The Pirate’s Madoff With Bitcoin

There really is nowhere safe to keep one’s money. Merely places that are different than others. Should one put their funds with an MFGlobal type institution only to lose a gross percentage of their overall holdings at a later date? Should people put their funds in gold and silver, hoping that the centuries long manipulation doesn’t seal their investment fate? Or, do they turn to Bitcoin, where losing their money could just as easily happen, despite perks of Bitcoin along the way?

The invite-only hedge fund called Bitcoin Savings & Trust shut down recently with 500,000 bitcoin or more than $5 million.  The administrator at the site, pirateat40, first announced the service would be shutting down “based on the general size and overall time required to manage the transactions,” adding, “As the fund grew there were larger and larger coin movements which put strain on my reserve accounts and ultimately caused delays on withdraws and the inability to fund order within my system.”

“On the 14th I made a final attempt to relieve pressure off the system by reducing the rates I offered for deposits,” pirateat40 wrote in a post on the Bitcointalk.org forum last edited August 17. “In a perfect world this would allow me to hold more coins in reserve outside the system, but instead it only exponentially increased the amount of withdrawals overnight causing mass panic from many of my lenders.”

In the note, Pirate writes that investors would be paid out by the end of one weeks’ time, but ten days later the services’ clients claimed they have not received funds. Pirate’s current online away message reads, about where the funds are, “When I know, you will.” He has disappeared from the chatroom where inquiries had been answered.

“You now have a very limited amount of time till the phone starts ringing. You may be in hiding, but others are not so well hid,” one user writes on the forum. “Do you really want to see how this plays out ? As of right now, I have about 2500 reasons to chase you down. Please don’t give me anymore.”