How Large is BTCST exposure?

[ArticMine]

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...

My understanding is that pirateat40 is a "us person" or has a strong enough nexus in the United States so that US law would apply, likely in the state of Texas. But even if US law did not apply in all of his cases. Suppose he has to settle in EUR or CAD etc., because of local laws with some creditors he can still avoid moving the BTC market.

[Frankie]

You think that dollars being legal tender gives everyone the right to liquidate any contract they please by paying what they claim to be fair market value?  That's an interesting belief.  Others believe in bigfoot.

More importantly, has he ever even promised to give everything back?  The lead post seems to have a disclaimer about risk and past performance not being a guarantee.  If Pirate's really looking for a tricky legal argument, that'd be the one I would use. 

As if anyone could sue him for being "hacked" or having a major deal go wrong in these "bitcoins" (assuming you can even prove who the responsible party is...)

[ArticMine]

You think that dollars being legal tender gives everyone the right to liquidate any contract they please by paying what they claim to be fair market value?  That's an interesting belief.  Others believe in bigfoot.

More importantly, has he ever even promised to give everything back?  The lead post seems to have a disclaimer about risk and past performance not being a guarantee.  If Pirate's really looking for a tricky legal argument, that'd be the one I would use. 

As if anyone could sue him for being "hacked" or having a major deal go wrong in these "bitcoins" (assuming you can even prove who the responsible party is...)

The tricky legal problem here is determining what fair market value is. That is where the lawyers will start to bill.

[P4man]

Black Market Drug Site 'Silk Road' Booming: $22 Million In Annual Sales
His findings: the site’s number of sellers, who offer everything from cocaine to ecstasy, has jumped from around 300 in February to more than 550. Its total sales now add up to around $1.9 million a month. And its operators generate more than $6,000 a day in commissions for themselves, compared with around $2,500 in February.
http://www.forbes.com/sites/andygreenberg/2012/08/06/black-market-drug-site-silk-road-booming-22-million-in-annual-mostly-illegal-sales/

I think this puts the argument that Pirate's business is somehow related to laundering coins for silk road to rest. Pirate's interest payments completely dwarf Silk Roads operator profit and almost rivals the combined revenue of all silk road sellers combined.

[blazing]

Black Market Drug Site 'Silk Road' Booming: $22 Million In Annual Sales
His findings: the site’s number of sellers, who offer everything from cocaine to ecstasy, has jumped from around 300 in February to more than 550. Its total sales now add up to around $1.9 million a month. And its operators generate more than $6,000 a day in commissions for themselves, compared with around $2,500 in February.
http://www.forbes.com/sites/andygreenberg/2012/08/06/black-market-drug-site-silk-road-booming-22-million-in-annual-mostly-illegal-sales/

I think this puts the argument that Pirate's business is somehow related to laundering coins for silk road to rest. Pirate's interest payments completely dwarf Silk Roads operator profit and almost rivals the combined revenue of all silk road sellers combined.

Well now that makes me feel somewhat more confident about pirate's operation continuing.

[Shadow383]

Black Market Drug Site 'Silk Road' Booming: $22 Million In Annual Sales
His findings: the site’s number of sellers, who offer everything from cocaine to ecstasy, has jumped from around 300 in February to more than 550. Its total sales now add up to around $1.9 million a month. And its operators generate more than $6,000 a day in commissions for themselves, compared with around $2,500 in February.
http://www.forbes.com/sites/andygreenberg/2012/08/06/black-market-drug-site-silk-road-booming-22-million-in-annual-mostly-illegal-sales/

I think this puts the argument that Pirate's business is somehow related to laundering coins for silk road to rest. Pirate's interest payments completely dwarf Silk Roads operator profit and almost rivals the combined revenue of all silk road sellers combined.

Well now that makes me feel somewhat more confident about pirate's operation continuing.

How so? There's still no known revenue stream...

[SpontaneousDisorder]

Its crazy the public can be duped into believing in the fiat money banking cartel ponzi scheme, and yet we have the same thing here in a microcosm. Amazing. There are even people insuring the bonds, just like derivatives!

[finkleshnorts]

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 

It took me roughly 9 seconds to realize that you weren't talking about Michael Jackson GIFs

[herzmeister]

just like derivatives!

nothing wrong with derivatives, as long as they're not being violently enforced as a primary currency to be used by everyone with their value loss due to their collapse being socialized.

[556j]

Its crazy the public can be duped into believing in the fiat money banking cartel ponzi scheme, and yet we have the same thing here in a microcosm. Amazing. There are even people insuring the bonds, just like derivatives!

Most of the pirate insurance are obvious scams though. Goat's is the only one that makes financial sense. The others take on full pirate risk for less profit. With no logical explanation (one said "creative accounting") and dodge any inquiries about why they'd offer it. Or pull the "you're too stupid to understand" nonsense. Unless you think the operators are just nice guys and want to run a charity.

[CoinCidental]

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?

Most/all judges are not young computer geeks so good luck

I doubt pirate would even be charged with anything if he claimed he was hacked tomorrow and someone
stole everyones coins

if the coins are transferred to some anonymous wallet using untraceable  IP address from TOR  ,what case 
would there be for pirate to answer?

does everyone  have a paper contract signed and witnessed that says pirate owes them 10,000 BTC or $110,000 in cash for deposits invested ?

didnt think so

[Shadow383]

Its crazy the public can be duped into believing in the fiat money banking cartel ponzi scheme, and yet we have the same thing here in a microcosm. Amazing. There are even people insuring the bonds, just like derivatives!

Most of the pirate insurance are obvious scams though. Goat's is the only one that makes financial sense. The others take on full pirate risk for less profit. With no logical explanation (one said "creative accounting") and dodge any inquiries about why they'd offer it. Or pull the "you're too stupid to understand" nonsense. Unless you think the operators are just nice guys and want to run a charity.

I still maintain someone with confidence in BS&T (anybody???) should offer Pirate CDS.
The only issue is how to enforce payment - there'd have to be a free-floating CDS market so that it can find an appropriate rate. It'd inevitably also settle at >7% to be worthwhile for the sellers.

[Frankie]

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?

Most/all judges are not young computer geeks so good luck

I doubt pirate would even be charged with anything if he claimed he was hacked tomorrow and someone
stole everyones coins

if the coins are transferred to some anonymous wallet using untraceable  IP address from TOR  ,what case 
would there be for pirate to answer?

does everyone  have a paper contract signed and witnessed that says pirate owes them 10,000 BTC or $110,000 in cash for deposits invested ?

didnt think so

+1

Even if you did have an enforceable contract, you'd never know if he stashed the coins in an offline wallet somewhere, and you'd never be able to prove it.

Individuals are judgmentproof anyways. Good luck getting you bitcoins from a bankruptcy estate.

[kjj]

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?

This is actually incredibly common.  For example, pretty much every commodity exchange asserts the right to pay you out in cash if they need to.  This is one of the reasons they say it is safe to trade more futures contracts for gold than actually exists.  That is just an example, everything else is done the same way too.

[Frankie]

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?

This is actually incredibly common.  For example, pretty much every commodity exchange asserts the right to pay you out in cash if they need to.  This is one of the reasons they say it is safe to trade more futures contracts for gold than actually exists.  That is just an example, everything else is done the same way too.

That's because cash settlement is usually baked into the contract. Sure, if dooglus lends you his car with the option of cash repayment, you could get cash back, but it's because of the nature of the contract rather than the dollar being legal tender.

Before the 1980s most futures contracts required actual delivery, and many still do (even though most of these are unwound by covering the contract close to expiration).

[ruski]

It's pretty clear everybody arguing about the legality of paying the outstanding debts in USD instead of BTC has no idea how shorts work.

I borrow 10 BTC from you, and pay you $100 at market price.
I then immediately sell them for $10x10 = $100.
The price then plummets to $1.
I buy 10 BTC off the market for $10, give you the near-worthless 10 BTC, and keep the $90 profit.

Now that we're all on the same page, I can't just give you back $10. The contract states that I owe you BTC, or oil, or scrap metal, not dollars. If the current bid price for BTC was $1, but the ask price was $30, would you accept $1 each as fair value? Neither would anyone else.

If he owes BTC he must pay BTC. Non-currency or not. If I owe you a Tinkerbell doll I have to give you a Tinkerbell doll, not $5.

[phungus]

What is surprising to me is just how large a target this guy is for a real hacker/social engineer/thief, in real life.

His name is public, his facial details are known, his place of residence is likely known by somebody with access to county records. He happens to live in a "hacker hotbed" (The Dallas/Fort Worth metroplex).

I would not be surprised at all if he's targeted personally.

I'm sure he uses encryption and what-not but everyone makes mistakes.


I just can't see how this can be good in the long run. My gut tells me if something happens we can kiss goodbye to double digit Bitcoin pricing. :-D

-p

[el_rlee]

which day of the week does he pay out the interest? just for me to know when to look for a default...

if you take 500k bitcoin at a 6% interest per week that would make 10M bitcoin in only one year - more than in existence...

[imsaguy]

which day of the week does he pay out the interest? just for me to know when to look for a default...

if you take 500k bitcoin at a 6% interest per week that would make 10M bitcoin in only one year - more than in existence...

you should read the op.  If you're too lazy to do even that, you're not going to be much use determining if it is a ponzi or not.

[kjj]

which day of the week does he pay out the interest? just for me to know when to look for a default...

if you take 500k bitcoin at a 6% interest per week that would make 10M bitcoin in only one year - more than in existence...

Which would be a huge bummer if he ever needed, for some ungodly reason, to accumulate all of the payout before making it.