

Texas Man Arrested for $4.5M Bitcoin Ponzi Scheme - davidst
http://www.forbes.com/sites/jordanmaglich/2014/11/06/texas-man-arrested-for-4-5-million-bitcoin-ponzi-scheme/

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consz
I remember seeing pirateat40's scam happening live. I could not believe that
anyone could possibly fall for a fund offering 10%+ per week, and when I found
out that he ran off with 150k bit coins, I laughed _so_ hard. The bitcoin
community always found ways to amaze me.

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beaner
What's really hilarious is that not only did the vast majority of the bitcoin
community _not_ get scammed, but you don't have to be a bitcoin user to be
ponzi-scheme'd, since it happens to people everywhere all the time! It's so
funny.

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nyolfen
reactive defensiveness and insecurity isn't actually very funny imo

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beaner
The whole situation is not funny. That was my point.

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nyolfen
if you can't find humor in the absurd level of fraud in the bitcoin sphere
you're poorer for it

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beaner
This reply is in direct contradiction to your first reply to me, which was a
write-off of my laughing at the situation.

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wpietri
I am shocked! Shocked that an unregulated asset class that has attracted every
technoutopian, financial naïf, and get-rich-quick dreamer would have a Ponzi
scheme in the community.

Every once in a while something happens where possibly some of the old rules
don't apply; suddenly a lot of people believe that none of the old rules are
of any use at all. E.g., the dot-com bubble, when the new economy changed
everything! Until it all came crashing down.

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jrockway
I'm hoping for more of these Internet crimes, if only because the
transcription of Twitter posts into official court documents amuses me. Or is
that "#amusesme"?

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alttab
its called #seeyouindeposition

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MichaelApproved
Does anyone know more about this story? Could he have gotten away with this if
he were in a country with less regulations? Was part of the pitch that he was
from the US or was that irrelevant to his investors?

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justincormack
You can rarely get away with Ponzi schemes. For an example of a less regulated
country, check out the Albanian schemes [1] which reached 50% of GDP and then
led to rioting, civil war, the fall of the government.

[1]
[http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm](http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm)

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ddorian43
But they ~got away with it.

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rbobby
11% per _week_! If it sounds too good...

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mikeash
If it sounds too good to be true, then you'd better put all your savings into
it quick before it gets shut down?

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swartkrans
You're liable for clawbacks. Madoff investors who pulled out early and
received more than they should have at the expense of others were all sued by
the trust responsible for recompensing victims. Best to just stay out of it.

~~~
mikeash
Wow, I had no idea. I was joking, but that's interesting just the same.

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jgoewert
With ponzi schemes, I always have wondered if they "work" because some people
even see that they are ponzi schemes, but believe themselves to be part of the
early investor set that will receive they promised shares and "outsmart" the
person leading the scheme.

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DrFunke
Should've tried Kickstarter instead.

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wmf
I assume that's a joke, but there's a lot of shady crowdfunding, "crowdsales",
IPOs, and "ICOs" going on in Bitcoin land. They're not Ponzis because they
don't promise any specific level of return but the effect is similar and the
SEC is cracking down on some of them.

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thret
4.5 million bitcoin scheme, 40 million in fines? Ridiculous. According to the
article he took around 1 million for personal use and returned the rest.

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mikeyouse
He kept _150,000_ Bitcoin.. Today they'd be worth over $50M. If you stole a
stack of stock certificates on a day when they were only worth $10 and were
arrested on a day when they were worth $100, you couldn't just pay back $10 in
cash and walk away with the stock, why should BTC be any different?

~~~
Dylan16807
Failure to repay is subtly different from going out and stealing in the
traditional manner. If you fail to repay stock and get super lucky with the
value I think you _should_ be able to pay cash+interest+penalties* and walk
away. (And play roulette next time, less likely to end in jail.)

They're not going to demand less money if the stock goes down, are they?

*penalties perhaps meaning you pay $30 plus interest

