How Large is BTCST exposure?

[Shadow383]

I've been pondering this question over the past few days, trying to work out what the total level of exposure to Pirate's scheme is on these forums. Obviously we have information like the fact that he apparently paid out 26000BTC in interest this week, but we don't know either the average rate (although presumably much is in passthroughs at 7%) or the amount of accounts that are set to automatically compound rather than pay out interest weekly.

Obviously in analysing the prospect of an imminent default, it would be good to know what level of liability you're looking at, and I'm personally quite concerned over how exposed the market has got.

So, it seems that the majority of BTCST deposits are in passthroughs (although it's difficult to know, given that there's so much smoke and mirrors surrounding total levels of deposits and the like).

So, looking at some of the pass-through programs we can try to work out how much is being invested:

BitcoinMax - in the region of BTC110000 (based on interest payments) https://bitcointalk.org/index.php?topic=83904.0
BurtW's PPT bonds - about BTC18000 most of the time based on compounding interest over 4 weeks https://bitcointalk.org/index.php?topic=76594.0
INAU - Unknown amounts, targeting large BTC amounts, he presumably has tier-1 trust account status so at least BTC25000 in that account https://bitcointalk.org/index.php?topic=91375.0
Hashking - Unknown total, also a tier 1 account so > BTC25000. He has 8000BTC of principal in deposits to his 50% insured pirate bonds. The amount uninsured bonds is unknown. https://bitcointalk.org/index.php?topic=66802.0
Brendio - Tier 2 account, so between BTC15000 and BTC25000. Claims to be near the top end of that. https://bitcointalk.org/index.php?topic=82772.0
notme - Previously had about 2000BTC in his PPT, not sure if the current spreadsheets are accurate but if so he's down at 144BTC now having lost out on trust account status. https://bitcointalk.org/index.php?topic=60405.0
OgNasty - Provides data! BTC720.36 https://bitcointalk.org/index.php?topic=75843.0
ShadowAlexey - BTC2155 https://bitcointalk.org/index.php?topic=75738.0
TyGrr-P - Goat's bonds, BTC30000 https://glbse.com/asset/view/TYGRR.BOND-P
BitFoo - Another GLBSE bond, BTC4674 issued, https://glbse.com/asset/view/FOO.PPPPT

Also, known deposits from forum members direct:
Patrick Harnett - apparently about BTC10000, although his own program does not hold BTCST assets https://bitcointalk.org/index.php?topic=61262.0

Working on the low-end estimates for certain trust accounts (and totally ignoring undisclosed exposure from other members) that gives exposure of BTC240,693.36 or $2.56 million at the most recent MtGox price.

Obviously some of these numbers are rough estimates, and I have no idea how much over and above this is held by some lenders that don't disclose totals (PPT ops - I'd love it if you could shed some light on your level of exposure for the sake of having accurate data in the community). In addition, asides Patrick, I'm not aware of anyone disclosing even an estimate of the amount they hold in a private BTCST account (again, if you have one and want to contribute please do).

[Vandroiy]

Visible interest this week was above 27k. Even if everyone were to get a full 7.7%, they'd need 350k exposure (paper coins) for this.

Bitcoinmax best estimate I know is 126k. The Monday payment was probably custom-arranged and does not tell you their exact interest, unlike the one a week earlier. To get data from GLBSE, look at dividends to see the active amount. E.g. the Goat "P" bond had 28732 active shares on the last payment.

IMO, a reasonable minimum estimate is currently 400k -- using 28k known interest (with Bitcoinmax corrected) and 7% average rate.

And, yes, that's a minimum, hell knows in what fantasyland the real number resides. A more interesting question might be: what's the exposure measured in real Bitcoins, the balance?

[CoinCidental]

400k btc is a fairly nice chunk of money ,especialy in this climate of ever rising btc value ........

[ElectricMucus]

Keep in mind that

a) pirate won't cash out when he defaults, unless he has shills inside mtgox (oh well considering craziness of recent events that even might be a possibility)

b) the hypothetical cash out values aren't that different if done at once because of slippage.
So 240K would give 1.67 mil USD and 400K just 1.91 mil USD.

[P4man]

Keep in mind that

a) pirate won't cash out when he defaults, unless he has shills inside mtgox (oh well considering craziness of recent events that even might be a possibility)

Yeah, if its a scam, he'd need something to clean his coins first; perhaps something allowing him to trade his tainted coins for freshly minted ones on a dozen or so pools. If only there was a large operation allowing just that.
Oh wait .

b) the hypothetical cash out values aren't that different if done at once because of slippage.
So 240K would give 1.67 mil USD and 400K just 1.91 mil USD.

Why would he be in any rush to sell it all at once?

[ElectricMucus]

Why would he be in any rush to sell it all at once?

I don't think he would want to.

But it would depend on the public reaction, if people start selling after the default, the word goes around that bitcoin is doomed now, etc...he might have no choice. If that doesn't happen I consider it unlikely.
He might do it regardless if he wants to get out of BTC in order to take out the motivation of the angry mob upto him.
"All your BTC are already sold, there is no way you can get them back" - is a strong argument.

[CoinCidental]

Everyone on the pro-pirate team says he is pretty rich in USD anyway so he can take some BTC losses or W/E

if he did steal 400-500k BTC he could take them outta circulation for a few years and slowly move them back in over the next 5-20 years when they are worth shitloads

but is this the same wealthy pirate who was in the police report for a $500 fraud case ?

[Frankie]

The funny thing is, if you believe his supporters, he's cycling all the coins to cash every week. Surely if he's running a scam he can do it just once over time, especially if he's already started. Keep in mind that a Ponzi operator "earns" much less than the amount on the books of his clients.

I don't even think he'd need to mix them. After all, they will probably be stolen by "hackers." Could you prove otherwise?

[tgmarks]

Aside from turning this into another 'is this a ponzi' argument, this information is awesome to see.  Thanks for putting this together and posting it.

[finkleshnorts]

if Pirateat40 is rebuying coins on Gox to repay his lenders, does the volume traded on Gox actually support this?

[Shadow383]

The funny thing is, if you believe his supporters, he's cycling all the coins to cash every week.

Where?
No really, where would he be doing that amount of volume? The usual reasoning is "off-exchange" but we're talking about a quantity of BTC larger than the weekly MtGox volume.

Aside from turning this into another 'is this a ponzi' argument, this information is awesome to see.  Thanks for putting this together and posting it.

Problem is, given the stratospheric interest rates it's already wrong 
Based on the ones I have info for, inflow into BS&T is still >10% a week.

In addition, there have been a few more new GLBSE instruments that have popped up taking money and giving it to Pirate.

[BoardGameCoin]

if Pirateat40 is rebuying coins on Gox to repay his lenders, does the volume traded on Gox actually support this?

I'm doing some basic back-of-the-envelop calculations here, but here's what I get:

30 day MtGox volume BTC (mtgox30btc): ~2,000,000 BTC
approximate 7 day MtGox volume (mtgox7btc = mtgox30btc*7/30):  470,000 BTC
conservative BTCS&T figure (piratebtc): 250,000 BTC

If pirate has to go back and forth to cash in order to make his profits, that requires selling once and buying once with 10% BTC profit, meaning that his weekly transaction volume would be
piratebtc*2.1, or 525,000 BTC of weekly volume, more than the entire MtGox weekly volume. If instead we view him as only selling once, then just buying back enough to pay interest, (which would be very risky in the case of rising BTC prices because he would be essentially short piratebtc number of bitcoins, and would have lost about 1.25 million in the recent rise from 5 to 10 USD), then his weekly volume would be piratebtc * 0.07 or 17,500 BTC. That would be about a third of a days volume at MtGox.

So, the short answer is it depends on what model of pirate's business you have in your mind, but I personally do believe it to be a Ponzi due to the ludicrous notion of sharing that level of profit when significantly cheaper ways to acquire legitimate capital are available.

-bgc

[tgmarks]

If he is moving that kind of volume I wouldn't expect him to be using only one exchange though.  Although, all the others don't account for much.

[MoneyIsDebt]

Obviously we have information like the fact that he apparently paid out 26000BTC in interest this week

Do you also have this kind of information back in time? (or could this be recorded from now on?)
If so it should be possible to guesstimate whether new deposits always cover payouts, or whether his operation is actually making money as well.

[old_engineer]

Whatever happens, it's going to be spectacular.  There's no way this scheme ends without drama.

[ElectricMucus]

Whatever happens, it's going to be spectacular.  There's no way this scheme ends without drama.

+1

one of the few things that still keeps me posting here 

[ArticMine]

if Pirateat40 is rebuying coins on Gox to repay his lenders, does the volume traded on Gox actually support this?

I'm doing some basic back-of-the-envelop calculations here, but here's what I get:

30 day MtGox volume BTC (mtgox30btc): ~2,000,000 BTC
approximate 7 day MtGox volume (mtgox7btc = mtgox30btc*7/30):  470,000 BTC
conservative BTCS&T figure (piratebtc): 250,000 BTC

If pirate has to go back and forth to cash in order to make his profits, that requires selling once and buying once with 10% BTC profit, meaning that his weekly transaction volume would be
piratebtc*2.1, or 525,000 BTC of weekly volume, more than the entire MtGox weekly volume. If instead we view him as only selling once, then just buying back enough to pay interest, (which would be very risky in the case of rising BTC prices because he would be essentially short piratebtc number of bitcoins, and would have lost about 1.25 million in the recent rise from 5 to 10 USD), then his weekly volume would be piratebtc * 0.07 or 17,500 BTC. That would be about a third of a days volume at MtGox.

So, the short answer is it depends on what model of pirate's business you have in your mind, but I personally do believe it to be a Ponzi due to the ludicrous notion of sharing that level of profit when significantly cheaper ways to acquire legitimate capital are available.

-bgc

This analysis is really interesting. What if we look at the mega short option with the BTC liabilities backed up in part with USD and in part with BTC. Now what pirateat40 could do here is:

1) Sell his remaining stock of BTC on MtGox at market to depress the price.
2) Settle his BTC liabilities in USD right away at the now depressed MtGox price by taking advantage of legal tender laws in the United States.

This avoids moving the market sharply up by having to purchase millions of USD worth of BTC in the open market.

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues

http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx

The interesting question here is whether this would attract litigation over market manipulation?

[dooglus]

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues

http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx

Does that mean that if I lend you my car for the weekend, you're within your rights to sell it and give me back the amount you got in dollars?

If I lend you my car, I expect to get my car back.

In the same way, if I lend you some Bitcoins, I expect to be paid back in Bitcoins.

Is the law really saying that all loans can be paid back in dollars at the borrowers discretion?

[Shadow383]

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues

http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx

Does that mean that if I lend you my car for the weekend, you're within your rights to sell it and give me back the amount you got in dollars?

If I lend you my car, I expect to get my car back.

In the same way, if I lend you some Bitcoins, I expect to be paid back in Bitcoins.

Is the law really saying that all loans can be paid back in dollars at the borrowers discretion?

I think the main problem is more along the lines of:

US law =/= Global law

People would do well to remember that...

[imsaguy]

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues

http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx

Does that mean that if I lend you my car for the weekend, you're within your rights to sell it and give me back the amount you got in dollars?

If I lend you my car, I expect to get my car back.

In the same way, if I lend you some Bitcoins, I expect to be paid back in Bitcoins.

Is the law really saying that all loans can be paid back in dollars at the borrowers discretion?

Actually, to a degree, yes.  If you loan someone your car and they go and have it scrapped and melted down, you will NEVER get 'your' car back.  The contract might stipulate they owe you X amount of funds + a penalty or you might end up having to sue them, but ultimately, they made a decision that they will not give you your car back.  Your only recourse at that point is USD (or find a judge or judges that will award you different property worth whatever value they deem appropriate, etc)