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.