The FBI says that they got to him because SilkRoad used a captcha link in a way that exposed its real IP.   After that, I would guess that they followed him for a while, and haced into his computers, until they felt that they had enough evidence.  They got his email, for instance, where he allegedly discusses the murder of some blackmailer.  So, even if he encrypted the wallet, they may have captured the password.  The library may not have been a mistake, it may have been just the place that the FBI chose for the arrest. 

Anyway, as others pointed out, he made a deal with the gov to have the coins auctioned now.

Free speech is the right to tell your own honest opinion.  It does not cover intentionally deceiving people, in particular misleading investors about the value of bonds and such -- which can take people to jail, in many jurisdictions.

If those people with money to spare really believe that Bitcoin will be worth 10000$ next year, why don't they buy those coins that are being offered for sale on the exchanges at 370$ now?

This is not my hidden agenda, it is the very reason why I started following bitcoin -- and I have been clear about that from the beginning.  We already had here a MLM that sucked all the worth -- over a billion dollars -- of millions of Brazilians wo did not know any better.   Now bitcoiners are pushing BTC in Latin America as a hedge against inflation, a miraculous get-rich schema, etc.; hoping that suckers here will lift the price and buy the coins that they want to sell.  You cannot ask me to be silent about it.

EDIT: And bitcoin funds are part of that too, so that was quite on-topic.  Too bad that you will never see criticisms of those funds in the bitcoin media (which is uspported by enterprises like SMBIT).

His parole officer filed charges of probation violation already in September 2013.  By a special caluse of his probation, Sonny was prohibited from engaging in any business that solicted funds; and the officer understood that taking pre-orders to develop a product (without telling her) violated that clause. Thanks to the testimony of Mr. Bourne, Sonny escaped jail but had his probation extended for another two years.
http://arstechnica.com/tech-policy/2014/04/digging-for-answers-the-strong-smell-of-fraud-from-one-bitcoin-miner-maker/

OK, but each bid by a syndicate member must have been for less than 2000 BTC.  Otherwise there would be no reason to enter the syndicate, right?

They also said that the bids added to ~120 kBTC, so the average bid was about 1200 BTC.

Indeed.  Perhaps those 8 bidders were themselves syndicates.  

In order to enter the SecondMarket syndicate, a bidder had to send them the full amount of their bid in advance.  So, there might have been a "banker" who collected several bids from other people, on credit, and entered the SM syndicate under his name, with his own money, for a fee.

Alternatiely, such sub-syndicates could be a way to avoid the KYC/AML requirements that USMS imposed on SecondMarket.  SecondMarket would not risk getting in trouble with the law, but the sub-syndicate organizer may not care about that.

SecondMarket had 186 small bidders in their syndicate for the June auction.
https://www.cryptocoinsnews.com/secondmarkets-bitcoin-investment-trust-syndicate-won-48000-btc-in-latest-silk-road-bitcoin-auction/
So that statistic droped too.

And they won't say what price they paid.  Not even say "we paid above market for some of the lots", or "we paid very close to market".

Perhaps they don't want the world to think that key players in the bitcoin space are optimistic about bitcoin. Right, that must be it.

That was a fypo, I suppose? (If not, whose tools?)

Thanks!  

Note that the first article was written in March, when the BTC price chart did not look as bad as it does now.

"This summer" is already gone. Did they open that bitcoin exchange?

According to the first article, only those SMBIT customers who have held shares for more than 12 months will be allowed to offer them for sale on OTCQX.  As people buy those shares, SMBIT will NOT buy more BTC.  

At best, I see the following effects of the OTCQX offering on the BTC market:

(1) when those old clients opt to sell their SMBIT shares on OTCQX instead of liquidating them, SMBIT will not have to sell the corresponding BTC.  It is not clear whether the people who buy at OTCQX will be able to liquidate them at SMBIT immediately, or whether they too will have to wait for one year before doing so.

(2) if the general public rushes to buy SMBIT shares on OTCQX, so that the shares sell at a premium over their face value, other large investors will want to buy shares from SMBIT (which will cause them to buy BTC) in order to sell them on OTCQX.  However those big investors will have to wait for one year before doing so.

I cannot imagine why someone would want to put their money into such a trap. But I cannot imagine why someone would invest in bitcoin either.  Oh well.

The Winkles presented a talk at the Money 20/20 conference recently.  Did you see the reviews?

And I sill would like to know whether that alleged letter from the SEC to SMBIT indeed exists, and what it says.

What about this claim, was it confirmed? It does not seem to have been picked up by @johoe.

"Facts" are things that really happened.  Things that one just makes up are not facts.

Barry said that they did not enter bids of their own.  That he said so is a fact.

The syndicate members wanted more than 120'000 BTC.  It would be pointless to enter all of them in the auction, so SecondMarket picked the highest bids that until they had 50'000 BTC, and said sorry folks to the rest.  Even so, they got only 48'000 BTC, so some of the chosen members too walked away without coins.  If SM had entered the auction themselves as syndicate member or on their own, and won, those members who didn't get anything would think that SM picked their bid price after seeing theirs, so as to outbid them.  That is why any bidding by the syndicate organizer, within the syndicate or outside it, would be terribly unethical.  That is a fact too.

Perhaps SM did enter their own syndicate.  That would mean that they cheated on the other members.  I have no reason to trust Barry's honesty, but neither any reason to believe they did that.


Draper bought 30'000 coins at 600 $/BTC.  Why do you think he did not want to go for everything again?  Barry pocketed 150 grand, he got ...  Lol.

Why do you think that Barry created SMBIT, or the Winkles want to create COIN?  Hint: if one has 100'000 coins, how could one sell them without crashing the price?

They explicitly said that they did NOT bid themselves.  Look for their statements to CoinDesk.

Doing so would be terribly unethical because they would know the bids of all the people who entered the syndicate.

Where are you getting those "facts" of yours? 

Come on guys, you are supposed to know those numbers. 

Yes, China is an exporter of bitcoins, and that transfers wealth from the West to China.

I don't know where the main mining ASIC manufacturers are (China, taiwan, Korea?) but that is a major industry too.


Not sure I get your point.  1.2 million per day is the cost of the bitcoin network in dollars. I did not consider the dollar inflation there, why should it be considered for MasterCard?

But anyway, Bitcoin inflation is 1.3 million bitcoins per year over 13 million existing bitcins, or 10% per year.  How much is the dollar's?

Transaction fees now yield only 15 BTC per day or so to the miners. 

In the future, as the block reward decreases, the transaction fees would have to make up for the difference, in order to keep the network working.  How much they would have to be depends on the price of BTC, the traffic at that time.  We cannot predict now how the transition will work out.  For the time being, it is a fact that the network is supported by the block rewards, and fees are negligible in that regard.

Miners get paid 25 BTC per block mined.

At 1 block every 10 minutes, that is 144 blocks/day, hence 3600 BTC/day.

At 350 USD/BTC, that is 1.26 million dollars per day.

Last time I looked there were about 100'000 transactions per day.  Hence 12.6 dollars per transaction.

Transactions seem free now because the network is paid with newly issued coins (there is an ugly word for that, but let's not rub that in).

Who pays that cost are the people who buy those 3600 new coins per day; whether small investors at the exchanges, or bigger investors over-the counter or by contracts with miners.  Those people give 1.26 million dollars per day, that they earned elsewhere, to the miners of the world; that goes into equipment, buildings, personel, electricity bills, and miners' profits.

Yes, 1% from any winning bid, IIRC.  That must be at least 150'000 USD in fees -- presumably, for a couple of days' work by a couple of people.  Not bad.

Well, the bitcoin network currently costs ~3600 BTC/day = ~1.2 million USD/day, or over 10 USD/transaction.  Something went wrong there?

That "Open Transparent and Connected"  thing looks even less transparent than SMBIT...

EDIT: Do you have a source for that claim about Barry looking at OTCMarket?


Bitcoin lost ~50% of its value in 2014.  No one can (or wants to) explain why it skyrocketed in 2013 or why it crashed in 2014.  No one can give any solid argument why it should go up in the future.

Anyone who recommends people to put their retirement money into bitcoin should be thrown in jail.

A frustrating aspect of bitcoin is that there is essentially no data about the "bitcoin economy".  Every indicator that we would need to predict the price and evaluate its investment potential is hidden by the anonymity and globality of the protocol and by the private and unregulated character of the companies.  There are practically no public audits, market statistics, open policies, ...  One can extract lots of numbers from the blockchain, but most of the traffic there is just coins trashing around between addresses that belong to the same person, and no one can tell how much meaningful transactiosn are there, and what they are.  Investing in bitcoin is like jumping over a cliff in a foggy night, without seeing the other margin.  It cannot be a rational decision, only a statement of blind faith, that only fools would do.

In particular, we do not really understand how SMBIT operates, whether those numbers are real investments by the public or or self-investments by the managing company, who are the clients and why they choose to invest in SMBIT rather than buy bitcoin directly.   The contract terms are revealed only to investors that they have approves, it seems.  Are they required to strictly hold 0.1 BTC per share, and buy them immediately? Or do they have some leeway, to wait a few days for the best price?  Or are they only bound to return the right amount of dollars at the end, as defined the current market price?

I don't understand how they can sell their shares to US residents and citizens without approval of the SEC, even without an open market.  Perhaps they don't, and only sell to non-Americans?  Is the SMBIT managing company based in the US, or in a foreign country?

Someone claimed on this thread that they have been ordered by the SEC to stop liquidating their shares, but can still sell them -- which does not make sense to me.  Is that true?  If so, what is the reason? Would they tell investors if that is true?


I do not see why having an open market for SMBIT shares (or even the possibility of trading them over-the-counter) would bring more money to the bitcoin economy.  OK, people would be able to invest less than 25'000 USD on SMBIT shares --- but, at that level, they could buy bitcoin at the exchanges instead.  Clients who have SMBIT shares would be able to liquidate them in the market instead of with SMBIT; but they could do that with bitcoin too.  Since the liquidation value of SMBIT shares is pegged to the BTC price, and they pay no interest or dividends,  their market value cannot be much higher than their face value.  The market for SMBIT shares is likely to be a lot less liquid than that of bitcoin.

By the way, the Falcon bitcoin fund closed because of low demand:
http://www.bloomberg.com/news/2014-12-08/falcon-global-capital-closes-bitcoin-fund-because-of-slow-demand.html

GABI is having problems with their banks.  Does anyone know how Pantera's PBP is doing?  And what about that fund in Malta, that Matonis was advertising a couple months ago?