Even if Pirate can make 10.65% per week (up to what amount? These never scale up infinitely. Actually, at that kind of return rate the limit should be reached very quickly.), it makes absolutely no sense to borrow such huge amounts of bitcoins at several-hundred-percent annual interest rate. He should have gotten a loan in fiat. He says he knows rich investors etcetera. He could have borrowed a million dollars and bought at least 250kbtc when they were cheaper.
And the argument that he can't buy bitcoins because he'd move the market is ridiculous. As if other people acquiring and tying up bitcoins in his scheme doesn't move the market exactly the same way.
Sounds as if you have a solid business plan to kick Pirate's ass out of the market. Take a run at it.
I don't have a business plan that would generate such ridiculous returns. These kinds of extremely high growth businesses occur very rarely, and almost never they grow at 10% weekly rate (which ends up to 14,000% annually. For percent-growth-challenged, this means the business grows 140-fold in size during the period of one year). And the growth phase lasts only until the business fills its "ecological niche", at which point the growth dies out.
Let's make a thought experiment: What if Pirate had such a high-growth scheme, and had done as I suggested? 10% a week. In bitcoins. Let's say he'd have taken a $1M loan at 5% interest rate (to be paid twice a year) and monthly repayments of $50k (at the end of each month). Let's again assume he keeps $200k as a dollar reserve initially, so that he can make the first four payments no matter what. So. Within the first two months, he buys, little by little, $800k worth of bitcoins (at the price of $5 per bitcoin), and at the same time, sets up his business, which starts to generate revenue in the beginning of the third month.
For the sake of simplicity, let's just assume each month has exactly four weeks, and that BTC price is stable at $5.
2 months: $100,000; BTC200,000; loan principal balance $900,000
3 months: $50,000; BTC292,820 - sell BTC10,000 to cover the loan repayment, and do this each month from now on
3 months: $100,000; BTC282,820; loan principal balance $850,000
4 months: $100,000; BTC404,077; loan principal balance $800,000
5 months: $100,000; BTC581,609; loan principal balance $750,000
Every 6 months, sell an additional BTC 5k to make the interest payment (is more than enough). Spend rest on drugs&whores.
6 months: $100,000; BTC836,534; loan principal balance $700,000
7 months: $100,000; BTC1,214,769; loan principal balance $650,000
8 months: $100,000; BTC1,768,543; loan principal balance $600,000
9 months: $100,000; BTC2,579,311; loan principal balance $550,000
10 months: $100,000; BTC3,766,369; loan principal balance $500,000
11 months: $100,000; BTC5,504,341; loan principal balance $450,000
12 months: $100,000; BTC8,043,906; loan principal balance $400,000
Okay, at this point he has 40% of all bitcoins that ever will exist, and retires, pays of his debt and enjoys his eight million BTCs.