Well, to sum it up what I've read here so far:
Pirates's income sources are at the very least unclear. They could come from selling BTC offline at a premium, be nonexistant (= interst comes from deposits --> ponzi), from GPUMAX customers, from money laundering/drug trafficking/other illegal stuff, selling goods other than Bitcoin at a hefty premium, from his private money ( --> charity), lending Bitcoin to others and charging high interest, day trading on some exchange/Bitcoinica, investing in another Ponzi scheme that pays even higher and is still running (e.g. the russian Mavrodi one).
What makes it likely that it's a ponzi:
* Huge interests, far above even the BTC inflation rate (which is also not small...)
* Source of income is unclear
* He could borrow these coins cheaper than the interest he pays
* People say it is
What might speak against it being a ponzi:
* Even though a lot of people are begging to throw money at him, he doesn't take it all
* He owns GPUMAX, a site that pays out real money to miners and that's nontrivial to operate
* He (supposedly?) gave his personal information to people investing in him, so he would be easy to find and prosecute
* People say it isn't
Nobody has yet published a money trail or tried to get the list of adresses pirateat40 actually owns or controls (by tracking payouts from BTCS&T, GPUMAX, payments to both services...), all of this here is pure speculation as only pirate knows what pirate does.
Topic: Bitcoin Savings and Trust is probably a Ponzi Scheme: A Petition - page 7. (Read 25616 times)
You're ASSuME-ing a few things that may not be true:
1. Is he really taking in "more and more" bitcoins? His books are not open, you have no way to know
2. Are all depositors receiving 1%/day? No, he requires 2k BTC on deposit to get that rate.
3. Maybe he does want to fund it from profits, but can't. Profits may not be as high as you presume; if he's arbing coins, it may move the market too much; he may require a relatively high level of funding to operate.
The second point is of little importance; even the smallest interest rate is HUGE, at 218% annually. 1. Is he really taking in "more and more" bitcoins? His books are not open, you have no way to know
2. Are all depositors receiving 1%/day? No, he requires 2k BTC on deposit to get that rate.
3. Maybe he does want to fund it from profits, but can't. Profits may not be as high as you presume; if he's arbing coins, it may move the market too much; he may require a relatively high level of funding to operate.
As for the last point, its worth pointing out all other bitcoin arbitrage bots so far have been proven a scam. Arbitrage is of course possible, and when done right, perhaps even profitable, but it wouldnt require anything like this level of funding, nor would it provide those kinds of returns.
As for pirate having trouble breaking even; the sensible thing to do would be to lower his interest rate, even if by 1%, and that problem would vanish and 6 months later its hard to see how he could not be self sustaining, or at the very least no longer needing additional funds.
At last point, how much money do you think he is capable of sending to some one, even with lets say 50k btc? Now it is only 250k dollars, that is not much and much lower that needed in some cases, and daily volume of gox right now is about 71k, so assuming that he is doing it with 50% fee 5 times a month, he gets very good percentages, and all he need is BTC to work with.
All pirates need to get more is just to increase of exchange volumes.
And i do assume that people who are interested in it are doing something illegal, but that`s their choice.
Remember we are dealing not with billions of dollars, all this amounts are small in terms of some businesses.
You're ASSuME-ing a few things that may not be true:
1. Is he really taking in "more and more" bitcoins? His books are not open, you have no way to know
2. Are all depositors receiving 1%/day? No, he requires 2k BTC on deposit to get that rate.
3. Maybe he does want to fund it from profits, but can't. Profits may not be as high as you presume; if he's arbing coins, it may move the market too much; he may require a relatively high level of funding to operate.
1. Is he really taking in "more and more" bitcoins? His books are not open, you have no way to know
2. Are all depositors receiving 1%/day? No, he requires 2k BTC on deposit to get that rate.
3. Maybe he does want to fund it from profits, but can't. Profits may not be as high as you presume; if he's arbing coins, it may move the market too much; he may require a relatively high level of funding to operate.
The first "ASSuMption" is pretty safe. Goat was quoted as the single example of someone turned down, as per his post, it turns out even he has been increasing his position substantially. More over, read the forums, everyone and their dog is offering pirate pass through bonds nowadays. Those end up at pirate in the end. Its hard to see how his position could not be increasing.
The second point is of little importance; even the smallest interest rate is HUGE, at 218% annually.
As for the last point, its worth pointing out all other bitcoin arbitrage bots so far have been proven a scam. Arbitrage is of course possible, and when done right, perhaps even profitable, but it wouldnt require anything like this level of funding, nor would it provide those kinds of returns.
As for pirate having trouble breaking even; the sensible thing to do would be to lower his interest rate, even if by 1%, and that problem would vanish and 6 months later its hard to see how he could not be self sustaining, or at the very least no longer needing additional funds.
What everyone here seems to forget: You're dealing with an open pseudonymous accounting system! EVERY transaction is public, you only have to find out which are the ones by pirate!
Has anyone actually tried tracking a few input transactions to pirateat40 and finding out his combined BTC holdings and money flow? Unless he's really smart by using the CoinControl branch and very careful not to mix private keys in wallets, sooner or later it might be possible to link all or most of his accounts together... this might then give better ideas on how he operates actually and we could also see money flows to several known sites (Bitcoinica, MtGox...) - if they are there.
Also it could show if he really uses mainly funds to pay out investors (warning: he probably will pay some investors from funds, that isn't proof it's a ponzi though! Bitcoin works that way...!) or something else (like mining income, coins coming from MtGox...).
Edit: It might be an interesting topic for researchers (like http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html) to graph pirate's money flow(s)... just saying!
Has anyone actually tried tracking a few input transactions to pirateat40 and finding out his combined BTC holdings and money flow? Unless he's really smart by using the CoinControl branch and very careful not to mix private keys in wallets, sooner or later it might be possible to link all or most of his accounts together... this might then give better ideas on how he operates actually and we could also see money flows to several known sites (Bitcoinica, MtGox...) - if they are there.
Also it could show if he really uses mainly funds to pay out investors (warning: he probably will pay some investors from funds, that isn't proof it's a ponzi though! Bitcoin works that way...!) or something else (like mining income, coins coming from MtGox...).
Edit: It might be an interesting topic for researchers (like http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html) to graph pirate's money flow(s)... just saying!
That still doesn't answer why pirate would need more and more bitcoins. Assuming he can legitimately make more than 1%/day on his bitcoin, wouldn't he want to fund it himself and reap all the rewards and not have to pay out the 1%/day to depositors?
You're ASSuME-ing a few things that may not be true:
1. Is he really taking in "more and more" bitcoins? His books are not open, you have no way to know
2. Are all depositors receiving 1%/day? No, he requires 2k BTC on deposit to get that rate.
3. Maybe he does want to fund it from profits, but can't. Profits may not be as high as you presume; if he's arbing coins, it may move the market too much; he may require a relatively high level of funding to operate.
I've run (and been involved in a few other) businesses that could reasonably turn every dollar into two, all day, every day. But payments typically came net 45, creating cash flow and scaling issues for many months (in one case years). One biz had little control over demand, it would always try to meet it because it was ultimately profitable to do so, regardless of temporary cash flow issues. An 8 figure (USD) credit line would have solved this, but was denied by the banks they asked.
I also could not have convinced any one else involved in those businesses to pay 7% weekly for capital (I'd have been laughed at), however, the quick math shows it would have been profitable to do so... the caveat is that it would have put a serious hurt on overall profitability, and after expenses it would have taken a couple years to build enough of a capital reserve to end the arrangement.
Before you label me a pirate fanboy: I do not have BS&T or Gpumax accounts. Invites have not been forthcoming, which adds to my point #1 above.
Reeses hit the nail on the head when he said (albeit less kindly) that people who know how to make money, aren't going to tell you how to copy them.
Which is what?
The "red flag" that they (Madoff was the example given) were paying higher than they could borrow at assumed you could borrow in the first place. Even the most basic business models knows that the cost of debt and equity are different, and that the ability to borrow is linked less to income than assets.
There are other simple ways to pay high interest rates, but obviously the mindset is that rates must be low.
That still doesn't answer why pirate would need more and more bitcoins. Assuming he can legitimately make more than 1%/day on his bitcoin, wouldn't he want to fund it himself and reap all the rewards and not have to pay out the 1%/day to depositors?
So either he's running a ponzi scheme or he is going to pass on all the risks of his business to his depositors. Either way, it means bad news for his depositors.
The above point was about the bad logic that goes into "why XYZ is a ponzi".
Like some religious witch-hunt, reason left this thread a long time ago (probably around the first post). Your "he's going to do this or that" argument doesn't stand scrutiny because you're just repeating the same misconceptions again and again (like good religious people do), rather than testing different theories (the more science end of the spectrum).
Have you actually looked to see if Pirate is actually taking more and more coins? or is that just made up like most of the other "facts"
btw - I have factored in 100% loss of my deposit into my risk profile, the same way I have several other loans/deposits/investments also fail. Having money in a real bricks and mortar business is also not guarantee that you won't lose your money either.
Which is what?
The "red flag" that they (Madoff was the example given) were paying higher than they could borrow at assumed you could borrow in the first place. Even the most basic business models knows that the cost of debt and equity are different, and that the ability to borrow is linked less to income than assets.
There are other simple ways to pay high interest rates, but obviously the mindset is that rates must be low.
Do you people actually know how to borrow money? Do you know how banks decide to extend a loan (either in business or personally). The basic formula is you give them 120% of what you want to borrow, and they might consider it. Show then the assets!!
Interest rates on debt might be lower, but if availability is zero, that's irrelevant.
It's really this simple: You can't pay off extraordinarily high interest rates reliably unless you have an astounding source of income. If you have an astounding source of income, you don't need to borrow at extraordinarily high interest rates. This could explain a small number of loans over a short period of time to jump start some kind of amazing opportunity, but it can't explain a sustained endeavor.Interest rates on debt might be lower, but if availability is zero, that's irrelevant.
A reasonable explanation would have been that he needed the money to finance a drug deal or two. But you don't keep borrowing money at high interest rates to finance drug deals unless you're planning to run off with the money.
You went straight past the point without even looking.
Do you people actually know how to borrow money? Do you know how banks decide to extend a loan (either in business or personally). The basic formula is you give them 120% of what you want to borrow, and they might consider it. Show then the assets!!
Interest rates on debt might be lower, but if availability is zero, that's irrelevant.
It's really this simple: You can't pay off extraordinarily high interest rates reliably unless you have an astounding source of income. If you have an astounding source of income, you don't need to borrow at extraordinarily high interest rates. This could explain a small number of loans over a short period of time to jump start some kind of amazing opportunity, but it can't explain a sustained endeavor.Interest rates on debt might be lower, but if availability is zero, that's irrelevant.
A reasonable explanation would have been that he needed the money to finance a drug deal or two. But you don't keep borrowing money at high interest rates to finance drug deals unless you're planning to run off with the money.
Not just me. Everyone else.
You have evidence for this? Everyone? You do know that most people with a secret but obvious way of making a shit-ton of money are smart enough to STFU? Pirate is the tip of the iceberg.
And we have a winner!
Your 80Ghash is not worth my time, honestly. And it doesn't really matter when the purchases run, but yes, I believe I could make more if the system were more responsive to my purchases.
Your time must be expensive. 80GH is >1600 BTC per month. If you can break even on 150% PPS, that means you could make >500BTC per month by renting our machines. I find it hard to believe that would not be worth your time, while posting in threads like these is, sorry.
Nice story, but Ill believe when I see it.
If you only wanted BTC possibly in return, yes you could. Is there a dual purpose to using GPUMAX?
Its a question often asked asked. There seems to be no impact on the networks global hash rate when gpumax is running or not, so it seems very unlikely its not producing bitcoin blocks in some way. If those hashes can be used for something else as well simultanously, like merged mining does, well that would be big news to me. Its not impossible I guess, but without explaining what the side product would be, its not something I consider an adequate explanation, particularly when none of the crypto experts seem to have thought of it so far.
But doesnt it strike you as... odd, to put it mildly, that Pirate somehow finds those large bitcoin buyers (and possibly sellers) willing to pay extreme prices for bitcoins
That's how I made a decent chunk of money out of bitcoins (and still do).
Red Flag No. 4: Cheaper to borrow
Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.[/i]
Pirate is paying FAR more than 12% annually. But I guess you would have been happy with Madoff's explanation too.
Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.[/i]
Pirate is paying FAR more than 12% annually. But I guess you would have been happy with Madoff's explanation too.
Tell me who will lend to you (at sub-usurious rates) for doing a big bitcoin operation of any sort. Now tell me who will lend to you at any rate if your business model involves dealing with shady characters who don't want to leave paper trails.
Oh, this is priceless (I'm catching up on the trash that has been written).
Do you people actually know how to borrow money? Do you know how banks decide to extend a loan (either in business or personally). The basic formula is you give them 120% of what you want to borrow, and they might consider it. Show then the assets!!
Interest rates on debt might be lower, but if availability is zero, that's irrelevant.
A) You don't have the marketing skills to overcome your lack of presence (or notoriety) compared to GPUMax.
You think whoever is pouring 1000s of btc in gpumax does it because of its.. marketing?
Its not just me, Ive not seen Giga or any of the other well known miners get anything like gpumax prices.
let me put it this way; whoever is buying at gpumax, could just PM giga and 2 other large miners and get a few 100GH pointed anywhere he wants for a fraction of GPUmax cost. Why isnt anyone doing that? You think Giga would say no to a 120% offer?
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B) 80 Ghash is not much. Have you actually made a purchase on GPUMax and seen the volume generated?
80GH may not be enough for stress testing a pool, but I dont think anyone seriously believes stress testing pools is more than a tiny fraction of gpumax purchase.
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You are not comparing equivalent offerings, and you are making claims that Pirate must be up to something because you have failed to execute something you see as similar.
Not just me. Everyone else.
As for the equivalence, indeed its not. GPUmax doesnt let you time your purchase, not even to the day; it restricts the pools you can point it to, and charges a premium thats at least 50% more expensive than what most miners and miner consortiums would accept. But I guess they have great marketing...
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There are ways to use the system to gather a decent ROI. Most people who post can't see how to use it, so the math doesn't work out for them.
You cant get a decent ROI if you dont even know what day your leases will run. If you claim you can get a decent ROI out of a non timed 150% PPS purchase, you can buy our 80GH at a bargain price and make a real killing. PM me.
If he wanted to start covering all the coins himself, he'd probably need to move some some of the (allegedly large) USD profits into bitcoin, which would require a large bank movement, paperwork, and other stuff he probably doesn't want to do right now.
Again, this doesnt make much sense to me, Im sorry. If he is doing both sides, he would have even less need for a large buffer, and it makes even less sense to pay these kinds of interest rates. What you are saying boils down to Pirate paying extremely high interest rates in BTC, to have a BTC buffer and thereby avoid having to convert cash in to BTC... to pay those interest rates with?
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One of the risks to consider, under this model, is the chance that his local sellers/buyers find each other, and stop paying Pirate the huge premium for effectively letting them trade with each other.
Thats not a big risk to investors. At worst his business would dry up, but it wouldnt make him default.
But doesnt it strike you as... odd, to put it mildly, that Pirate somehow finds those large bitcoin buyers (and possibly sellers) willing to pay extreme prices for bitcoins, and then also find buyers willing to pay similarly insane prices for bitcoin shares on gpumax? When no one else seems to be able to find either?
Im sure he is clever and talented, but I just cant believe the two are not related, and the explanations given so far dont relate them.
In short; I dont buy it. The trust and gpumax are part of one and the same operation, and its pretty tough to come up with sensible explanations that covers both and does not involve a scam. Im open to the possibility, but wouldnt bet a dime on it.
Joel already repeated the main argument against this, it doesnt really help Pirate to have a large fund of BTC, he needs to convert fiat in to BTC anyway.
The other thing Id like to add, is that his fund is what, almost 6 months old now? I havent heard anyone being told they need to take their coins out of the fund because Pirate has no more need for it. Has he not made a dime of profit all that time while paying out ridiculously high interest rates? I think now is a good time to start worrying if you werent already.
The other thing Id like to add, is that his fund is what, almost 6 months old now? I havent heard anyone being told they need to take their coins out of the fund because Pirate has no more need for it. Has he not made a dime of profit all that time while paying out ridiculously high interest rates? I think now is a good time to start worrying if you werent already.
As I said in my post, Pirate can be handling both sides of the exchange. Some people need coins and have dollars, others might have coins and need dollars. Assuming reasonable balance, he could easily be skimming off both sides of the exchange, paying us some of the bitcoin proceeds, and keeping the USD proceeds for himself. If he wanted to start covering all the coins himself, he'd probably need to move some some of the (allegedly large) USD profits into bitcoin, which would require a large bank movement, paperwork, and other stuff he probably doesn't want to do right now.
One of the risks to consider, under this model, is the chance that his local sellers/buyers find each other, and stop paying Pirate the huge premium for effectively letting them trade with each other.
The other thing Id like to add, is that his fund is what, almost 6 months old now? I havent heard anyone being told they need to take their coins out of the fund because Pirate has no more need for it. Has he not made a dime of profit all that time while paying out ridiculously high interest rates? I think now is a good time to start worrying if you werent already.
Well, I have heard of someone who had his funds forcibly withdrawn to his address. Goat, please confirm that in January, Pirate returned some funds he could not handle back to you. (Public proof is already in Pirate's thread.)
I am late to the party but I am also okay with how things are going. It took me a while to figure out the system but that's fine.
I had some coins get sent back. How do I know when it is okay to send them again?
Thx
I had some coins get sent back. How do I know when it is okay to send them again?
Thx
Why doesn't everyone just leave it alone and let people do whatever they want ?
My silence is not a requirement of your freedom.And, one more time, while I think it's possible it's a Ponzi scheme, I think it's more likely something other than a Ponzi scheme. But I have no idea what, and I don't think very many other people do either. As a result, the risk is completely unknown.
Good point. It comes down to risk and reward, with the former being unknown and, absent further information, unknowable.
How about that, some one is willing to send money to payback, he is OK to over pay for doing it, he buys this amount from pirate with rate about(7 or even 10).
This is reasonable when you want to send BIG sum(over 300k$), because when you will buy it on gox the prise will go up(see gox chart) to unknown plus gox has limits and likes to ask questions,and then you dont know how to handle it on the other side. And then pirate just buys the mined BTC for this money, slowly, over a month, taking in to account BTC inflation this shouldnt be a problem. It can work all over the world, all what u need is BTC enough to fulfill the request, because now you can buy e-money for cash everywhere and the rates are flat .
This is reasonable when you want to send BIG sum(over 300k$), because when you will buy it on gox the prise will go up(see gox chart) to unknown plus gox has limits and likes to ask questions,and then you dont know how to handle it on the other side. And then pirate just buys the mined BTC for this money, slowly, over a month, taking in to account BTC inflation this shouldnt be a problem. It can work all over the world, all what u need is BTC enough to fulfill the request, because now you can buy e-money for cash everywhere and the rates are flat .
The price will go up no matter what, because Pirate needs to refund the lenders and the miners with BTC and he got paid in fiat. He has no alternative to buying at an exchange. Lending money from investors can delay that, but it doesnt solve the problem, in the long run, it exacerbates it.
GPUmax is the same, assuming Pirate is the main buyer, again he can not possibly mine as many BTC as he needs to pay the miners (let alone his customers), and he does pay them in BTC, not fiat, so he again must convert fiat to btc at some point. He needs to convert considerably more than the initial deal was to pay back both his lenders and miners. So it doesnt help, it makes it worse.
Have no Idea about GPUMax, because hashing is only applicable if you want to brute-force some ones RSA key or smlr. That`s the only thing that comes to my mind.
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