Awww   Thank you!   But the thing is I'm having immense fun thinking I could be ruining the "fun" of a scammer so my posts might be formulated childishly but they still contain valid arguments and valid red flags that I will not stop raising.

I might even take your advice and make a special thread and bump it all the time as well.

Where did you get the idea you could pay me to stop raising valid arguments and red flags in order to prevent people from needlessly losing their money?

A coddled child, protected from all difficulty, rarely becomes more than an automaton. We learn through our failures. Development of rational judgment requires trial and error.

Go get a dog so you can come to understand cause & effect.


And if you destroy what might turn out to be a legitimate outfit that may well be a primary factor in maintaining a stable Bitcoin exchange rate, what will you say? "Oops"?

You are not the judge, jury, and executioner.

I'll take the same deal, but for 50.. see sig

I don't think I've posted much more than "Happy monday!" though.

BTCST is a Ponzi scheme, pure and simple. It's been masterfully planned and executed, but I suspect the end is near. 7% a week (28% a month, non-compounded) is far too high to sustain the operation for very long, and it's impressive that it has lasted 6 months. Madoff survived so long by offering about ONE percent a month. People handed him billions to be able to get those returns. There is simply no business opportunity on the planet for which it makes sense to borrow at a compounded annual interest rate of 3300%. If you had a way of making even 1% a week, you'd be crazy to share those profits for longer than it took you to accumulate enough capital to self-fund and bear the risk of whatever you're doing. Or convince a single large private lender of what you're doing, and borrow at something like 6-8% annually.

Here are some aspects that make this a well-played Ponzi:

- Establish trust and reputation over a long period by making OTC trades and building a high OTC and Forum rating. What is the trust rating of an anonymous avatar ultimately worth vs. potentially stealing 100k BTC or more? "Con man" derives from "confidence man". A successful confidence man goes for the long con -- building trust over a long period of time, not taking the small short-term gain in order to take the big score at the end.

- Build an early core of investors who are well-known forum members. My guess is these people were pulled in a month or more before he ever posted the first thread on the forum. This army of early investors serves as a mob who can shout down the inevitable ponzi warnings on the forums. Read the EVE Online account for an account of how this works. In particular, have certain forum members claim to know Pirate's real name or have met hime. If there are forum members here who claim to know who Pirate is (with proof), you should commit to that identity now in the forum with an encrypted message. When the scheme goes south, you can provide the key for decryption. I highly down anyone actually knows who he is though.

- Limit capacity early on, visibly kicking people's investments out. This serves multiple functions. First, it sidesteps the "whale" problem of taking on too much money too early and not being able to make payments. Second, it is a psychological trick that causes investors to be afraid of the wrong thing. Instead of having the fear of losing their entire investment, investors fear being kicked out by earlier investors or "lack of capacity". This makes them reluctant to withdraw, because they may not be able to get back in. Finally, it gives preferential status to early investors, who can offer pass-thru investments to others, and essentially magnifies the marketing efforts of what he could do on his own. He can still control the overall growth rate by restricting these pass-thru providers though. These pass-thru providers may or may not be in on the scheme. Even if they're not in on it, but suspect it's a Ponzi, they can effectively collect risk-free spread by skimming off their spread, while shifting the blame onto Pirate when the eventual default comes.

- Use very vague description of the business. Indicate that there are these large "whales" out there who want to invest in bitcoin and are willing to pay absurd premiums to the market rate in order to do so, and apparently want more and more BTC over time. Even though no one else has found such clients, no one can really prove that you DON'T have access to such clients. This is better than Ponzi's original scheme which he said involved buying massively discounted postal coupons overseas and selling them for face value in the US for big arbitrage profit. The post office called his bluff -- that can't happen to Pirate.

- The scheme is being run using a virtual currency which is semi-anonymous and can be effectively laundered, either along the way or at the end. Based on current law, it may not even be considered a crime, if bitcoin is not considered to be property by the law.

It appears we may be nearing the end of this. The rates are being lowered (but why wait til Aug 1? Potentially, to suck more money in for the next 4 weeks to earn the still-high returns). These "trust" accounts are where the real money is to be made. By making a large differential between the direct accounts and the high value "trust" accounts, it encourages the inflow of a lot of capital to trust accounts (with a nice little 500 BTC kicker per account for the "security deposit"). This is the time for the payoff, so it makes sense to take as much money as quickly as you can before the end. No more worries about whales.

Posting that he's going to be available to meet up in person is another signal that he needs to create additional assurance to suck more investors in. Odds are, either the scheme will collapse before then, or he'll conveniently get sick and not be able to make it.

How does this end? I can think of 3 main ways:

1) He simply disappears, never to be heard from again on the forums.

2) He announces it's a Ponzi -- sorry, you've all been had.

3) He announces that (horror of horrors!) he's been hacked. All the BTC are gone. He's really sorry to let down all his investors -- but it's that damn hacker you should track down!

In any of these cases, he could cash out to USD beforehand or afterwards at a later time. But if you were uncertain as to the impact that revealing BTCST as a ponzi might have on the exchange rate, I think it's much more likely that you'd try to cash out beforehand.

The sooner people test their ability to actually withdraw their account balances, the sooner this will all be over. A ponzi can't tolerate even the HINT of a run on the bank. Why pay out money that you know you can't? Better to keep it and end the scheme.

Good luck to you all.

Yep. Pirate realises his identity will be uncovered and whereabouts distributed to the masses when he disappears. I wonder what his move will be. He knows stealing an excess of $400k from a pool of tech savy individuals is not smart.

Unfortunately none of that proves it's a Ponzi.  And even more unfortunate is that seldom Ponzi can be proven until it's too late.  In the case of each one of your three end-game scenarios, we still have full dox on him, and some people still have a lot of BTC.  

This is the one rare occasion that calls for a deliberate double-post.


I'm off, guys, it doesn't get any better than this, and that's when you quit.

Nice coincidence, on the first page of gotbalotelled right now: