pirateat40: It became Bill Cosby coins
We here at Buttcoin have obtained newly filed paperwork (1, 2) in the SEC’s case against Trendon Shavers, AKA pirateat40, owner of the now-collapsed pyramid scheme Bitcoin Savings and Trust. Some highlights:
- He’s been unemployed for 4 years. (Father of 10-ish year old twins)
- He began his ponzi efforts informally starting in February of 2011 through IRC channels, with microloans that turned into larger loans
- He said for the last 2 years he’s been “self employed in currency trading”. When asked what that meant, he said he used localbitcoins.com to arrange trades throughout Texas, always receiving cash for BTC.
- At a bitcoin conference in Las Vegas in July 2012, he hit up a bunch of bitcoin bigwigs for investments in his ponzi. They invested a lot into him, and he names names. Burt Wagner is the only name [our source] recognized. But he netted a lot of whales at that thing.
- Paraphrased question: Why did you take deposits in Vegas by paper transactions? “In Vegas I didn’t have access to a computer to be able to connect. Vegas’ network was horrible. So I told anybody that made deposits that I couldn’t verify on the server… I would pay them an additional percentage for those coins.”
- One of the Vegas investors stiffed him with the paper transaction, withdrawing the amount before the blockchain confirmed his deposit.
- He mentions that he had to change all of his passwords when bitcointalk got hacked: “It became Bill Cosby coins, a bunch of stuff got messed up, and everything went haywire, so they had everybody reset their passwords”
- He says about 60 to 70 percent of his ponzi was invested in Bitcoinica, the rest he was daytrading or cashing out in-person through localbitcoin.com.
- They seemed to spend like 30 minutes going around in a circle for pirate to explain that he used a large number of addresses to hide his transaction. Finally he had to spell it out: “It was to keep people from knowing exactly which large – I held most of the large bitcoin addresses on the internet. … they figured out a way to look through the blockchain to find out who has the most bitcoins. Well, for me, I needed a way to hide that.”
- He had some big bet with a bitcointalk poster named Vandroidy. He bet 5000 that he wasn’t a ponzi, apparently this was a big public thing? He had a big plan to publicly “mess” with vandroidy and win the bet, but his plans fell through as his entire business collapsed and he was behind hundreds of thousands of BTC.
- QUESTION: “Did you pay the 5000 bitcoin to Vandroidy?”
- ANSWER: “Oh yeah”<pause>
- QUESTION: “Why?”
- ANSWER: “Because I had to secure the bet”
- Shavers made an unsecured loan of 202,000 bitcoins to BTCST’s largest borrower, who promptly absconded with the funds.
- Shavers admits the July 2, 2012 rate-change announcement on the Bitcoin Forum precipitated a “wave” of withdrawal requests from BTCST investors.
- Pirate took in about 732,050 BTC.
- He paid out about 551,231 BTC…
- 150,649 BTC were transferred from the business wallet to Pirate’s personal accounts with… MT GOX! (deposition was taken in september, everything is silent as to the current status of the coins)
- At least $150,000 was successfully withdrawn as cash for him to live on
- The Fed is using curent exchange rates (3/3/14) to say investors were defrauded of $149 million
Additional food for thought:
Shavers paired with someone called “Big One” and “Number Two” to source coins and interest payments to keep his ponzi (a ponzi within a ponzi) going but he talked about “Big One” manipulating the market. He was basically suggesting that the Mt. Gox crashes that we saw happening on Fridays were his doing and that he had control of so many coins that he would cause a drop in price and scoop them up at lower prices on Friday, sell on Monday and give 10% interest on the invested coins to pirateat40. pirateat40 would then take his investor’s bitcoins, hand them to Big One”, he would drop the price again and reap more interest and then pay it out
Both “Big One” and “Number Two” had access to his bitcointalk account and posted on his behalf too. Silent bitcoin ponzi partners.
And finally, the icing on this cake of hilarity:
All admitted without legal counsel present, because Shavers considers himself a Freeman on the land, and therefore something something gold fringe berth certificate etc. He’s doomed.