Is pirateat40 really anonymous?

In GNU/Linux just open a terminal and type
I wonder

Bets of Bitcoin: Bitcoin Savings and Trust will default before the end of 2012

Who cares indeed?  So why the inflammatory language?

Can we move on now?

I think one important aspect has been missed in this thread:

Will he leave with BTC or USD in his pockets??

Option A:

He's running a legitimate business. In this case, when he decides to quit, the first thing he has to do (in order to stay within legal boundaries) is to make sure to have enough BTC funds to pay back his lenders. He may have to buy on the market large amounts to fill potential voids. He then has to announce the end of operations of BS&T (does anybody know what notice period he has to adhere to?). Once all debts are paid off, he can either keep all his remaining BTC, USD or convert one into the other and walk away. We may see a substancial purchase of BTC in advance to his notice, which would be an indicator of his true blue intentions.

Option B:

He's running a ponzi or legitimate business but decides to scam everybody. In that case he will not give prior notice, try to vanish as quickly as possible, preferably before the whole swindle surfaces so he can pocket all the funds without paying anything back. The question now arises: Will he leave with BTC or with USD in his pockets?

1. If he is indeed running a ponzi scheme, the mayor part of his funds will be held in BTC through the influx of BTC from his lenders. To leave the country (because his identity is know) with only a huge amount of bitcoin in his wallet, that still has to go through some bank account to convert into USD is a rather flawed option (lets put any of the BTC for USD in mail services aside, because none of those would have sufficent USD cash reserves to pay out 250k BTC in mail envelopes). He would probably try to convert a significant amount of his BTC denominated funds to USD and withdraw that prior to his exit. The current MtGox withdrawal limits are limited to a maximum of 500k USD/month for trusted customers. He would have to give it at least 2 month time to prepare his exit to withdraw 1M USD and maybe some extra from other exchanges to have a reasonable pocket money for his livelong vacation on tropical island. We could in that regard see some 1M USD worth in BTC be sold on the major exchanges (and withdrawn).

2. If he is instead selling large amounts of BTC to an anonymous investor that uses pirate as surrogate, he could decide to pocket the USD from his big brother and default on his BTC debts, duping all his lenders as he walks away with about 2M USD in his pocket. That way the community would have no prior warning and no chance to trace pirate after he vanishes, except for international warrants (likely?). The BTC lent, will be still there, but through various laundering services probably well cleaned off their tracks.

So in conclusion; depending on the scheme he is running, one can only hope, that he is a good pirate at heart, because in both cases he could just sail away with all the money and leave nothing behind. But honestly, what pirate has ever been known for his kindheartedness?

Old business model:

1. ...?
2. Profit!

New business model:

1. ...? (but different!)
2. Profit!


But you are right about what a great deal he has. I mean what young savvy entrepreneur--who has supposedly generated hundreds of thousands in profits for himself--could ever pass up the opportunity a raising funds for the low, low rate of, um, 3000% interest?

Stop drinking the Kool-aid, Brunic. I think it might not be good for your health.

Who's to say GPUMAX is proving to be profitable? They're obviously trying to limit growth with the huge waitlist. The very concept of it - a quick way to buy hashing power with bitcoins - provides an end-run around the security model of bitcoin; useful for double-spend attacks for instance. The concessions by making it only possible to redirect GPUMAX hashing power to major pools are probably grudgingly provided, and would serve to severely limit the value of the service. For all we know GPUMAX is being subsidized right now so that the capability is in reserve.

Anyway, fundamentally the pirate is accumulating *bitcoins* one way or another by playing with bitcoin. He needs a way to lock-in those profits without legal risks to himself, either by staying totally anonymous, "getting away with it" legally speaking, or by someone actually developing those profits. My scenario provides an possible way to actually generate those profits, unique to a small market like bitcoin that actually does have the potential to be destroyed. If he manages to pull it off, it'd get rid of a lot of legal risk if someone manages to somehow unmask him.

When you get down to it, the Pirate is probably the guy with the biggest bitcoin-denominated debt, by far. A debt that could well be a good chunk of the bitcoin economy - observe the ludicrous recent forum post titled "Bitcoin Killer App: High Yield Investments". If a good chunk of the bitcoin economy may be these naive investors plowing money into scams, and when that bubble bursts the outcome will be ugly enough as it is.

Unfortunately with their bitcoin-denominated debts the people running these scams have an incentive to make sure that outcome is as ugly as possible.

He's selling borrowed BTC (while paying interest) on the market with the goal of buying them back lower. That's called 'shorting bitcoin', no?

Something like this is certainly possible, if you're rich enough in BTC,
compared to the "real" depth of the orderbook down to your target price.

You don't need to drive the price to zero, or make it stay there for the scheme to work.

---

Extremely simplified hypothetical scenario with completely fictional numbers:

Assume that for some strange reason find yourself in possession of 500K BTC, 0 USD.
Assume that it takes 500K BTC to - however briefly - drive the price to 1 USD.

Step 1: You sell 500K BTC from 10 USD down to 1 USD/BTC.
Let's assume you manage to get an average price 5 USD/BTC, this nets you 2.5M USD,

Step 2: Immediately place a bid for 2.5M BTC at 1 USD/BTC.
Price rebounds from 1USD/BTC. You now possess 2.5 Million BTC, 0 USD.

Step 3: (Optional) Pay off Bitcoin denominated debt, if any.

---

And... you're done! Buy an island and retire.

What happens in step 2 if the market doesn't fill your bid for 2.5M BTC @ USD$1, and bids at $5 start flooding the market? Finding people to sell you a huge number of BTC @ $1 might be difficult.

Well, you fail.

You need to finish selling the open orders of BTC down to your target price,
before the market react and successfully transfer the millions of dollars required to stop the fall into the exchange(s).

Surprise and confusion would be an advantage.

If taken by surprise, much of the market will obviously, reasonably join in and sell what they can while the price is "still above 8$, still above $7, still above $6, still above 5$".

This gives an advantage to the instigator of the crash, as he will (plausibly) get a higher average price for his sold coins, than if he were to do it alone.

Also: You can still succeed, even if the sudden drops stops at 2.0$ or whatever... As long as you sell most at the top and less at the end.