That explains exactly nothing about how he made positive returns, much less in the amounts he was supposedly getting, for victims investors. Could you summarize in your own words how Pirate made 7% returns (in BTC) weekly by taking your Bitcoin, selling it for cash, and then...purchasing Bitcoin back? He would have to have been doing MASSIVE volume, and there is no way his local "friends" could have supported this sort of scheme based only on their desire for purchasing Bitcoin. They could have gotten their Bitcoin anonymously from BitInstant or even through an exchange (as long as they aren't withdrawing, you can purchase Bitcoin anonymously easily online). This makes zero sense as a business unless there is something I'm missing. Maybe you could explain it.
Time is money. Money is time. Clients pay %markups for instant availability, for anonymity.
Let me give you two possible examples:
First example:
Let's assume you wanted to try to play the market, say $50k a month. (Pocket change for any real market wizards.) You didn't want to keep large amounts of cash or btc tied up, but to be able to jump in/out of the market at will, without leaving IRS-related ripples.
Today, that's impossible.
-- Sell BTC today, and tell me how long it is till you have $real-money$ in your hand? 3 days? 5 days?
-- Have cash in your hand? How long till you get BTC? 48 hours? more?
-- every > $10k transaction is entitled to fairly high levels of visibility.
What kind of percentages would someone be willing to pay to reduce that to 4 hours? 2hours? Is it worth a 10% markup?
In the financial trading world, a company called "Spread Networks" spent $millions$ of $usd$ to build a new fiber route between Chicago and New York, just to shave a few MS off that path... and the financial houses paid happily just for a few milliseconds of advantage. (http://www.forbes.com/forbes/2010/0927/outfront-netscape-jim-barksdale-daniel-spivey-wall-street-speed-war.html)
Second example:
Let's assume you are moving "product X" from one part of the world to another. You don't want to leave a money trail. You need someone on each end willing to move $$$/BTC in large amounts. you don't care at ALL about the 10% ding. You don't care what the market price is, because you're moving in/out of btc.
I'm not sure why these concepts are either so hard to understand or so difficult to believe. I'm not saying it's impossible that bts&t was a scam. I'm not saying it's impossible that it was a ponzi. I'm not saying Pirateat40 is a standup guy who will return all the money.
I'm saying, just because you don't understand it, doesn't make it impossible.
