50 is unreasonable and will never be reached.
no way in hell will the ask depth be their when he wants to buy back.

he ends up with $ profits not BTC

500,000$  < 50,000BTC, even if the price is 8$

Anyone can see charts and volume. Whoever was selling large amounts on that big dump at best got 12$ average. There is no way all the coins can be bought back  below that. Once the market senses the blood it will not let wounded player off the hook.

Huge tankers can not ride circles around small tug boats, it is just how it works. Huge players cannot sell big on open market and then buy big and stay in profit. They can only push profitably in one direction and move slow and steady.

That charts shows an irrational player panicking.

+21,000,000

[Killerpotleaf]

so...

pirate payed out a few people, and hasn't said anything for 2 days?

[bitcoinBull]

[Narydu]

I don't get it. I didn't bet on pirates fund but why do you think he is untraceable?? Obviously if he has any intention to move such amounts of money in mtgox his real name and contact data has been verified. If MtGox refused to share such data of an pbious scammer he would be a viewed as a needed partner for the scamm to take place!

[Littleshop]

so...

pirate payed out a few people, and hasn't said anything for 2 days?

who claims to have been paid? i call fud...

Just a few (between 1 and 11) bitcoinmax accounts.  The total is less then 700 BTC and all only a few of those 11 have been verified.  So far less then the assumed accumulated interest for one day. 

[Seal]

so...

pirate payed out a few people, and hasn't said anything for 2 days?

who claims to have been paid? i call fud...

Just a few (between 1 and 11) bitcoinmax accounts.  The total is less then 700 BTC and all only a few of those 11 have been verified.  So far less then the assumed accumulated interest for one day. 

Interesting. Links to claims would be awesome if you have them.

Maybe he's buying himself some time??

[Littleshop]

so...

pirate payed out a few people, and hasn't said anything for 2 days?

who claims to have been paid? i call fud...

Just a few (between 1 and 11) bitcoinmax accounts.  The total is less then 700 BTC and all only a few of those 11 have been verified.  So far less then the assumed accumulated interest for one day. 

Interesting. Links to claims would be awesome if you have them.

https://bitcointalk.org/index.php?topic=102107.0

Basically this only shows the IRC chat where pirate says he paid.  I think this is more a stunt to pump up the price of pirate debt since there is very little expedience of coin movement.

[hazek]

Allow me to just quickly point out how the outcome of this escapade so far seems to perfectly coincide with the predictions I and other like me, who used reason and evidence to evaluate BS&T and what pirateat40 is really doing, predicted.

But it's ok to make a mistake and fall for the fraud as long as you manage to learn something from it and not repeat the mistake.


Next time, please use reason and evidence(or lack thereof) in your evaluations or if you haven't learned how to do that, at least listen to people who do.

[thebaron]

Next time, please use reason and evidence(or lack thereof) in your evaluations or if you haven't learned how to do that, at least listen to people who do.

Education costs money sometimes.

[hazek]

Next time, please use reason and evidence(or lack thereof) in your evaluations or if you haven't learned how to do that, at least listen to people who do.

Education costs money sometimes.

Sometimes that's the only education that sticks.

[zyk]

so...

pirate payed out a few people, and hasn't said anything for 2 days?

who claims to have been paid? i call fud...

Just a few (between 1 and 11) bitcoinmax accounts.  The total is less then 700 BTC and all only a few of those 11 have been verified.  So far less then the assumed accumulated interest for one day. 

Interesting. Links to claims would be awesome if you have them.

Maybe he's buying himself some time??

That can be only smoke and mirorrs....he will never ever pay out a cent before bitlane is not assured to get his....so behind the scenes the colluding is already done ?

In any Ponzi the criminals  at the top divide the loot.....in a failed buiseness the remnants would be distributed evenly.

Cheers Zyk

[_mr_e]

so is it official yet? has anyone heard a peep from pirate since friday?

[bitcoinsydney]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

[JoelKatz]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

If that's true, there are two reasons he could be doing that.

1) He wants to make people think he's going to pay out.

2) He's trying to cover the fact that he's actually *selling* Pirate debt.

[MrTeal]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

If that's true, there are two reasons he could be doing that.

1) He wants to make people think he's going to pay out.

2) He's trying to cover the fact that he's actually *selling* Pirate debt.

If Pirate really was planning to run with everything, he could add a decent bonus to his earnings by starting to pay out some small accounts and then selling big "accounts" at a steep discount.

That being said, if Pirate really is going to pay everyone back, it would make sense for him to scoop up as much discounted debt as possible.

[odolvlobo]

I think that the 500,000 BTC that people claim he has is gone -- used to pay out the 7% per week interest -- and he has nothing left. If he actually earns nothing from the deposits, then all the money is gone in only 3 months.

[mrSprinkles]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

That wasn't the real pirateat40. That pirateat40 (and steamship) did not have the OP prefix (@) in front of their nick. In addition, both @pirateat40 and pirateat40 were in the channel at the same time. It's likely he used an invisible character or typo to change his name to pirateat40. He was also clearly a troll. Can't believe everything you see, and then take it at face value.

[boonies4u]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

That wasn't the real pirateat40. That pirateat40 (and steamship) did not have the OP prefix (@) in front of their nick. In addition, both @pirateat40 and pirateat40 were in the channel at the same time. It's likely he used an invisible character or typo to change his name to pirateat40. He was also clearly a troll. Can't believe everything you see, and then take it at face value.

Did you check the ident?

[CoinCidental]

[unclescrooge]

Thats the plan baby

[unclescrooge]

2) He's trying to cover the fact that he's actually *selling* Pirate debt.

I don't understand what you mean by selling his debt.

I can understand how he could buy it at a discount, which would equate to a partial discount. But selling it? Selling what?

[apetersson]

But selling it? Selling what?

One thing he can do now is create a new account in his DB assign a bazillion coins to it.
Then go here with a new sockpuppet account and state: "i want to get rid of this btcst account, someone buy it from me for 30%"

there he sold his own debt

[Grinder]

I don't understand what you mean by selling his debt.
I can understand how he could buy it at a discount, which would equate to a partial discount. But selling it? Selling what?

Lots of people are selling their pirate accounts at a discount. He probably has some fake accounts, and he could be selling them. That would also explain why he's still hanging around. If he didn't it would be pretty much impossible to sell them even at a discount.

[FreeMoney]

2) He's trying to cover the fact that he's actually *selling* Pirate debt.

I don't understand what you mean by selling his debt.

I can understand how he could buy it at a discount, which would equate to a partial discount. But selling it? Selling what?

Buying it would involve giving someone money.

Selling it would involve getting more money.

He's been selling Pirate IOUs all along. Maybe he's still selling them, I dunno. But he's not buying them, lol.

[interlagos]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

Steamship? Hmm... was Titanic a steamship?

[JoelKatz]

I don't understand what you mean by selling his debt.

I can understand how he could buy it at a discount, which would equate to a partial discount. But selling it? Selling what?

For the last several months, Pirate has likely been buying up Pirate debt. Why not? It's free for him. If he buys 1,000 BTC worth of Pirate debt, those 1,000 BTC just get deposited with him.

Now, Pirate debt is selling for around 50 cents on the dollar. Pirate knows that he's never going to pay his debt back. So he knows the debt is worthless. But he can sell that 1,000 BTC that he effectively paid nothing for and get an extra 500 BTC.

It makes *no* sense for him to buy Pirate debt. It costs him money. How would he get that money back? From himself?

But if he sells Pirate debt, he gets more of other people's money. And it perfectly explains why Pirate bought himself a week or two. This gives him lots of time to make more money by selling worthless debt.

[RoloTonyBrownTown]

Thou shalt henceforth be known as Conspiracy Katz.

[boonies4u]

I don't understand what you mean by selling his debt.

I can understand how he could buy it at a discount, which would equate to a partial discount. But selling it? Selling what?

For the last several months, Pirate has likely been buying up Pirate debt. Why not? It's free for him. If he buys 1,000 BTC worth of Pirate debt, those 1,000 BTC just get deposited with him.

Now, Pirate debt is selling for around 50 cents on the dollar. Pirate knows that he's never going to pay his debt back. So he knows the debt is worthless. But he can sell that 1,000 BTC that he effectively paid nothing for and get an extra 500 BTC.

It makes *no* sense for him to buy Pirate debt. It costs him money. How would he get that money back? From himself?

But if he sells Pirate debt, he gets more of other people's money. And it perfectly explains why Pirate bought himself a week or two. This gives him lots of time to make more money by selling worthless debt.

If he IS planning on paying back lenders, buying back pirate debt with sock accounts would make sense.

[DeathAndTaxes]

It makes *no* sense for him to buy Pirate debt. It costs him money. How would he get that money back? From himself?

Well that isn't exactly true.   

Person sells x BTC worth of debt.
Person creates uncertainty in the market and buys that debt back for y BTC.
Persons profits (x-y) BTC.

Not saying Pirate is doing that but there it isn't correct to say there is no sense in rebuying your own debt.

[imsaguy]

so is it official yet? has anyone heard a peep from pirate since friday?

He's been in and out of IRC changing names between pirateat40 and steamship. It's bizarre really. When he's "steamship" he's been offering to buy pirate debt at reduced rates. No idea if he's serious.

That wasn't the real pirateat40. That pirateat40 (and steamship) did not have the OP prefix (@) in front of their nick. In addition, both @pirateat40 and pirateat40 were in the channel at the same time. It's likely he used an invisible character or typo to change his name to pirateat40. He was also clearly a troll. Can't believe everything you see, and then take it at face value.

You need to learn more about irc.  There cannot be two people with the same nick on the network.  He didn't have @ because it can be given/taken away like nothing.  As to the sarcasm from steamship.. that's true.  Many of the comments from steamship are actually things that were said on the forums by others first, with steamship repeating them and then getting quoted on it back on the forums again. 

[Draino]

so, the super duper genius people who figured out what pirate does, maybe you can offer some insight

i don't understand why pirate wouldn't do forced withdrawals over time to wind things down, instead of continue the ponzi outline to a T

also, for someone who was so insistent on allowing immediate withdrawals, isn't it contradictory to suddenly hold everyone's coins hostage without notice?

[Spekulatius]

I think he is full of BS and will never pay back. Effect on price should be minimal till some serious amounts are payed back and verified.

[hazek]

I think he is full of BS and will never pay back. Effect on price should be minimal till some serious amounts are payed back and verified.

+1

[JoelKatz]

It makes *no* sense for him to buy Pirate debt. It costs him money. How would he get that money back? From himself?

Well that isn't exactly true.  

Person sells x BTC worth of ddebt.
Person creates uncertainty in the market and buys that debt back for y BTC.
Persons profits (x-y) BTC.

Not saying Pirate is doing that but there it isn't correct to say there is no sense in rebuying your own debt.

How is that better than this:

Pirate sells x BTC worth of direct debt.
Pirate profits x BTC.

Or this:

Before he defaults, Pirate buys x BTC of PPTs.
Pirate gets those x BTC back because they pass through.
Pirate defaults.
Pirate sells those x BTC of PPTs for y BTC.
Pirate profits y BTC.

Both of these scenarios are more profitable than yours and neither of these require Pirate to buy his own debt. Notice that they both require him to sell it.

[jimbobway]

It makes *no* sense for him to buy Pirate debt. It costs him money. How would he get that money back? From himself?

Well that isn't exactly true.  

Person sells x BTC worth of ddebt.
Person creates uncertainty in the market and buys that debt back for y BTC.
Persons profits (x-y) BTC.

Not saying Pirate is doing that but there it isn't correct to say there is no sense in rebuying your own debt.

How is that better than this:

Pirate sells x BTC worth of direct debt.
Pirate profits x BTC.

Or this:

Before he defaults, Pirate buys x BTC of PPTs.
Pirate gets those x BTC back because they pass through.
Pirate defaults.
Pirate sells those x BTC of PPTs for y BTC.
Pirate profits y BTC.

Both of these scenarios are more profitable than yours and neither of these require Pirate to buy his own debt. Notice that they both require him to sell it.

If you do accounting outside of the blockchain, you can "counterfeit" bitcoins sort of like fractional reserve banking.  But, if you perform a transaction through a bitcoin client and have it record on the blockchain, then is it really possible for pirate to do what you suggested?

[JoelKatz]

If you do accounting outside of the blockchain, you can "counterfeit" bitcoins sort of like fractional reserve banking.  But, if you perform a transaction through a bitcoin client and have it record on the blockchain, then is it really possible for pirate to do what you suggested?

Yes, absolutely. Pirate accounts were always outside the blockchain. PPTs were always outside the blockchain.

If I deposited 100 BTC with Pirate or used it to buy a PPT, that 100 BTC is still in circulation in the blockchain. In addition, there a 100 BTC Pirate debt and, if it was a PPT, a 100 BTC PPT obgliation. So if you use 100 BTC to buy a PPT, it becomes 300 BTC. (Assuming the PPT operator is honest, 100 BTC of that doesn't really count.)

[jimbobway]

If you do accounting outside of the blockchain, you can "counterfeit" bitcoins sort of like fractional reserve banking.  But, if you perform a transaction through a bitcoin client and have it record on the blockchain, then is it really possible for pirate to do what you suggested?

Yes, absolutely. Pirate accounts were always outside the blockchain. PPTs were always outside the blockchain.

If I deposited 100 BTC with Pirate or used it to buy a PPT, that 100 BTC is still in circulation in the blockchain. In addition, there a 100 BTC Pirate debt and, if it was a PPT, a 100 BTC PPT obgliation. So if you use 100 BTC to buy a PPT, it becomes 300 BTC. (Assuming the PPT operator is honest, 100 BTC of that doesn't really count.)

Pirate asked the PPT operators for their books so he could pay people directly (I think.)  So the PPT obligations could now be removed, and 100BTC to buy a PPT is now 200BTC (instead of the 300BTC.)  Would this be to pirates advantage?

[smoothie]

My theory (with more and more insurmountable evidence each passing minute):

Pirate was running a Ponzi scheme.

Initially everything went well early on. As it grew he couldn't not pay out every week 7% in order to safe face.

Most of the paid out interest was the bulk of other investor funds.

This is where I believe users like GigaVPS could afford 4 BFL 1TH/s mini rigs paid with bitcoin back in June.

Is it that hard to believe that he ran a ponzi?

 

[Raize]

I don't think he ran a straight up Ponzi, but in effect he though his "Forex skillz" were good enough to justify having only 1/5th of the S&T on hand. I also refuse to rule out money laundering for Silk Road. They needed large amounts of clean coin and they needed it for ~6 months. After they got it, they finally had a system in place to properly "clean" coin and no longer needed Pirate's service. This threw Pirate for a loop because he assumed they were going to mass-sell. When they didn't and he did, he realized he was holding large amounts of cash and the demand for Bitcoin was ever-increasing. The result, as the 1Dky address thread is proving, is that Silk Road's claim to have their own cleaning service is bunk now, we're on to their game and we'll be able to track which addresses are Silk Road deposit accounts in the future by watching which ones donate into the accounts that go into future 1Dky addresses.

[koin]

"Forex skillz" were good enough to justify having only 1/5th of the S&T

s&t?

no longer needed Pirate's service.
[...]

Silk Road's claim to have their own cleaning service is bunk now, we're on to their game and we'll be able to track which addresses are Silk Road deposit accounts in the future by watching which ones donate into the accounts that go into future 1Dky addresses.

confused here.  they no longer needed pirate because they have their own and then you say they don't have their own.  or

[dooglus]

s&t?

Savings and Trust?

[anu]

My theory (with more and more insurmountable evidence each passing minute):

Pirate was running a Ponzi scheme.

Initially everything went well early on. As it grew he couldn't not pay out every week 7% in order to safe face.

Na, investors re-invested all their earnings and the compounding interest exceeded BTC 21 Million. 

[smoothie]

I don't think he ran a straight up Ponzi, but in effect he though his "Forex skillz" were good enough to justify having only 1/5th of the S&T on hand. I also refuse to rule out money laundering for Silk Road. They needed large amounts of clean coin and they needed it for ~6 months. After they got it, they finally had a system in place to properly "clean" coin and no longer needed Pirate's service. This threw Pirate for a loop because he assumed they were going to mass-sell. When they didn't and he did, he realized he was holding large amounts of cash and the demand for Bitcoin was ever-increasing. The result, as the 1Dky address thread is proving, is that Silk Road's claim to have their own cleaning service is bunk now, we're on to their game and we'll be able to track which addresses are Silk Road deposit accounts in the future by watching which ones donate into the accounts that go into future 1Dky addresses.

Right pirate's "forex skillz" was to BUY HIGH AND SELL LOW.

Pirate is such a joke. His screen name should be PussyAt30.

[anu]

Pirate is such a joke. His screen name should be PussyAt30.

That name would at least explain how so many guys stopped thinking and rushed at it.

[RyNinDaCleM]

Pirate is such a joke. His screen name should be PussyAt30.

That name would at least explain how so many guys stopped thinking and rushed at it.

Hugulghuguh...Pussy...Doh!

[smoothie]

Pirate is such a joke. His screen name should be PussyAt30.

That name would at least explain how so many guys stopped thinking and rushed at it.

ROFL!!!! That's actually a really funny though. bwahahahaha

[JoelKatz]

Pirate asked the PPT operators for their books so he could pay people directly (I think.)

We have no idea why he asked for that information. I think the most likely scenario was that it was simply a stalling tactic. Since no payments were made even for PPT operators who complied, it's unlikely he ever intended to make payments.

So the PPT obligations could now be removed, and 100BTC to buy a PPT is now 200BTC (instead of the 300BTC.)  Would this be to pirates advantage?

First, it wouldn't remove those obligations. Pirate's belief to the contrary, if he had one, is mistaken. And it wouldn't be to Pirate's advantage except in the unlikely scenario where you repays a PPT operator, the PPT operator fails to repay the depositor, and that depositor goes after Pirate.

If the PPT operator is honest, the funds are only doubled. The tripling is locked on the books of the PPT operator.

Say I deposit 100 BTC with a PPT operator. I get a 100PPT coupon. The PPT operator deposits the 100 with Pirate. He gets a 100Pirate coupon. Pirate now gets the 100 BTC and circulates it. I have a 100PPT coupon I can circulate. Pirate has 100 BTC he can circulate. But the 100Pirate 'coupon' cannot circulate as the PPT operator must hold it so that he can pay to me any funds he gets from Pirate. In order for my 100PPT coupon to exist, the PPT operator must hold a 100Pirate coupon, so that's locked. It works the same way with banks and dollars and it's why loans double money rather than tripling it.

[imsaguy]

Pirate asked the PPT operators for their books so he could pay people directly (I think.)

We have no idea why he asked for that information. I think the most likely scenario was that it was simply a stalling tactic. Since no payments were made even for PPT operators who complied, it's unlikely he ever intended to make payments.

Q: Why did you require PPT operators to submit their account holders information?
A: There’re a few reasons for doing this.  The largest of which was to remove the PPT operators from the added risk of their users claiming
they were not paid once the main account was paid. The other reasons can not be disclosed.

http://pastebin.com/DVNsx7xz

[ArticMine]

... The other reasons can not be disclosed.

These propriety "other reasons" are the really interesting part.

[Piper67]

... The other reasons can not be disclosed.

These propriety "other reasons" are the really interesting part.

And when you think about it, the first reason seems shady as well. There are dozens of ways of making sure who's got paid and who hasn't which do not require the private information of users to be disseminated like that.

[Raize]

confused here.  they no longer needed pirate because they have their own and then you say they don't have their own.  or

If you take a look at nimda and dooglus's post here...
https://bitcointalk.org/index.php?topic=94675.msg1063869#msg1063869

You'll basically see that we know that the 1Dky address was owned by Silk Road. So we know they have coin, but we also know where it is from. It is possible that they needed pirate's LOANED coin to further complicate the process of where money was coming from and going to. Now that he's no longer an agent in their affairs, they are simply spinning off from the 1Dky address back to their vendors. This means the vendors are now responsible for "cleaning" their withdrawn coin.

For a practical application, expect to see at least a handful of high-profile drug busts over the next couple months, maybe. Large withdrawals from addresses linked to 1Dky are going to be pretty clear evidence of having a Silk Road vendor account.