why would the exchange rate matter for an investment that is denominated in bitcoins?  a gain or loss is determined in bitcoins not in dollars.  when the "cessation" comes and the fund pays out $500 usd instead of the 110 bitcoins expected then there's going to be some very unhappy campers.

oh, of course! that's the whole scam right there isn't it?

see, you can't be charged with a serious crime if one didn't happen.   a person that lends an amount worth $500 usd and then gets back $500 usd can't really claim that fraud happened.  where are the financial losses?  u.s. dollars must be accepted as payment for debt.  you loaned $500, you got back $500 (plus a little interest maybe).  in the worst case, since nobody lost any money (in terms of dollars) there's not much of a penalty even if there is theft (of expected returns) by deception.



simply locking up the bitcoins (which were acquired only through the promise of fantastic returns) is something that keeps the supply on the market low.  once the block reward drop occurs in december, the market will have 25,000 btc fewer issued each week.  so the exchange rate is likely to be higher at "cessation" and as a result nearly nobody will have lost money, in terms of dollars.

if this is how pirate's scam works, then those who thought their 100 bitcoins which cost $500 at the time are now worth $990 (after returns grew them to 110 btc and are priced at today's $9 each) will find out they were very, very wrong.  they get their $500 back plus a jar of vaseline and a note saying thanks but it was perfectly legal.

the only winners are those who withdraw in full before the "cessation" event.