Quote from: dust on August 22, 2012, 10:52:42 AM

Quote from: ribuck on August 22, 2012, 10:45:31 AM

Quote from: JoelKatz on August 22, 2012, 09:17:14 AM

He has much more incentive to sell his debt than to buy it.

No, I don't think so. Buying his debt at discount is one way he could actually avoid technically defaulting. For example (using exaggerated numbers to make the math easier):

1. Suppose pirate has taken 50,000 BTC in direct loans, and 500,000 BTC via passthroughs.
2. Suppose pirate, after paying weekly interest, still has 150,000 BTC in his bitcoin wallet.
3. Suppose pirate pays back the direct loans, leaving him with 100,000 BTC.
3. Suppose the passthrough shares are being sold for 10% of their face value.
4. Suppose pirate buys all the passthrough shares for 50,000 BTC, leaving him with 50,000 BTC.
5. Suppose pirate pays back the passthroughs, 50,000 BTC at a time.
6. The coins pass through, back to pirate, who then pays back the next tranche of 50,000 BTC.
7. Repeat ten times, and pirate has technically not defaulted (although he has screwed those who sold their passthrough shares at 10% of their face value).

Sure, there are a lot of suppositions and extreme figures above. But something like this is not impossible.

I am concerned this could happen. This could be pulled off more easily if pirate colluded with some of his top supporters (BurtWagner, imsaguy etc) Has anyone seen any suspicious purchases of pirate debt?

As I said above, this can only happen if Pirate had the BTC funds to refund everybody but still decided not to do so in time. He cannot buy his own debt in BTC and remain solvent in BTC to do refunds, unless he had an excess of BTC in the first place. This alone cannot work.

If he pulls that, props to him. That would mean he played insolvent and fooled a lot of people to great profit. I wouldn't bet on it though.