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He lost the use of his BTCs for that duration as well as any profit

Yes, Bitcoin is perfect for arbitrage scamming, also beware of mining pools that keep hold of your coins.
I'm still waiting on half the coins I worked on Eligius pool in October.
Of course this thing is easier to pull off if you can pay out in 2 currencies. You always win. Wink

I not saying that this is what is going on here, just that this is how it could be done..

I'm selling pre-order Unicorns.
You can pay me in either dollars or bitcoins.
After 30days, if you are not happy waiting for your pre-order unicorn, you can request a 100% guaranteed refund.
I will refund you in whichever currency leaves me with the currency arbitrage profit.
$10,000,000 of pre-order Unicorns, bitcoin value moves 10%, that's $1,000,000 for me suckers!

It's genius, but probably illegal, only banks get away with this kind of stuff! Grin