A Theory on what pirateat40 is doing

[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.