Bitcoin Savings and Trust: Difference between revisions

From Quadriga Initiative Cryptocurrency Hacks, Scams, and Frauds Repository
Jump to navigation Jump to search
No edit summary
(COMPLETE 30 minutes. Review of remaining article. Added information related to the scheme wrapping up, and the various end stages from the BitcoinTalk thread. Updated the date to August 17th.)
 
(One intermediate revision by the same user not shown)
Line 1: Line 1:
{{Imported Case Study 2|source=https://www.quadrigainitiative.com/casestudy/bitcoinsavingsandtrust.php}}
{{Case Study Under Construction}}{{Unattributed Sources}}
{{Unattributed Sources}}


[[File:Bitcoinsavingsandtrust.jpg|thumb|Bitcoin Savings and Trust]]Pirateat40 (Trendon Shavers) ran a scheme where he would supposedly invest people's bitcoin to earn more bitcoin, and conducted regular payouts for all participants as promised. This scheme continued for more than a year, before finally collapsing. He was later prosecuted for fraud and spent time in jail. Over half of participants lost money in his operation.
[[File:Bitcoinsavingsandtrust.jpg|thumb|Bitcoin Savings and Trust Logo/Trendon Shavers]]Pirateat40 (Trendon Shavers) ran a scheme where he would supposedly invest people's bitcoin to earn more bitcoin, and conducted regular payouts for all participants as promised. This scheme continued for more than a year, before finally collapsing. He was later prosecuted for fraud and spent time in jail. Over half of participants lost money in his operation.


This exchange or platform is based in United States, or the incident targeted people primarily in United States.<ref name="onyxgs-3142" /><ref name="cryptocurrencymedium-3759" /><ref name="bitcointalk-3760" /><ref name="bitcointalk-3761" /><ref name="bitcointalk-3762" /><ref name="btclendingarchive-3763" /><ref name="bitcointalk-3764" /><ref name="bitcointalk-3765" /><ref name="bitcointalk-3766" /><ref name="bitcointalk-3767" /><ref name="forumsarchive-3768" /><ref name="elliptic-2535" /><ref name="vocal-5675" /><ref name="lawnews-7528" /><ref name="comparitech-10032" />
This exchange or platform is based in United States, or the incident targeted people primarily in United States.<ref name="onyxgs-3142" /><ref name="cryptocurrencymedium-3759" /><ref name="bitcointalk-3760" /><ref name="bitcointalk-3761" /><ref name="bitcointalk-3762" /><ref name="btclendingarchive-3763" /><ref name="bitcointalk-3764" /><ref name="bitcointalk-3765" /><ref name="bitcointalk-3766" /><ref name="bitcointalk-3767" /><ref name="forumsarchive-3768" /><ref name="elliptic-2535" /><ref name="vocal-5675" /><ref name="lawnews-7528" /><ref name="comparitech-10032" />
Line 15: Line 14:
"I've created my own custom management software that I've built to monitor deposits, withdraws and interest payments.  As this gets bigger I'll build a front end for it so users can view and manage there account and maybe putting that domain btclending.com to good use." "I really don't have a max number, I'm talking with the buyers today to see what kind of volume they are looking for. But from pass conversations they need more than I've been able to provide."
"I've created my own custom management software that I've built to monitor deposits, withdraws and interest payments.  As this gets bigger I'll build a front end for it so users can view and manage there account and maybe putting that domain btclending.com to good use." "I really don't have a max number, I'm talking with the buyers today to see what kind of volume they are looking for. But from pass conversations they need more than I've been able to provide."


"i think people will more likely be interested in whether or not we get our principle back Cheesy the interest payments would be a secondary consideration." "Agreed, otherwise it could be one big ponzi scheme."
=== Reviews Received ===
 
"I did this with Pirate for quite a while and never had any issues whatsoever.  My interest payments were timely and I was always able to withdraw according to our terms.  I only quit using him because I liquidated a large percentage of my working capital.  I look forward to reinvesting with him."
"I did this with Pirate for quite a while and never had any issues whatsoever.  My interest payments were timely and I was always able to withdraw according to our terms.  I only quit using him because I liquidated a large percentage of my working capital.  I look forward to reinvesting with him."


"As I said I would do, I'm here to indicate that I received my first interest payment today, exactly as promised. I also lent pirateat40 some more BTC."
"As I said I would do, I'm here to indicate that I received my first interest payment today, exactly as promised. I also lent pirateat40 some more BTC."


=== Popularity Of Service ===
"Between September 2011 and September 2012, Shavers’ Bitcoin Savings & Trust (BTCST) allegedly raised 764,000 bitcoins, worth roughly $4.5 million at the time (and over half a billion USD at current Bitcoin exchange rates), from clients that trusted him to invest the funds for them. These investors were promised returns of 7% per week, or 3,641% per year, claiming to employ market arbitrage strategies."
"Between September 2011 and September 2012, Shavers’ Bitcoin Savings & Trust (BTCST) allegedly raised 764,000 bitcoins, worth roughly $4.5 million at the time (and over half a billion USD at current Bitcoin exchange rates), from clients that trusted him to invest the funds for them. These investors were promised returns of 7% per week, or 3,641% per year, claiming to employ market arbitrage strategies."
"This thread is locked until further notice." "I'll be in Las Vegas July 27th through July 29th with some of the biggest names in Bitcoin.  If you're in the area drop by and we can all chat.  Contact me for details if you're interested." "The interest rates are going to decrease substantially on August 1st."
"After much consideration, I’ve decided to close down Bitcoin Savings & Trust." "The decision was based on the general size and overall time required to manage the transactions. 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 orders 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. 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."
"I’ve spoken with my clients over the last week and come to an agreement that would allow me to close down my operation within a week.  Currently my reserve (operating wallets) are drained from fulfilling the withdraw spree that happened after the rate drop announcement.  All withdraws at this point will be delayed until Monday when the shutdown process begins." "At this point I will no longer accept deposits.  Any coins sent into the system as of now will be returned immediately."
"Starting Monday I’ll begin systematically closing and withdrawing accounts as coins are transferred.  I don't expect the entire process to last longer than a week. The moment your account is closed you’ll receive your coins plus any interest accrued up to the hour it was sent."
"I’d like to thank all of my lenders and PPT operators that were a key element in making Bitcoin Savings & Trust a success. Bitcoin has grown a lot since I started this and want you to know that you were a vital part in helping it grow."
"In 2014 Shavers was arrested for running a bitcoin-related Ponzi scheme and was ordered to pay $40.7 million in fines and sentenced to one and half years in prison."
"Shavers, who was charged with one count of securities fraud and one count of wire fraud, faced up to 40 years in prison. Originally, he pled not guilty to fraud charges in March 2015. This decision was reversed in September of that year as part of a plea deal — thanks to this, his possible sentence was lowered to a maximum of 41 months."
This exchange or platform is based in United States, or the incident targeted people primarily in United States.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
* Known history of when and how the service was started.
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.
Don't Include:
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.


== The Reality ==
== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
"i think people will more likely be interested in whether or not we get our principle back Cheesy the interest payments would be a secondary consideration." "Agreed, otherwise it could be one big ponzi scheme."
 
* When the service was actually started (if different than the "official story").
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.


== What Happened ==
== What Happened ==
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
Bitcoin Savings and Trust ultimately collapsed.
{| class="wikitable"
{| class="wikitable"
|+Key Event Timeline - Bitcoin Savings and Trust
|+Key Event Timeline - Bitcoin Savings and Trust
Line 72: Line 33:
!Description
!Description
|-
|-
|August 1st, 2012
|December 16th, 2011 7:35:10 PM MST
|Main Event
|BTC Lending Site Online
|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
|PirateAt40 announces the complete launch of an online portal for his investors at btclending.com<ref>[https://bitcointalk.org/index.php?topic=50822.msg652644#msg652644 ineededausername - "website's live! waiting for my credentials!" - BitcoinTalk] (Accessed Sep 3rd, 2024)</ref>.
|-
|December 17th, 2011 6:35:52 PM MST
|Large 600 BTC Withdrawal
|payb.tc mentions that they managed to complete a large withdrawal of 600 BTC from Trendon's platform<ref>[https://bitcointalk.org/index.php?topic=50822.msg653385#msg653385 payb.tc - "a while back we mentioned that getting principal back is far more important than getting the interest payments... so i should mention that last week i successfully withdrew a large chunk of it (600 btc). cheers." - BitcoinTalk] (Accessed Sep 3rd, 2024)</ref>.
|-
|July 4th, 2012 3:46:42 PM MDT
|Main Thread Is Locked
|pirateat40 announces that the main Bitcoin Savings and Trust thread is locked. until further notice<ref>[https://bitcointalk.org/index.php?topic=50822.msg1009152#msg1009152 pirateat40 - "This thread is locked until further notice." - BitcoinTalk] (Accessed Sep 16, 2024)</ref>.
|-
|-
|
|July 23rd, 2012 4:44:54 PM MDT
|
|Referral Only Requirement Lifted
|
|pirateat40 announces lifting the referral-only requirement to opening an account with his platform in what appears to be the final post in the thread<ref name=":0">[https://bitcointalk.org/index.php?topic=50822.msg1048498#msg1048498 "Starting today, I've lifted the '''referral only''' requirement to open a Savings account. The switch date is being moved to Aug 13th due to me being out of town and a delay in the rollout of the website update. Any account that holds more than 5k BTC will automatically be upgraded to a Trust account on that day. Accounts opened from today to the switch date will be paid the current rates until the switch happens."] (Accessed Sep 16, 2024)</ref>. The measures will start in effect on August 13th. Any reduction in the interest rate is only implied by the post since "Accounts opened from today to the switch date will be paid the current rates until the switch happens." and not actually mentioned explicitly<ref name=":0">[https://bitcointalk.org/index.php?topic=50822.msg1048498#msg1048498 "Starting today, I've lifted the '''referral only''' requirement to open a Savings account. The switch date is being moved to Aug 13th due to me being out of town and a delay in the rollout of the website update. Any account that holds more than 5k BTC will automatically be upgraded to a Trust account on that day. Accounts opened from today to the switch date will be paid the current rates until the switch happens."] (Accessed Sep 16, 2024)</ref>.
|-
|August 17th, 2012 11:57:53 AM MDT
|Platform Closure Announced
|The shutdown of the scheme is announced through an edit of the main forum thread<ref name="bitcointalk-3764" />. "The decision was based on the general size and overall time required to manage the transactions.  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 orders 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.  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."<ref name="bitcointalk-3764" />
|}
|}


Line 86: Line 59:
== Total Amount Lost ==
== Total Amount Lost ==
The total amount lost has been estimated at $5,300,000 USD.
The total amount lost has been estimated at $5,300,000 USD.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?


== Immediate Reactions ==
== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
"I'll be in Las Vegas July 27th through July 29th with some of the biggest names in Bitcoin.  If you're in the area drop by and we can all chat.  Contact me for details if you're interested." "The interest rates are going to decrease substantially on August 1st."


== Ultimate Outcome ==
== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
"This thread is locked until further notice."
 
"After much consideration, I’ve decided to close down Bitcoin Savings & Trust." "The decision was based on the general size and overall time required to manage the transactions. 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 orders 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. 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."
 
"I’ve spoken with my clients over the last week and come to an agreement that would allow me to close down my operation within a week.  Currently my reserve (operating wallets) are drained from fulfilling the withdraw spree that happened after the rate drop announcement.  All withdraws at this point will be delayed until Monday when the shutdown process begins." "At this point I will no longer accept deposits.  Any coins sent into the system as of now will be returned immediately."
 
"Starting Monday I’ll begin systematically closing and withdrawing accounts as coins are transferred.  I don't expect the entire process to last longer than a week. The moment your account is closed you’ll receive your coins plus any interest accrued up to the hour it was sent."
 
"I’d like to thank all of my lenders and PPT operators that were a key element in making Bitcoin Savings & Trust a success. Bitcoin has grown a lot since I started this and want you to know that you were a vital part in helping it grow."


== Total Amount Recovered ==
== Total Amount Recovered ==
There do not appear to have been any funds recovered in this case.
There do not appear to have been any funds recovered in this case.


What funds were recovered? What funds were reimbursed for those affected users?
== Ongoing Developments ==
"In 2014 Shavers was arrested for running a bitcoin-related Ponzi scheme and was ordered to pay $40.7 million in fines and sentenced to one and half years in prison."


== Ongoing Developments ==
"Shavers, who was charged with one count of securities fraud and one count of wire fraud, faced up to 40 years in prison. Originally, he pled not guilty to fraud charges in March 2015. This decision was reversed in September of that year as part of a plea deal — thanks to this, his possible sentence was lowered to a maximum of 41 months."
What parts of this case are still remaining to be concluded?
== General Prevention Policies ==
== General Prevention Policies ==
The largest issue which allows such schemes to continue is the lack of visibility into the backing of funds. Through proving reserves and liabilities, a legitimate operation can give visibility into their backing. Something as simple as Trendon claimed could easily be verified periodically to confirm all assets were fully backed.
The largest issue which allows such schemes to continue is the lack of visibility into the backing of funds. Through proving reserves and liabilities, a legitimate operation can give visibility into their backing. Something as simple as Trendon claimed could easily be verified periodically to confirm all assets were fully backed.
Line 120: Line 99:


== References ==
== References ==
<references><ref name="onyxgs-3142">[https://www.onyxgs.com/blog/six-cryptocurrency-fraud-schemes-you-should-know Six Cryptocurrency Fraud Schemes You Should Know | Onyx] (Sep 19, 2021)</ref>
<references>
 
<ref name="onyxgs-3142">[https://www.onyxgs.com/blog/six-cryptocurrency-fraud-schemes-you-should-know Six Cryptocurrency Fraud Schemes You Should Know - Onyx] (Accessed Sep 19, 2021)</ref>
<ref name="cryptocurrencymedium-3759">[https://cryptocurrency.medium.com/the-biggest-cryptocurrency-scams-in-history-part-4-bitcoin-savings-and-trust-e16a9911d79f The Biggest Cryptocurrency Scams In History Part 4 Bitcoin Savings And Trust] (Oct 14, 2021)</ref>
<ref name="cryptocurrencymedium-3759">[https://cryptocurrency.medium.com/the-biggest-cryptocurrency-scams-in-history-part-4-bitcoin-savings-and-trust-e16a9911d79f The Biggest Cryptocurrency Scams In History Part 4 Bitcoin Savings And Trust - Cryptocurrency Medium] (Accessed Oct 14, 2021)</ref>
 
<ref name="bitcointalk-3760">[https://bitcointalk.org/index.php?topic=4464504.0 History -  Bitcoin Savings and Trust and Pirateat40 on Bitcointalk (PONZI) - BitcoinTalk] (Accessed Oct 14, 2021)</ref>
<ref name="bitcointalk-3760">[https://bitcointalk.org/index.php?topic=4464504.0 History -  Bitcoin Savings and Trust and Pirateat40 on Bitcointalk (PONZI)] (Oct 14, 2021)</ref>
<ref name="bitcointalk-3761">[https://bitcointalk.org/index.php?topic=50822.msg607752#msg607752 Bitcoin Savings and Trust | Home | Closed - BitcoinTalk] (Accessed Oct 16, 2021)</ref>
 
<ref name="bitcointalk-3762">[https://bitcointalk.org/index.php?topic=15672.msg472876#msg472876 Introduce yourself :) - BitcoinTalk] (Accessed Oct 16, 2021)</ref>
<ref name="bitcointalk-3761">[https://bitcointalk.org/index.php?topic=50822.msg607752#msg607752 Bitcoin Savings and Trust | Home | Closed] (Oct 16, 2021)</ref>
<ref name="btclendingarchive-3763">[https://web.archive.org/web/20120301085553/http://btclending.com/ BTC Lending - Login] (Accessed Oct 21, 2021)</ref>
 
<ref name="bitcointalk-3764">[https://bitcointalk.org/index.php?topic=50822.20 Bitcoin Savings and Trust | Home | Closed - BitcoinTalk] (Accessed Oct 21, 2021)</ref>
<ref name="bitcointalk-3762">[https://bitcointalk.org/index.php?topic=15672.msg472876#msg472876 Introduce yourself :)] (Oct 16, 2021)</ref>
<ref name="bitcointalk-3765">[https://bitcointalk.org/index.php?topic=91508.0 A Theory on what pirateat40 is doing - BitcoinTalk] (Accessed Oct 21, 2021)</ref>
 
<ref name="bitcointalk-3766">[https://bitcointalk.org/index.php?topic=91306 BS&T -- Are you staying or leaving? - BitcoinTalk] (Accessed Oct 21, 2021)</ref>
<ref name="btclendingarchive-3763">[https://web.archive.org/web/20120301085553/http://btclending.com/ BTC Lending - Login] (Oct 21, 2021)</ref>
<ref name="bitcointalk-3767">[https://bitcointalk.org/index.php?topic=91252.msg1004534#msg1004534 Look at a pirate, eye to eye if you dare. - BitcoinTalk] (Accessed Oct 21, 2021)</ref>
 
<ref name="forumsarchive-3768">[https://forums-archive.eveonline.com/topic/148917/1/ Bitcoin Ponzi Scheme followed Eve Online path -  Out of Pod Experience -  EVE Online Forums] (Accessed Oct 21, 2021)</ref>
<ref name="bitcointalk-3764">[https://bitcointalk.org/index.php?topic=50822.20 Bitcoin Savings and Trust | Home | Closed] (Oct 21, 2021)</ref>
<ref name="elliptic-2535">[https://www.elliptic.co/blog/bitcoin-fraud-cases-you-should-know-about 5 Bitcoin Fraud Cases You Should Know About - Elliptic] (Accessed Aug 15, 2021)</ref>
 
<ref name="vocal-5675">[https://vocal.media/theChain/cryptocurrencies-that-were-proven-to-be-scams Cryptocurrencies That Were Proven to Be Scams - Vocal Media] (Accessed Jan 16, 2022)</ref>
<ref name="bitcointalk-3765">[https://bitcointalk.org/index.php?topic=91508.0 A Theory on what pirateat40 is doing] (Oct 21, 2021)</ref>
<ref name="lawnews-7528">[https://news.law.fordham.edu/jcfl/2012/09/23/bitcoiners-in-the-court-room-part-i-government-oversight/ Bitcoiners in the Court Room, Part I: Government Oversight - Fordham Law] (Accessed Apr 10, 2022)</ref>
 
<ref name="comparitech-10032">[https://www.comparitech.com/crypto/cryptocurrency-scams/ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech] (Accessed Dec 15, 2022)</ref>
<ref name="bitcointalk-3766">[https://bitcointalk.org/index.php?topic=91306 BS&T -- Are you staying or leaving?] (Oct 21, 2021)</ref>
</references>
 
<ref name="bitcointalk-3767">[https://bitcointalk.org/index.php?topic=91252.msg1004534#msg1004534 Look at a pirate, eye to eye if you dare.] (Oct 21, 2021)</ref>
 
<ref name="forumsarchive-3768">[https://forums-archive.eveonline.com/topic/148917/1/ Bitcoin Ponzi Scheme followed Eve Online path -  Out of Pod Experience -  EVE Online Forums] (Oct 21, 2021)</ref>
 
<ref name="elliptic-2535">[https://www.elliptic.co/blog/bitcoin-fraud-cases-you-should-know-about 5 Bitcoin Fraud Cases You Should Know About] (Aug 15, 2021)</ref>
 
<ref name="vocal-5675">[https://vocal.media/theChain/cryptocurrencies-that-were-proven-to-be-scams Cryptocurrencies That Were Proven to Be Scams | The Chain] (Jan 16, 2022)</ref>
 
<ref name="lawnews-7528">[https://news.law.fordham.edu/jcfl/2012/09/23/bitcoiners-in-the-court-room-part-i-government-oversight/ Bitcoiners in the Court Room, Part I: Government Oversight] (Apr 10, 2022)</ref>
 
<ref name="comparitech-10032">[https://www.comparitech.com/crypto/cryptocurrency-scams/ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech] (Dec 15, 2022)</ref></references>

Latest revision as of 17:13, 16 September 2024

Notice: This page is a new case study and some aspects have not been fully researched. Some sections may be incomplete or reflect inaccuracies present in initial sources. Please check the References at the bottom for further information and perform your own additional assessment. Please feel free to contribute by adding any missing information or sources you come across. If you are new here, please read General Tutorial on Wikis or Anatomy of a Case Study for help getting started.

Notice: This page contains sources which are not attributed to any text. The unattributed sources follow the initial description. Please assist by visiting each source, reviewing the content, and placing that reference next to any text it can be used to support. Feel free to add any information that you come across which isn't present already. Sources which don't contain any relevant information can be removed. Broken links can be replaced with versions from the Internet Archive. See General Tutorial on Wikis, Anatomy of a Case Study, and/or Citing Your Sources Guide for additional information. Thanks for your help!

Bitcoin Savings and Trust Logo/Trendon Shavers

Pirateat40 (Trendon Shavers) ran a scheme where he would supposedly invest people's bitcoin to earn more bitcoin, and conducted regular payouts for all participants as promised. This scheme continued for more than a year, before finally collapsing. He was later prosecuted for fraud and spent time in jail. Over half of participants lost money in his operation.

This exchange or platform is based in United States, or the incident targeted people primarily in United States.[1][2][3][4][5][6][7][8][9][10][11][12][13][14][15]

About Bitcoin Savings and Trust

"Howdy... pirateat40 here, long time watcher first time poster. Those that know me, know me from OTC. Arrrrgh"

"Over the last few months I have been selling BTC to a group of local people. Now this is a don't ask don't tell group of people so I can't tell you exactly where and to whom the coins ultimately end up with but so far its been pretty painless. During this last week I maxed out my available coins both personally and "leased" from other members and they needed a lot more. Up until now, I have dealt with my core group of friends and been able to handle the requests, but they seem to be getting larger and more frequent. So now I'm looking into other methods for keeping a consistent storage or on-demand availability of coins. I have two plans available for those sitting on coins."

"This plan works as an ongoing commitment. You would send coins anytime to the address provided and you would earn interest on a daily basis. You can withdraw your balance at anytime, but I do request that you give me a couple hours to insure I have coverage for the next order. Interest payments are paid out ever 3 days until either you withdraw the funds or my local dealings dry up and I can no longer be profitable. This plan pays 1% per day."

"I've created my own custom management software that I've built to monitor deposits, withdraws and interest payments. As this gets bigger I'll build a front end for it so users can view and manage there account and maybe putting that domain btclending.com to good use." "I really don't have a max number, I'm talking with the buyers today to see what kind of volume they are looking for. But from pass conversations they need more than I've been able to provide."

Reviews Received

"I did this with Pirate for quite a while and never had any issues whatsoever. My interest payments were timely and I was always able to withdraw according to our terms. I only quit using him because I liquidated a large percentage of my working capital. I look forward to reinvesting with him."

"As I said I would do, I'm here to indicate that I received my first interest payment today, exactly as promised. I also lent pirateat40 some more BTC."

Popularity Of Service

"Between September 2011 and September 2012, Shavers’ Bitcoin Savings & Trust (BTCST) allegedly raised 764,000 bitcoins, worth roughly $4.5 million at the time (and over half a billion USD at current Bitcoin exchange rates), from clients that trusted him to invest the funds for them. These investors were promised returns of 7% per week, or 3,641% per year, claiming to employ market arbitrage strategies."

The Reality

"i think people will more likely be interested in whether or not we get our principle back Cheesy the interest payments would be a secondary consideration." "Agreed, otherwise it could be one big ponzi scheme."

What Happened

Bitcoin Savings and Trust ultimately collapsed.

Key Event Timeline - Bitcoin Savings and Trust
Date Event Description
December 16th, 2011 7:35:10 PM MST BTC Lending Site Online PirateAt40 announces the complete launch of an online portal for his investors at btclending.com[16].
December 17th, 2011 6:35:52 PM MST Large 600 BTC Withdrawal payb.tc mentions that they managed to complete a large withdrawal of 600 BTC from Trendon's platform[17].
July 4th, 2012 3:46:42 PM MDT Main Thread Is Locked pirateat40 announces that the main Bitcoin Savings and Trust thread is locked. until further notice[18].
July 23rd, 2012 4:44:54 PM MDT Referral Only Requirement Lifted pirateat40 announces lifting the referral-only requirement to opening an account with his platform in what appears to be the final post in the thread[19]. The measures will start in effect on August 13th. Any reduction in the interest rate is only implied by the post since "Accounts opened from today to the switch date will be paid the current rates until the switch happens." and not actually mentioned explicitly[19].
August 17th, 2012 11:57:53 AM MDT Platform Closure Announced The shutdown of the scheme is announced through an edit of the main forum thread[7]. "The decision was based on the general size and overall time required to manage the transactions.  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 orders 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.  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."[7]

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $5,300,000 USD.

Immediate Reactions

"I'll be in Las Vegas July 27th through July 29th with some of the biggest names in Bitcoin. If you're in the area drop by and we can all chat. Contact me for details if you're interested." "The interest rates are going to decrease substantially on August 1st."

Ultimate Outcome

"This thread is locked until further notice."

"After much consideration, I’ve decided to close down Bitcoin Savings & Trust." "The decision was based on the general size and overall time required to manage the transactions. 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 orders 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. 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."

"I’ve spoken with my clients over the last week and come to an agreement that would allow me to close down my operation within a week. Currently my reserve (operating wallets) are drained from fulfilling the withdraw spree that happened after the rate drop announcement. All withdraws at this point will be delayed until Monday when the shutdown process begins." "At this point I will no longer accept deposits. Any coins sent into the system as of now will be returned immediately."

"Starting Monday I’ll begin systematically closing and withdrawing accounts as coins are transferred. I don't expect the entire process to last longer than a week. The moment your account is closed you’ll receive your coins plus any interest accrued up to the hour it was sent."

"I’d like to thank all of my lenders and PPT operators that were a key element in making Bitcoin Savings & Trust a success. Bitcoin has grown a lot since I started this and want you to know that you were a vital part in helping it grow."

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

Ongoing Developments

"In 2014 Shavers was arrested for running a bitcoin-related Ponzi scheme and was ordered to pay $40.7 million in fines and sentenced to one and half years in prison."

"Shavers, who was charged with one count of securities fraud and one count of wire fraud, faced up to 40 years in prison. Originally, he pled not guilty to fraud charges in March 2015. This decision was reversed in September of that year as part of a plea deal — thanks to this, his possible sentence was lowered to a maximum of 41 months."

General Prevention Policies

The largest issue which allows such schemes to continue is the lack of visibility into the backing of funds. Through proving reserves and liabilities, a legitimate operation can give visibility into their backing. Something as simple as Trendon claimed could easily be verified periodically to confirm all assets were fully backed.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ Six Cryptocurrency Fraud Schemes You Should Know - Onyx (Accessed Sep 19, 2021)
  2. ↑ The Biggest Cryptocurrency Scams In History Part 4 Bitcoin Savings And Trust - Cryptocurrency Medium (Accessed Oct 14, 2021)
  3. ↑ History - Bitcoin Savings and Trust and Pirateat40 on Bitcointalk (PONZI) - BitcoinTalk (Accessed Oct 14, 2021)
  4. ↑ Bitcoin Savings and Trust | Home | Closed - BitcoinTalk (Accessed Oct 16, 2021)
  5. ↑ Introduce yourself :) - BitcoinTalk (Accessed Oct 16, 2021)
  6. ↑ BTC Lending - Login (Accessed Oct 21, 2021)
  7. ↑ 7.0 7.1 7.2 Bitcoin Savings and Trust | Home | Closed - BitcoinTalk (Accessed Oct 21, 2021)
  8. ↑ A Theory on what pirateat40 is doing - BitcoinTalk (Accessed Oct 21, 2021)
  9. ↑ BS&T -- Are you staying or leaving? - BitcoinTalk (Accessed Oct 21, 2021)
  10. ↑ Look at a pirate, eye to eye if you dare. - BitcoinTalk (Accessed Oct 21, 2021)
  11. ↑ Bitcoin Ponzi Scheme followed Eve Online path - Out of Pod Experience - EVE Online Forums (Accessed Oct 21, 2021)
  12. ↑ 5 Bitcoin Fraud Cases You Should Know About - Elliptic (Accessed Aug 15, 2021)
  13. ↑ Cryptocurrencies That Were Proven to Be Scams - Vocal Media (Accessed Jan 16, 2022)
  14. ↑ Bitcoiners in the Court Room, Part I: Government Oversight - Fordham Law (Accessed Apr 10, 2022)
  15. ↑ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech (Accessed Dec 15, 2022)
  16. ↑ ineededausername - "website's live! waiting for my credentials!" - BitcoinTalk (Accessed Sep 3rd, 2024)
  17. ↑ payb.tc - "a while back we mentioned that getting principal back is far more important than getting the interest payments... so i should mention that last week i successfully withdrew a large chunk of it (600 btc). cheers." - BitcoinTalk (Accessed Sep 3rd, 2024)
  18. ↑ pirateat40 - "This thread is locked until further notice." - BitcoinTalk (Accessed Sep 16, 2024)
  19. ↑ 19.0 19.1 "Starting today, I've lifted the referral only requirement to open a Savings account. The switch date is being moved to Aug 13th due to me being out of town and a delay in the rollout of the website update. Any account that holds more than 5k BTC will automatically be upgraded to a Trust account on that day. Accounts opened from today to the switch date will be paid the current rates until the switch happens." (Accessed Sep 16, 2024)
Retrieved from "https://quadrigainitiative.com/cryptocurrencyhackscamfraudwiki/index.php?title=Bitcoin_Savings_and_Trust&oldid=5956"