Topic: BTCS&T Timeline, SEC edition (Read 2162 times)
Alright, the flu has been kicking my ass so I just got around to adding in all the current corrections. Apparently the SEC is already investigating TS, and has confirmed his identity, so I'm leaving that. I've also been informed that "Patrick Harnett" and "Theymos" both have records of pirate verifying his scheme as stated above. I'll leave this here as is for their convenience, since apparently nobody is bothering to take civil action.
gpumax is a 2012 thing.
9-21-12 Obama meets with Pirateat40
... i see twins.
9-21-12 Obama meets with Pirateat40
It might be a good idea to mention Zeek rewards...
I think it's stupid to refer to pirate as trendon.
Untill that is proven you should ignore it for something like a timeline and consider it separate information.
Untill that is proven you should ignore it for something like a timeline and consider it separate information.
I was in Las Vegas near the end of July to attend DefCon, but did not visit Pirate, nor were there any speeches at DefCon about bitcoin. I am pretty sure the Pirate meeting didn't take place at the DefCon venue, as one bitcoiner I met couldn't enter the DefCon venue because he was in Vegas "to see Pirate" rather than attend DefCon and didn't buy a badge.
The Pirate meeting was at New York New York. I was the guy who met Casascius and could not get in. I had to meet him at a Chinese restaurant near by and he was nice and bought me lunch. I'm pretty sure Pirate did not go to DefCon but could have. I did not spend much time with Pirate other than that dinner and that night after.
lol
.I know who was the first guy to lend to Pirate and might be able to ask him when it started but I'm thinking June-Aug 2011.
Please do, having accurate information helps.
[/quote]
Alright. Thanks to everyone who has provided clarifications so far.
Some prominent questions:
-If anyone has a reasonable date for when pirate actually started his operation, please let me know. It doesn't need to be exact, but I'm looking to see if we can't pin down an earliest date and/or other details.
-If anyone knows the dates when the vote to take FPS&T to invite only started and ended, that would also be helpful.
-If anyone knows when the first passthroughs started, what type they were, or any other specifics on that. Also quotes of why pirate claimed to discourage them originally, or quotes from when he decided to allow them.
That was patrick's summation, but it is my understanding that it was more or less paraphrasing things pirate had told him in private conversations. If pirate comes up with something better or different in court, he will still have to prove it.
Some prominent questions:
-If anyone has a reasonable date for when pirate actually started his operation, please let me know. It doesn't need to be exact, but I'm looking to see if we can't pin down an earliest date and/or other details.
-If anyone knows the dates when the vote to take FPS&T to invite only started and ended, that would also be helpful.
-If anyone knows when the first passthroughs started, what type they were, or any other specifics on that. Also quotes of why pirate claimed to discourage them originally, or quotes from when he decided to allow them.
The 'private business plan' was a user's working theory I believe. Double check this.
That was patrick's summation, but it is my understanding that it was more or less paraphrasing things pirate had told him in private conversations. If pirate comes up with something better or different in court, he will still have to prove it.
The original thread was deleted by the mods AFAIK.
I think that the November 3, 2011 thread was the original thread. Supposedly he was initially running the program over IRC with a small group of people. I don't know much more than that, though. 
I was in Las Vegas near the end of July to attend DefCon, but did not visit Pirate, nor were there any speeches at DefCon about bitcoin. I am pretty sure the Pirate meeting didn't take place at the DefCon venue, as one bitcoiner I met couldn't enter the DefCon venue because he was in Vegas "to see Pirate" rather than attend DefCon and didn't buy a badge.
The original thread was deleted by the mods AFAIK. I tried to search it when I was writing this up to get more accurate details, but wasn't able to. The record they kept listed the OP from the BTCS&T thread as being from Nov, 3, 2011. If you can find any proof of an earlier date, I'd appreciate it.
I'll add in the corrections for the Vegas info and the original interest rate. There's a few other things I'm thinking of adding regarding team ponzi and their involvement.
I haven't read anything specific about why he discouraged PPTs to begin with (just that he did). Quotes on that would be appreciated as well. I also have no idea when the first PPTs started popping up, who offered them, or whether pirate approved of them before, or after they went public. I don't follow the GLBSE so I don't know whether bonds came first or deposit takers on the forum.
I'll add in the corrections for the Vegas info and the original interest rate. There's a few other things I'm thinking of adding regarding team ponzi and their involvement.
I haven't read anything specific about why he discouraged PPTs to begin with (just that he did). Quotes on that would be appreciated as well. I also have no idea when the first PPTs started popping up, who offered them, or whether pirate approved of them before, or after they went public. I don't follow the GLBSE so I don't know whether bonds came first or deposit takers on the forum.
You make no mention of FPS&T.
Good point. I had forgotten the name change. When did the name get changed to BTCS&T?
I don't know right off hand. you can probably go back to the original thread and look at the titles of the replies in the posts. It'll show when it switched from one topic to the next.
reeses is right though, there's a bunch of stuff that is close, but not 'right'..
It started before Nov 3.
Interest was actually 1% day but payable every 3 days.
The thing ran for /almost/ a year.
PPTs were originally discouraged because of something about people bypassing invites. Eventually, the insured PPT was formed, goat cloned it after several weeks and then many others copied it thereafter.
The people attending Vegas said pirate never went to defcon, just happened to be there the same weekend. He was supposedly never at the Rio that weekend.
The 'private business plan' was a user's working theory I believe. Double check this.
You make no mention of FPS&T.
Good point. I had forgotten the name change. When did the name get changed to BTCS&T?
You make no mention of FPS&T.
I've put together a timeline of everything that I believe was relevant in regards to BTCS&T, including some background information. If/when anyone gets around to contacting a proper lawyer, this will be important for making our case and for investigative purposes.
Please look over this and see if I have missed anything. If you see anything I missed, post here and if it's worthy of mention I'll add it in. Exact dates may also be helpful. Thanks!
Please look over this and see if I have missed anything. If you see anything I missed, post here and if it's worthy of mention I'll add it in. Exact dates may also be helpful. Thanks!
Quote
Bitcoin Savings & Trust (BTCS&T)
-BTCS&T was founded in June or August of 2011, privately over IRC with a few investors, by Trendon Shavers, under the pseudonym “pirateat40“, then called "First Pirate Savings and Trust". On Nov, 3, 2011, he took his 'service' public on these forums .
-He initially offered 1% interest per day, payed every 3 days. He soon changed this to offer up to 7% interest per week (depending on account size and activity, paid weekly), which was roughly 2-3 times the rates offered by other deposit takers at the time. Most people did not trust this, and only a few people invested based on his reputation (OTC rating).
-After collecting his first round of investors, Trendon held a vote amongst them to decide if BTCS&T should be made invite only. It was decided so, and investors were discouraged from accepting payments for invites. Several people who are known not to be directly involved with BTCS&T report denying considerable offers for invites. The stated reason for the action was that managing accounts, withdrawals, etc was becoming too time consuming.
-For several months, Trendon made all payments faithfully, and at one point he had to pay out a considerable amount of deposits as people rushed to take advantage of a price spike in BTC/USD. By whatever means, he was able to create the appearance of solvency.
-Trendon did not publicly disclose the nature of his business, purportedly to avoid competition in some form of arbitrage. He did, however, leak his “business scheme” to a few people in private, one of whom was a respected member of the community who otherwise had good business sense. Trendon had previously done business selling computer hardware and had a good reputation doing so, and founded gpumax.com at some point early in 2012.
-Around May, 2012, Trendon re-opened BTCS&T to the public indirectly, through “pass-through” programs which he had previously condemned. A few people had opened these in order to gain the 7% rate, not having sufficient funds for it themselves. The stated reason was to allow others to simplify the management for him, and interest rates were determined both by account value and by the total activity of the pass-through operator. A few pass-throughs were insured against Trendon defaulting, although each had its own contract.
-On Jul 27-29, 2012, Trendon appeared in Las Vegas, where two other events were taking place (which he did not attend). He met with several people from the community, including some who invested with him as well as some who did not, and provided his identification which was later revealed as “Trendon Shavers” from McKinney, TX.
-On August 17, 2012, Trendon announced that BTCS&T would be closing, as his profit margins were falling below the interest owed.
-On August 28, 2012, Trendon announced that BTCS&T was in default, presumably due to inability to pay interest. He demanded that all pass-through operators disclose the contact info and account holdings of their depositors, which was impossible for certain operators, and against the contract agreement of others. At this point his manner turned to belligerence and threats of non-payment to any operator who refused to comply. None of their questions were answered adequately.
-Shortly after this, Trendon ceased communications, drawing criticism and threat of legal action from the community. His “business plan”, as it was disclosed privately was then revealed as follows:
“Given he's not surfacing or communicating, I don't see why not. This may not be the actual model used but is is one way to do it - it exploits an inefficiency between two markets and indulges in market manipulation along the way. I would think a year at 3%/week would be easier, but it would become unweildy to do it for much longer than that (again, it's an opinion).
- Mr X wants a 10% return on a USD investment, but banks pay near zero.
- Mr Z can provide him that return and gets a $500k deposit.
- Mr Z buys bitcoins at $5 each. Because bitcoins is small, Mr Z can corner and squeeze the market - preventing big price swings, selling high and buying low.
- Mr Z does this with bitcoins that he has obtained from bitcoin users - he pays them interest. Over six months, Mr Z has moved the price to $11, sells 50k to return $550k to Mr X
- Mr Z has happy customers, and made some money along the way.
The plus of this is that the price of bitcoins generally increases. The down side is that the market is controlled and there is much less free-will or competitive force at work. The phrase "you've been played" springs to mind. Interestingly, this process also allows (within reason) a forecast future trading range (increasing). The bubble over $13 probably hurt BS&T along with the reduced liquidity from the August withdrawal spree. Having watched this over the past year, it was clear a lot of trading was not occurring through Gox and there are lots of good reasons for that.
Why can't he unwind it all quickly/smoothly? Not sure, but then I would have run it differently.”
Obviously this plan cannot possibly succeed, as cornering the market can only be run at a loss, and there is no means within it for making interest for two sets of investors on opposite sides of a currency pair. It was at this point that it became obvious that he had been running a ponzi scheme.
It is not known if his business associates at gpumax were involved with BTCS&T, however there is good reason to suspect them.
Zach Nakaska: https://www.linkedin.com/in/znakaska
Michael Thalasinos: https://www.linkedin.com/profile/view?id=191324706&pid=69812266&authType=name&authToken=_K83&trk=pbmap
-BTCS&T was founded in June or August of 2011, privately over IRC with a few investors, by Trendon Shavers, under the pseudonym “pirateat40“, then called "First Pirate Savings and Trust". On Nov, 3, 2011, he took his 'service' public on these forums .
-He initially offered 1% interest per day, payed every 3 days. He soon changed this to offer up to 7% interest per week (depending on account size and activity, paid weekly), which was roughly 2-3 times the rates offered by other deposit takers at the time. Most people did not trust this, and only a few people invested based on his reputation (OTC rating).
-After collecting his first round of investors, Trendon held a vote amongst them to decide if BTCS&T should be made invite only. It was decided so, and investors were discouraged from accepting payments for invites. Several people who are known not to be directly involved with BTCS&T report denying considerable offers for invites. The stated reason for the action was that managing accounts, withdrawals, etc was becoming too time consuming.
-For several months, Trendon made all payments faithfully, and at one point he had to pay out a considerable amount of deposits as people rushed to take advantage of a price spike in BTC/USD. By whatever means, he was able to create the appearance of solvency.
-Trendon did not publicly disclose the nature of his business, purportedly to avoid competition in some form of arbitrage. He did, however, leak his “business scheme” to a few people in private, one of whom was a respected member of the community who otherwise had good business sense. Trendon had previously done business selling computer hardware and had a good reputation doing so, and founded gpumax.com at some point early in 2012.
-Around May, 2012, Trendon re-opened BTCS&T to the public indirectly, through “pass-through” programs which he had previously condemned. A few people had opened these in order to gain the 7% rate, not having sufficient funds for it themselves. The stated reason was to allow others to simplify the management for him, and interest rates were determined both by account value and by the total activity of the pass-through operator. A few pass-throughs were insured against Trendon defaulting, although each had its own contract.
-On Jul 27-29, 2012, Trendon appeared in Las Vegas, where two other events were taking place (which he did not attend). He met with several people from the community, including some who invested with him as well as some who did not, and provided his identification which was later revealed as “Trendon Shavers” from McKinney, TX.
-On August 17, 2012, Trendon announced that BTCS&T would be closing, as his profit margins were falling below the interest owed.
-On August 28, 2012, Trendon announced that BTCS&T was in default, presumably due to inability to pay interest. He demanded that all pass-through operators disclose the contact info and account holdings of their depositors, which was impossible for certain operators, and against the contract agreement of others. At this point his manner turned to belligerence and threats of non-payment to any operator who refused to comply. None of their questions were answered adequately.
-Shortly after this, Trendon ceased communications, drawing criticism and threat of legal action from the community. His “business plan”, as it was disclosed privately was then revealed as follows:
“Given he's not surfacing or communicating, I don't see why not. This may not be the actual model used but is is one way to do it - it exploits an inefficiency between two markets and indulges in market manipulation along the way. I would think a year at 3%/week would be easier, but it would become unweildy to do it for much longer than that (again, it's an opinion).
- Mr X wants a 10% return on a USD investment, but banks pay near zero.
- Mr Z can provide him that return and gets a $500k deposit.
- Mr Z buys bitcoins at $5 each. Because bitcoins is small, Mr Z can corner and squeeze the market - preventing big price swings, selling high and buying low.
- Mr Z does this with bitcoins that he has obtained from bitcoin users - he pays them interest. Over six months, Mr Z has moved the price to $11, sells 50k to return $550k to Mr X
- Mr Z has happy customers, and made some money along the way.
The plus of this is that the price of bitcoins generally increases. The down side is that the market is controlled and there is much less free-will or competitive force at work. The phrase "you've been played" springs to mind. Interestingly, this process also allows (within reason) a forecast future trading range (increasing). The bubble over $13 probably hurt BS&T along with the reduced liquidity from the August withdrawal spree. Having watched this over the past year, it was clear a lot of trading was not occurring through Gox and there are lots of good reasons for that.
Why can't he unwind it all quickly/smoothly? Not sure, but then I would have run it differently.”
Obviously this plan cannot possibly succeed, as cornering the market can only be run at a loss, and there is no means within it for making interest for two sets of investors on opposite sides of a currency pair. It was at this point that it became obvious that he had been running a ponzi scheme.
It is not known if his business associates at gpumax were involved with BTCS&T, however there is good reason to suspect them.
Zach Nakaska: https://www.linkedin.com/in/znakaska
Michael Thalasinos: https://www.linkedin.com/profile/view?id=191324706&pid=69812266&authType=name&authToken=_K83&trk=pbmap
Jump to: