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Topic: A Theory on what pirateat40 is doing - page 10. (Read 40018 times)

hero member
Activity: 501
Merit: 500
July 17, 2012, 04:47:50 AM
If Pirate wasn't running a ponzi scheme, he definitely would try to grow his net wealth by repaying the high-interest debts with all the profit he'd be getting from his extremely profitable enterprise. Come on, every repayment of principal would earn him 7% per week.

Actually. If I had a business idea that would (in medium term) generate 10% per week ROI for up to (say) one million dollar investment, I would borrow the money from somewhere other than the bitcoin community. I'm a pretty poor chap but I figure I'd get at least $150,000 loan from my bank at less than 5% fixed annual rate. (I have a small property I could put up as collateral). If that wasn't enough for an initial investment, I'd have to shop around a bit or maybe find a business partner with more liquidity on hand.
hero member
Activity: 812
Merit: 1001
-
July 17, 2012, 03:12:48 AM
The most plausible explanation I see of some people announcing "huge dump" and then dumping large amount of BTC to the marked at bid is eve-like "lottery" where someone is playing with borrowed money that was never intended to be paid back.

IF pirate converts borrowed BTC into USD, now it is all the more difficult to covert it back to pay those "dividends", if not why the hell to try to sell then?

And one final question? How does it feel to sell so much BTC 1$ below market price just to get some more popularity points among already captive audience.


newbie
Activity: 15
Merit: 0
July 17, 2012, 03:02:41 AM
Instead of trying to second guess whatever Pirate is doing in order to justify the interest rates that he offers, lets assume that he is running a ponzi (most likely the correct assumption). How much damage will the unraveling of this cause? The last thing the Bitcoin community needs at this point is for another blow up, this time from a massive ponzi-scheme, undermining confidence once again.
sr. member
Activity: 467
Merit: 250
July 17, 2012, 02:39:45 AM
Theory:
-- considers BTC as a consumable item?
-- prefers cash to purchase BTC?
-- enjoys anonymity?
-- is legal?

He takes cash for BTC at (some magic percentage >7%) above the market price, uses the cash to buy more coin, takes his percentage, rinse and repeat. He needs the coin (BTCS&T/GPUMAX) so he has enough coins on hand to fulfill demand, then buys via gox/dark/etc to renew the coin pool.

Perhaps bitcoin-only gambling operations?

RE: Who Pirate is, where he is, etc:

In 5 minutes of focused Googling, you can find a trail of 3 people.. You could call them "The Idea", "Zee Code", and "Money", or T, Z, and M for short.
newbie
Activity: 27
Merit: 0
July 10, 2012, 12:38:56 AM
A stranger says to you: "If you lend me money, I can pay back in double, in three and a half months' time." He doesn't quite tell you how he's going to achieve this. Do you trust him?

Also, he calls himself a pirate. There certainly is a sucker born every minute and I guess in a way Mr Pirate deserves his plunder.
hero member
Activity: 501
Merit: 500
July 10, 2012, 12:32:25 AM
Reality check:

A stranger says to you: "If you lend me money, I can pay back in double, in three and a half months' time." He doesn't quite tell you how he's going to achieve this. Do you trust him?

This is exactly what's happening.

In a ponzi scheme, he's not even lying, if the scheme is succesful. He doesn't have any incentive to stop paying out interest and the withdrawals of principal as long as the grand total of his funds keeps on growing. As soon as the growth dies out, though, if he's at all smart, he's going to vanish with all the money.

Some of the earliest investors may have turned profit at that point, if they've been smart enough to not reinvest. Everyone else loses.
hero member
Activity: 868
Merit: 1002
July 09, 2012, 11:36:08 PM
For a 7 page thread there's remarkably little in the way of actual theorizing. Ponzi's hack at this point...no need to keep repeating it.

Maybe he's helping migrant workers move cash back home safely.
riX
sr. member
Activity: 326
Merit: 254
July 09, 2012, 10:47:23 AM
That he sold bitcoins. Just claim they were mined two years ago.
Of course, everything depends on blockchain analysis not holding up in court.
legendary
Activity: 1078
Merit: 1003
July 09, 2012, 09:33:25 AM
This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

From the outside it looks like Mr A sold bitcoins to Mr P. If authorities ask, Mr A says he mined them. Borrowing a lot of btc enables you to create your own btc tumbler, efficient enough that a blockchain analysis never holds up in court. Early adopters might have some coin unused since they were mined, check out the blockchain for interesting stuff..

And what is Mr P going to tell the authorities about where he got the 90% he used to "buy" the bitcoins from Mr A?
riX
sr. member
Activity: 326
Merit: 254
July 09, 2012, 09:14:52 AM
This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

From the outside it looks like Mr A sold bitcoins to Mr P. If authorities ask, Mr A says he mined them. Borrowing a lot of btc enables you to create your own btc tumbler, efficient enough that a blockchain analysis never holds up in court. Early adopters might have some coin unused since they were mined, check out the blockchain for interesting stuff..
legendary
Activity: 1358
Merit: 1002
July 09, 2012, 08:59:06 AM
Tldrifyed: An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore. He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneeded is of course in the grey zone, but that's why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka. Mr A, with the aforementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses. P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilize the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.

This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?

What part of PHYSICAL CASH didn't you understand, dumbfuck?
legendary
Activity: 1078
Merit: 1003
July 09, 2012, 08:57:00 AM
Tldrifyed: An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore. He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneeded is of course in the grey zone, but that's why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka. Mr A, with the aforementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses. P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilize the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.

This makes zero sense. From the outside this looks like Mr A sent some money to Mr P and then Mr P sent 90% of it back. Is this your idea of money laundering?
donator
Activity: 2058
Merit: 1007
Poor impulse control.
July 09, 2012, 08:29:05 AM
Tldrifyed:
An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore.

He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneded is of course in the grey zone, but thats why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka.

Mr A, with the abovementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses.

P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilise the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.


Semi-FTFY. You can do the typos.
riX
sr. member
Activity: 326
Merit: 254
July 09, 2012, 08:24:00 AM
Tldrifyed: An individual of profession, in order of probable probability, live poker player, carpenter doing some business on the side on weekends, drug dealer or bank robber, has got too much physical cash, and wants to convert his pile into a more legal form, preferably in the bank account of his legitimate business or possibly offshore. He makes a transaction with Mr P, who in turn makes a note in his books about selling bitcoins OTC to an unnamed customer, since KYC requirements is not needed for transactions not involving currency conversion, and btc is not currency as we all know. That the three letter requirement is unneeded is of course in the grey zone, but that's why he's hired a lawyer, making sure not to break any rules, just bend them. As soon as the cash is in the bank, a wire is sent to the individual, aka. Mr A, with the aforementioned profession's tax-paying account, and pays with the very same bitcoins that he bought before, getting a nice sum of about 90% of the former deal. The remaining 10% of the cash goes to mtgox and is swiftly converted into btc. A's got fresh smelling money in the bank, for which he payed 10%, and can now buy cars ans houses. P's got 10% more BTC. The market's got some less BTC, equivalent to 10 and not 100% of the total operation, which is convenient, since it is then easy when holding ten times that to put up a few walls of another kind than those Mr A crafts on weekends to stabilize the rate and not risk too much during the few hours he's in fiat. With P's background as CEO of TLP, Mr O's tool slides right off the stubble.
legendary
Activity: 2198
Merit: 1311
July 09, 2012, 07:38:52 AM
The funny part is that even if his activities were perfectly legit, it simply cannot work due to the nature of bitcoins.

Bitcoin offer is illiquid -not only this, it is limited by its very nature; and he states he converts his bitcoins to fiat. So he has to convert them back to pay his lenders -and the amount he would need to convert is by now enormous, and growing fast.
If he had to pay them all at once, the price would go over the roof quite quickly... so however big is the pile of USD he's sitting over, he would default on a bank run, as the fact itself that he repays pushes the prices up until it's impossible to repay.

Which rules out the possibility of an orderly shutdown... and so makes sure, since nothing can last forever, that when this all ends it will be with a default, at least partial. Even if he is really making the insane amount of profits (in USD) he is claiming he is!
Unless of course BTC price crashes really low... but ther's no sign this is ever gonna happen.

He cannot not be aware of this. So the fact that he seems certain of an orderly shutdown, which is objectively really unlikely, is another point in favour of the idea he's simply lying, and his activity is indeed a Ponzi.



sr. member
Activity: 252
Merit: 250
July 09, 2012, 07:26:25 AM
The funny part is that even if his activities were perfectly legit, it simply cannot work due to the nature of bitcoins.

Bitcoin offer is illiquid -not only this, it is limited by its very nature; and he states he converts his bitcoins to fiat. So he has to convert them back to pay his lenders -and the amount he would need to convert is by now enormous, and growing fast.
If he had to pay them all at once, the price would go over the roof quite quickly... so however big is the pile of USD he's sitting over, he would default on a bank run, as the fact itself that he repays pushes the prices up until it's impossible to repay.

Which rules out the possibility of an orderly shutdown... and so makes sure, since nothing can last forever, that when this all ends it will be with a default, at least partial. Even if he is really making the insane amount of profits (in USD) he is claiming he is!
Unless of course BTC price crashes really low... but ther's no sign this is ever gonna happen.

He cannot not be aware of this. So the fact that he seems certain of an orderly shutdown, which is objectively really unlikely, is another point in favour of the idea he's simply lying, and his activity is indeed a Ponzi.
legendary
Activity: 1036
Merit: 1002
July 08, 2012, 03:18:01 PM
Uh... are we talking about 6-digit shorts here? While this is theoretically possible, it's insanely risky. BTC ask is illiquid. If nothing causes a price panic, the funds just get burned and that's that.

Sales to customers don't work either, at least not on this scale. 200k was Gox weekly volume the last two weeks. Nope, he cannot have bought back that much there, unless he is the only remaining buyer for the whole week.
hero member
Activity: 560
Merit: 500
I am the one who knocks
July 08, 2012, 03:15:57 PM
Pirate's selling at high premiums removes this supply (100-200k (?) BTC weekly) from the market at current rates, his clients won't be selling on the market at negative profit margin. Although it is in his best interest keeping or having price low, he's effectively extinguishes the available supply at any given rate, so at some point prices will have to move up due to limited supply availability especially if his own business demands increase. If his business is indeed legit and does what he claims it does - it has overall positive effect on the market as it steadily absorbs all low priced inventory.

Not to mention that once he is 'done' the price should skyrocket, making us all more money Smiley
legendary
Activity: 1050
Merit: 1000
July 08, 2012, 10:26:27 AM
Pirate's selling at high premiums removes this supply (100-200k (?) BTC weekly) from the market at current rates, his clients won't be selling on the market at negative profit margin. Although it is in his best interest keeping or having price low, he's effectively extinguishes the available supply at any given rate, so at some point prices will have to move up due to limited supply availability especially if his own business demands increase. If his business is indeed legit and does what he claims it does - it has overall positive effect on the market as it steadily absorbs all low priced inventory.
hero member
Activity: 1652
Merit: 569
Catalog Websites
July 08, 2012, 09:08:38 AM
Here's my theory:  

Assuming pirate's operation is not a ponzi and he's not doing anything illegal, then he obviously wants the price of BTC to go down.

"I'd Gladly Pay You Tuesday for a Hamburger Today" - J. Wellington Wimpy

This famous quote is referring to the idea that people taking loans and paying interest are betting on the value of whatever they are borrowing to go down. In pirate's case he's betting on the value of BTC to go down.

Have you ever seen him say anything bullish? I see him talking about "risk management" saying that he is prepared for BTC to have no value in the future by using them in an analogy that refers to BTC as "pet rocks" here: https://bitcointalksearch.org/topic/m.918162

Even if pirate wasn't betting on the price going down initially, if he gets enough loans in BTC, (which he already has) he will have enough volume to corner the market and have enough influence on the price to MAKE it go down.

This really isn't a risky move for him because if somehow the price of BTC rises out of his control, (which i find unlikely because he clearly stopped the rally today) then his business model either turns into a ponzi (when the only income comes from new investors) and he can just take all the BTC and run. or if he decides to do this legally, he already has enough influence on the price of BTC that i think he can make enough fiat through market manipulation to pay back his investors still with a lot of profit for him.

His investors are basically lending him BTC to sell for fiat to drive the price down.

Assuming this is the case, if I were an investor I would withdrawal my coins before the price makes any movements up or down, because both scenarios are risky for you.

Don't get me wrong, there is still potential to earn money through investing in BS&T as long as you get out in time. But, i think its a bad bet and, in any case, i think it's a bad thing for Bitcoin to have people "Centralizing" where the Bitcoins are. This picture here: https://bitcointalksearch.org/topic/m.1015662  clearly shows that the market is already backed up into a corner.
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