Showing all posts tagged research:

Bitcoin Ponzi scheme ( [ycombinator]

Bitcoin Ponzi scheme (
326 points by runn1ng 1035 days ago | hide | past | web | 286 comments | favorite

mmaunder 1035 days ago [-]

Ponzi Scheme Enforcement Actions

Curtailing Ponzi schemes and holding those responsible for these scams accountable is a vital component of the SEC's enforcement program.

Since fiscal year 2010, the SEC has brought more than 100 enforcement actions against nearly 200 individuals and 250 entities for carrying out Ponzi schemes.1 In these actions, more than 65 individuals have been barred from working in the securities industry. The SEC also has worked closely with the U.S. Department of Justice and other criminal authorities on parallel criminal and civil proceedings against Ponzi scheme operations.



Keep in mind that BTC or virtual money is just another asset class.

gburt 1035 days ago [-]

A Ponzi scheme is an investment fraud that involves the
payment of purported returns to existing investors from
funds contributed by new investors. Ponzi scheme
organizers often solicit new investors by promising to
invest funds in opportunities claimed to generate high
returns with little or no risk. With little or no
legitimate earnings, Ponzi schemes require a constant flow
of money from new investors to continue. Ponzi schemes
inevitably collapse, most often when it becomes difficult
to recruit new investors or when a large number of
investors ask for their funds to be returned.
Surely this isn't an "investment fraud" if it is completely honest about how it works. I wouldn't count on the SEC being reasonable about that though.

mmaunder 1035 days ago [-]

Yeah IMHO it walks the line between ponzi and pyramid scheme, so you'll either have the SEC or FTC coming after you. e.g. FTC has been hassling MLM schemes for years and they argue the differentiator is the fact that there's a product involved, but this clearly does not have a product, so best case the FTC shuts it down, worst case the interested agencies will include FTC, SEC, U.S. postal service and local and state equivalents.
Bit more data on the FTC's opinion:

Incidentally a pyramid scheme almost took down the Albanian economy and sparked the 1997 rebellion.

I suspect BTC investors are a little more sophisticated, but given the pseudo-anonymity behind cryptos, I wouldn't be surprised if something like this doesn't wreak a respectable amount of havoc in the future once cryptos are more widely held.

PS: If the site author's reading this, I'd start hitting the 5x5 stronglifts hard with a good bulking nutrition regime. You really want to hit the ground in federal prison with a size advantage. So I'm told. Can't wait for the AMA.

eschaton 1035 days ago [-]

If you've been following what's actually gone on in the Bitcoin world for any length of time, you'd know that "BTC investors" aren't "more sophisticated" - they tend to be less so.
For one example, take a look at the people in the community who claim BTC exchanges are unregulated, and who "invest" in "stock markets" in BTC and the like: Just because you're not following the law or regulation doesn't mean you're not subject to it. It just means your hoping you don't get caught.

Another example? The pirateat40 Ponzi scheme and the creation of "Pirate pass-through" schemes. He claimed to offer 7% interest WEEKLY and Bitcoiners ate it up despite its obvious impossibility. And again they tried to securitize that by selling "shares" in and/or "insuring" their investments, and so on—all without acknowledging there's any form of legal or regulatory process to go through when doing such things.

Bitcoin is a total clown show, the history of economics repeated in fast-forward so anarcho-capitalists/libertarians can learn first hand why laws and regulations were invented.

JumpCrisscross 1035 days ago [-]

>If you've been following what's actually gone on in the Bitcoin world for any length of time, you'd know that "BTC investors" aren't "more sophisticated" - they tend to be less so.
Part of this is Bitcoin self-selects against those with a rigorous understanding of monetary economics, capital markets, and foreign exchange.

username223 1035 days ago [-]

Pretty much. It self-selects for libertarian ideologues, money-launderers, and people trying to take advantage of the ideologues and/or ride the bubble. The cool thing about BTC is that the tech bubble has given a particular set of fools a whole lot of money from which to be parted.

hisabness 1035 days ago [-]

Can you prove this?

JumpCrisscross 1035 days ago [-]

No. It is, however, a very profitable asset to make markets in,. That implies huge market inefficiencies and a large population of low-infomration market participants. The problem is the low size and liquidity make other markets more profitable to think about, since 10% of ten or twenty billion is less than a few basis points [1] of trillions.

powera 1035 days ago [-]

But it's not completely honest. The FAQ says "Every time you send money to the Ponzi address, you'll get back 1.2x what you put in." But by the nature of these scheme, the last 15% of people won't get their money back.

BlackDeath3 1035 days ago [-]

It also not only plainly labels itself a Ponzi scheme, but explains that you'll only get a return if others invest after you.

vidarh 1035 days ago [-]

Ponzi/Pyramid schemes often are honest about this. What they are usually not honest about is the mathematical impossibility of it being possible for it to keep going very long. But some simply bet on people being greedy enough to take the chance that they are getting in early enough...
As such I think it is good commentary on Bitcoin and cryptocoins in general - a lot of people do appear to enter expecting a pyramid, and just hoping to get theirs before it collapses.. The question is what proportion they make up.

treekiller 1035 days ago [-]

It could call itself multi-level marketing and be golden. You just need to resell something tangible, like TF2 hats.

erikb 1035 days ago [-]

Beside the word "solicit" the definition you deliver applies 100% to that website. So why do you think it does not follow the definition? The returns come from new investors. It requires a constant flow of money. It will inevitably collapse at one point.

superuser2 1035 days ago [-]

The website does not imply "little to no risk." It explicitly states that it's a Ponzi scheme, which clearly means that you're gambling on not being the last one the party.

erikb 1035 days ago [-]

Yes, but it is not a requirement to hide the fact that it is a Ponzi to be a Ponzi. It still is, if you know about it or not.

superuser2 1035 days ago [-]

By this definition, there is.
>"purported returns"

Disbursements from are not purported to be investment returns or legitimate income of any kind. There are clearly other people's contributions.

ryanjshaw 1035 days ago [-]

Any lawyers here want to give an opinion on whether - from a legal perspective - this is a Ponzi scheme or a gambling site? And if it's a Ponzi scheme, are the people participating complicit in a crime?
Just because it calls itself a Ponzi scheme doesn't make it one - is it fraud when the scheme is openly labelled as such? OTOH I can see some people arguing it's not that clear that the scheme is unsustainable without further thought, research, or existing knowledge of pyramid schemes, and that it entails an unstated high element of risk, so in that sense it may be misleading.

JimmyM 1034 days ago [-]

The Dogecoin gem is interesting for the same reason.

Based on the BTC gem, which has I think been shut down.

bernardom 1035 days ago [-]

This is a beautiful piece of art/social experimentation/I-don't-know-what.

TheAnimus 1035 days ago [-]

It's brilliant, and it will work, and continue to work until people don't believe in it.

ryanjshaw 1035 days ago [-]

That's the fun part. Watching to see how big it will grow. It's almost like putting an exact dollar value on the amount of greed present.

eterm 1035 days ago [-]

I don't find it fun at all, I find it a bit tragic. Looking from the chat it looks like it's a bunch of kids who don't have the sense to not engage with this kind of site.

maxerickson 1035 days ago [-]

It's technically how high it goes (the current balance should be quite a bit less than the total paid in).

ElongatedTowel 1035 days ago [-]

I love how people send over $1000 to this site. Why not play poker if you have that much money to spend on gambling? Or, you know, buy an instrument and learn something beautiful?

BlackDeath3 1035 days ago [-]

Because if they gamble and win, they can buy two instruments!
Do you not understand how gambling works?

ZitchDog 1035 days ago [-]

Just like Bitcoin. :)

BlackDeath3 1035 days ago [-]

Just like fiat.

judk 1035 days ago [-]

Just like Social Security, really.

qdog 1035 days ago [-]

Social Security isn't a vehicle that attempts to return your principle + interest. Regardless of how many contributors there are, SS benefits would pay out at a % of the target if it could not cover the complete benefit. Ponzi schemes have no such provisions and are not transparent about it.
I suppose they are similar in that neither are actual investment vehicles, despite what many contributors tend to think.

BlackDeath3 1035 days ago [-]

I mean that fiat will continue to work as long as people believe in it.
Social security, now that I think about it, does sound much like a Ponzi scheme.

gnaritas 1034 days ago [-]

> now that I think about it, does sound much like a Ponzi scheme.
Think harder, it's nothing like a Ponzi scheme, it's just like any other insurance; payout is not guaranteed.

CamperBob2 1035 days ago [-]

Anyone who doubts that Social Security is a Ponzi scheme should try starting a similar one themselves, and see how it goes.

saalweachter 1035 days ago [-]

It is called an annuity. It is one of the more basic forms of insurance, offered widely since forever by more or less everyone.

patio11 1035 days ago [-]

The difference between Social Security and an annuity is that Social Security charges too little and promises payouts of too much. It cannot sustain the payouts which are promised in 2014 from revenues available to it in 2014 or the investment returns reasonably possible as a result of those revenues (and its accumulated capital). It must therefore increase the amount of revenues it receives, by a) increasing the SS tax rate and b) increasing the number of people who pay into SS until c) it inevitably defaults on promises to some portion of beneficiaries, for example by adopting e.g. means testing and retroactively stating that people born after a certain day will get the payout they've been promised their entire lives iff they have less income/wealth than $INSERT_CUTOFF and, if they exceed that, they'll receive $CONSOLATION_PRIZE_FORMULA instead.
Did you know that Social Security taxes were once 2.25% of income? Before they were 4.5%? Before they were 6.9%? Before they were 8.1%? Before they were 15.3%? That's where we are in 2014.

To be fair, while Social Security is clearly not an annuity, as of 2014 it isn't yet in default of its obligations. There's some dispute about what year that will inevitably happen. It will not be described as a default when it does, but rather tweaking a few formulas to protect America's most vulnerable citizens.

Edit: Social Security also has some "constructive default" options which are available outside of the program, because it is coextensive with the taxing power of the federal government. For example, SS benefits were once untaxed but are now taxed. There exist plausible ways by which every dollar promised of SS benefits can be "paid" but in which many get immediately recaptured by the government, which avoids formally adjusting the terms of the promise but which is indistinguishable from default in its impact on e.g. your family's budgeting process in 2070.

Another option is inflating away the insolvency. Japan will probably do this. It will pay out every yen of the promised monthly 200,000 yen due to pensioners, but pay it with yen which buy half as many apples as they did back when the pensioners were working.

saalweachter 1035 days ago [-]

The similarity that Social Security has to a Ponzi scheme is that they are both ultimately zero-sum games. The difference is that the government can run a zero-sum game forever, because it's the government.
You have a standard lie in your screed above, which when revealed demonstrates exactly how the zero-sum game will shift during our lifetimes to keep Social Security solvent forever and ever, amen. You claim that Social Security has no investments. This is a blatant lie. Social Security has been running a surplus for all of my life, and investing the surplus in trillions and trillions of US government debt, partially because it's the safest investment in the world and probably mostly because it's really convenient for the government.

Ah-ha, I'm sure you're going to say. When the one hand cashes in the T-bills, the other hand will have to pick our pockets to pay for it with more taxation, you're going to say.

Yes. But which pockets the government picks to pay off our internal obligations is extremely important.

Social Security, you see, is funded by a more-or-less flat tax on the first $XYZ,000 of workers incomes. It is basically the most regressive a tax can be, short of it being a fixed dollar amount regardless of income, which usually only happens for licensing fees, but that's another story. On the other hand, the mature T-bills are going to be paid for out of the general fund, the taxation structure for which is honestly one of the more progressive tax bases in the world.

When you combine this with the most probable fixes for Social Security -- dropping the income cap on the tax -- the future of Social Security is quite clear. Social Security is going to quietly shift from intergenerational wealth transfers to intragenerational wealth transfers. Some people in a generation, the poorest, will get back more money from Social Security than they pay in. Some people in a generation, the richest, will pay in more money than they get back.

The difference between Social Security and a Ponzi scheme is that, in a Ponzi scheme, if every group did not statistically get back more than they paid in, they would stop paying into it. Social Security, being involuntary, can collect 15% of $250,000 from a man while telling him upfront and outright he's only getting back 15% of $150,000 after he retires. At this point, a Ponzi scheme would collapse. Social Security will just putter along happily, running exactly as it should.

The difference between a Ponzi scheme and Social Security is that a Ponzi scheme is an investment, while Social Security is an insurance. As an insurance, a statistical loss is expected, but it provides a guarantee, in this case that when you are old you will never be destitute, living on the street eating catfood, or cats and rats when you can catch them.

sethev 1035 days ago [-]

Since Social Security is clearly not an annuity, calculations based on treating it as if it was (or should be) don't really tell us anything. In particular, where does this idea come from that current revenues have to pay for future benefits? That's not the way Social Security works or ever has worked.

anonymoushn 1035 days ago [-]

Right, so when our population follows in the footsteps of Japan and Korea, we can just stop paying the benefit/kill all the old people/enslave all the young people.

sethev 1034 days ago [-]

My default is to suspect arguments that support dismantling social programs now because they might be insolvent in 60 years. Especially when insolvency here means not paying out as much as people expect to receive right now.

coldtea 1034 days ago [-]

Ah, Americans talking about social security. As if they have ever experienced the thing...

skj 1035 days ago [-]

Populations grow exponentially, and the whole population is required to pay into SS.

paul_f 1035 days ago [-]

Except they don't. Populations in developing countries have now stabilized and in some cases, Japan, are well below replacement level.

skj 1035 days ago [-]

Population growth is a fundamentally exponential process, even if that exponent is very close to 1 in some cases, or even less than 1.

gnaritas 1034 days ago [-]

> Population growth is a fundamentally exponential process
No it isn't. If everyone has one or less children, the population does not grow exponentially.

lutusp 1034 days ago [-]

> If everyone has one or less children, the population does not grow exponentially.
False. An exponential function, and a growing exponential function, differ only in the value of the exponent.

Here's an equation that predicts future population based on the value of an exponential term:

The equation: pt - p0 e^rt

pt = population at time t

p0 = present population

r = rate of population growth, 1% = .01

t = time

A result at 40 years for a population rate of change of -1.7% per year:

e^(-.017 * 40) = .5066

This result says that, for a population growth rate of -1.7%, after 40 years the population will be about half its present size. It's an exponential result, it's even an exponential growth rate, but the growth rate is negative.

In this image:

The red trace is an exponential rate of change for r = +1.7%, the green trace for r = -1.7%. Both are exponential results, and both reflect what a population would look like for given r values.

gnaritas 1034 days ago [-]

False. Put all your bullshit math aside because that's what it is, bullshit trying to move the goalpost. The statement I made is absolutely factually true. If everyone has one or less children, the population does not grow exponentially.
We're not talking about how to model population growth, or functions, we're talking about whether every couple having one child results in exponential growth and it simply does not. If the population decreases, that is not exponential growth. An exponential result != exponential growth. You are wrong and we are done.

lutusp 1034 days ago [-]

> The statement I made is absolutely factually true. If everyone has one or less children, the population does not grow exponentially.
You need to learn mathematics (as well as grammar). Also learn "negative growth rate" while you're about it:

And, everything else aside, all the described rates are exponential.

> We're not talking about how to model population growth ...

WHAT?? Here is what you said: "If everyone has one or less children, the population does not grow exponentially." How exactly is that NOT talking about how to model population growth?

Also, it's "one or fewer children," not "one or less children."

> An exponential result != exponential growth

False in a discussion about population and exponential growth rates, terms you chose.

gnaritas 1034 days ago [-]

It's sad that you can't admit that a population decrease is not exponential growth, but your ego clearly can't handle being wrong so troll somewhere else.

lutusp 1034 days ago [-]

> It's sad that you can't admit that a population decrease is not exponential growth
I posted the proof of my position, you posted your ignorant opinion.

Here is another reference that makes the same point in the same way:


Quotation: "The formula for exponential growth of a variable x at the (positive or negative) growth rate r, as time t goes on in discrete intervals (that is, at integer times 0, 1, 2, 3, ...), is xt = x0 (1 + r)^t"

Let me emphasize that for you, in case your eyes are giving out:


Now circle the word you're most unfamiliar with, raise your hand, and the teacher will administer a sedative.

gnaritas 1034 days ago [-]

You seem unable to read English. Let me make it clear for you, you're trying to make a lay conversation about population into a math problem which it is not, in doing so you are changing the meaning of lay words into their math definitions and misunderstanding the points being made to you in the same way a scientist means something different by the word theory than a lay person does. Stop talking, stop doing math, and listen, pay attention to context, this is not a math class and as I'm the commenter you replied to, I'm the one who sets the context and I've said not a math conversation; this is a lay conversation, use the lay definition of words.
You've been told numerous times to stop thinking about math and read the words but you clearly don't grok or can't remove your math head and have normal conversation. You're still talking about modelling growth, no one else is or was. Turn off your math head and read the English words using their lay definitions, a decline in population is not exponential growth as a decline in population is not any kind of growth because it isn't growth. If you can't bring yourself to admit that, you are beyond hope.

Secondly, I'm a computer programmer, I understand the math, so stop trying to lecture me on math when you're the one not listening. I can't help it you don't understand the point being made to you because you lack the ability to be aware of the context of the conversation you're in. I know what I'm trying to communicate and I've made it as clear as I can numerous ways; if your brain is unable to work in multiple contexts, that's your failing in understanding how to communicate with others.

If you try and prove your point with equations one more time, or reference them one more time, then you've utterly failed to understand what is being communicated to you and we're done because I don't talk to brick walls who can't think.

hueving 1034 days ago [-]

skj was trolling by changing the common definition of exponential by saying the exponent could be 1 or less than one.

lutusp 1034 days ago [-]

> skj was trolling by changing the common definition of exponential by saying the exponent could be 1 or less than one.
That's not trolling. It's called "mathematics."

gnaritas 1034 days ago [-]

Which is trolling in a discussion that isn't about mathematics.

lutusp 1034 days ago [-]

Wait, what? Replying to a comment that is clearly about mathematics, with a comment that is clearly about mathematics, is trolling?
The OP's comment, including " ... changing the common definition of exponential by saying the exponent could be 1 or less than one" is (a) mathematical and (b) wrong and misleading. The "common definition of exponential" accommodates any valid argument to exp(x), and to claim otherwise requires a mathematical correction to avoid misleading people.

gnaritas 1034 days ago [-]


skj 1034 days ago [-]

This is a very disappointing comment line. I know not everyone here is a CS major, but if you're even CS-knowledgable you should understand what an exponential process is. It is not, as many laypeople assume, something that is "very big".
That said, I was not intentionally trolling. I do think it's possible for a SS-style benefit to sustain itself provided that an exponentially growing population, whose exponent is greater than 1, is obligated to pay in.

A country with a stagnant or declining population will probably have trouble.

You may disagree, that's fine.

Nevertheless, any population whose growth (or lack of growth) is defined by the average number of children per member will behave exponentially.

gnaritas 1034 days ago [-]

> behave exponentially.
Behave exponentially != grow exponentially, still utterly missing the point; still trolling.

skj 1033 days ago [-]

I believe trolling entails intent. I don't think that I can both miss the point and troll at the same time.

CamperBob2 1035 days ago [-]

The whole working population.

baddox 1035 days ago [-]

Except that you don't generally get to choose whether to pay into Social Security.

retrogradeorbit 1035 days ago [-]

and central banking.

RyanZAG 1035 days ago [-]

I'm trying to work out if this is some grand statement on the similarities of Bitcoin to a Ponzi scheme in the way it's deflationary, or just a quick way for someone to make a few BTC. Maybe it's designed as a way to teach people about Ponzi schemes?
Got to say, I pity the person who eventually deposits too much money at once, causing the payments to pause while they build up enough to cover his large deposit, in turn causing everyone else to think that the money has stopped paying out and causing no further money to be deposited. That seems like the likely end of this eventually...

Buge 1035 days ago [-]

It's less of a statement about bitcoin as a statement about people. It shows that people will willingly deposit money into a scheme that they know is broken.
Just like with Bitcoin Savings and Trust, people essentially knew it was a ponzi scheme but they still deposited 263024 BTC. It was offering 7% a week which is 3373% a year. There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?

unclebucknasty 1035 days ago [-]

>There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?
The same could be asked of state lotteries and other forms of betting. Not sure there's much difference from a moral standpoint.

semanticist 1035 days ago [-]

I think the key difference there is that when you participate in a lottery you know - or can obtain - the odds of a payout up-front.
Ponzi schemes by definition hide the fact that there's any risk of non-payment, that's why it's fraud, and illegal, and immoral.

unclebucknasty 1035 days ago [-]

>Ponzi schemes by definition hide the fact that there's any risk of non-payment
Ponzi schemes in general, yes. But, I was referring to this one, wherein it was out in the open.

>when you participate in a lottery you know - or can obtain - the odds of a payout up-front

Technically, yes. But, the odds in some games are so astronomical that knowing them is basically a non-factor. That is, people play completely hoping to get lucky, but not really expecting to win. I think the same applies with a Ponzi scheme like this one, wherein it's known that the music could stop playing anytime and the participants are simply hoping to get lucky.

eterm 1035 days ago [-]

Even if it's not one person depositing a large amount, the backlog must grow larger and larger as time continues, this site actually has to grow exponentially to keep payout times constant.

ivanca 1035 days ago [-]

Indeed, the liquidity here is the popularity of the site itself so as soon as the media buzz fades out the last ones to invest are going to lose everything; just like it always happens in ponzi schemes.

poopsintub 1035 days ago [-]

Poor Kevin Bacon didn't know what hit 'em.

downandout 1035 days ago [-]

IMO, this was built to demonstrate one of the unique characteristics of Bitcoin. The ability to track transactions linked to addresses not owned by you, in this case, lets all participants see in realtime whether the owners are living up to their promises. Had Bernie Madoff used Bitcoin, his reign would have been over in a few minutes.

ohashi 1035 days ago [-]

Minutes? Really? Because that's how most people measure their investments. The only way you could see if 'he was living up to his promises' was if he just speculated on more bitcoins, which would be dumb.

downandout 1035 days ago [-]

The point was that you could see where the money was going. If there were a Bitcoin based stock exchange and it published its addresses for stock purchases, when money from pooled funds started going to addresses outside of those known addresses, people would immediately know that the money has gone somewhere it shouldn't have.

hueving 1034 days ago [-]

>money from pooled funds started going to addresses outside of those known addresses
What? It's a stock exchange. By definition the money is immediately going to go to the counter-party in a trade. So it's going to be an unknown address. Stock exchanges aren't the ones selling stock...

downandout 1034 days ago [-]

Yeah, no kidding. But you're saying the counterparties couldn't register those addresses publicly with the exchange so that everyone knows where the money is going? Alternatively, the exchange itself (a trusted party) couldn't receive the coins first and then send them to the counterparties?

albiabia 1035 days ago [-]

This transaction is where everything went wrong. I think after the shutdown they tried to start paying out the largest investors manually and missed a decimal place:
1 BTC In and 10 BTC back

Someone made 10x their money. (1ponziUjuCVdB167ZmTWH48AURW1vE64q) --> Change (14ji9KmegNHhTchf4ftkt3J1ywmijGjd6M) --> Big Winner (1CeGvbrAuLJYyKxX7T2KD3358dWoLmAohR)

K2h 1035 days ago [-]

maybe thats where the site got their return.

00rion 1035 days ago [-]

This makes me wonder if a bank could operate with Bitcoins. Not everyone would withdraw the money at once and there would be a way of publicly verifying the degree that they're leveraged. If the bank wanted to lend out part or all of a person's money, it could require their approval such that both them and the bank get a percentage of the interest rate the borrower pays. So many questions.

lucb1e 1035 days ago [-]

Should have known! Like ten minutes before I expected 1.2x to be gathered and my payout to be done, the site reports "The experiment is over." Come on guys, just let it run. I would have accepted it if it just 'died of natural causes' and I lost all I put in (which is not much, 0.03); that was my gamble. Not that you'd pull the plug.
Somehow their pulling the plug just really bothers me much more than losing it would have been. Especially because at the rate at which it was going, payout was more or less ensured (300btc * 1.2 = 360. They quit 16 coins short). Right now, two hours after they supposedly would pay everyone back, I still got nothing.

acchow 1035 days ago [-]

> At the rate at which it was going, payout was more or less ensured (300btc * 1.2 = 360. They quit 16 coins short)
I think you misunderstand how ponzi schemes work.

FiloSottile 1035 days ago [-]

I don't see the flaw in his reasoning, can you elaborate?
EDIT: I will, then. If when he put money in when there was a total deposit of 300, the total owed by the system was 300 * 1,2 = 360. So it would all be payed when the total deposit of 360; he considered that at the rate it was going at the moment it would have been reached quickly (here is the gamble) but instead they closed the site 16 BTC short of that target.

Are you sure you did understand? Or am I on the wrong path?

acchow 1035 days ago [-]

And the people putting in those last 16 bitcoins - what do they get back?
There are always losers in every ponzi scheme.

ramblerman 1035 days ago [-]

Nobody is denying that, but you are misunderstanding his argument.
There is a difference between a ponzi scheme collapsing from lack of new "suckers" vs pulling the plug on the site. I think what he is trying to say is that there were plenty of suckers left, and the loss now feels artificial.

Somebody is going to pay though. I'm sure (I hope in this community) everyone knows that.

lucb1e 1035 days ago [-]

This is indeed exactly my reasoning.

daeken 1035 days ago [-]

I'm kind of amazed I got a payout. I threw in 0.3BTC for the hell of it, and out popped 0.2999 + 0.0239.
Also, where does it say the experiment has ended? I don't see that on the page, and the chat is still lively. [Edit: Now I see that]

FiloSottile 1035 days ago [-]

Consider that there is also the change address

And, they seem to be paying again, so there's still hope. Obviously the (half) shutdown (half) stopped the inbound flood, so there was damage done.

lucb1e 1035 days ago [-]

Payout stopped last night at 1:46 UTC as far as I can tell. 13 hours later I still got nothing.

FiloSottile 1035 days ago [-]

The experiment is over.
We will pay back everyone we can. We are not making money from this.
And it's down.

curiousgeorgio 1035 days ago [-]

I'm curious - anyone know what happened to cause the (inevitable) end? From what I can tell, it doesn't seem to be the lack of new interest/money. Possibilities I can think of:
- Author got scared (of legal repercussions)

- Author got greedy (pocketing much of the last deposits)

- For some reason (research?) it was intended from the beginning to only run to a certain point

- Technical scaling issues

Anyone know?

corford 1035 days ago [-]

No idea but if I had to guess... author got scared. BTC deposits were rocketing in just before the site went dark and he would probably have shot past the 1000BTC mark in hours rather than days if he'd have left it up. Running a public ponzi scheme that attracted over half a million dollars worth of deposits in a week with no signs of slowing down would have certainly given me sweaty palms :D

legojoey17 1035 days ago [-]

I feel it was technical scaling issues, probably from the sudden surge.
I say this because I received an absurd amount of BTC compared to what I put in (bare minimum, only a few cents) which would only have happened as a side effect of a technical issue.

rnbrady 1035 days ago [-]

Or they realised too late that they had a bug which caused some people to get back 900% instead of 120%. That would break the model. Underpaying is something you could correct retroactively, overpaying not so easy.

rangersanger 1035 days ago [-]

What makes you think it ended? People are still paying in and it appears to still be paying out.

curiousgeorgio 1035 days ago [-]

I'm looking at the huge text on the home page saying "The experiment is over." If that can't be trusted, then why in the world would anyone expect to receive a payout at this point (as if it weren't already incredibly risky)?

rangersanger 1035 days ago [-]

I was seeing a cached version. Wonder why they chose to do it that way.

eterm 1035 days ago [-]

It looks like it stopped paying out at 20:27.
Money was still flooding in until around 22:55.

Overall with 344 BTC recieved, if everything was paid out as expected, the site operator would lose around 69 bitcoins.

As it stands, the address still has ~20 bitcoins left in the wallet, but obviously owes a lot more than that even if it were to pay the remaining payments 1:1 rather than 1:1.2.

FiloSottile 1035 days ago [-]

People are still sending money in (!?)
Paybacks seem to have halted

galvin 1035 days ago [-]

Here's a cached version:

With numbers:

eterm 1035 days ago [-]

They still have the site up at anyway

3rd3 1035 days ago [-]

Couldn’t one somehow decentralize a ponzi scheme like that? Maybe with the scripting language included in Bitcoin?

phreeza 1035 days ago [-]

this would probably be possible in etherum. might even be a killer app because it establishes a completely transparent and trustable ponzi scheme, which might not work out terribly different from giving loans in the end...

utuxia 1035 days ago [-]

Here's another one:

ll123 1035 days ago [-]

Except that one is just a copy of the html and nobody is going to get paid, the chat doesn't even work.

jacob019 1035 days ago [-]

actually I just put in 0.01 BTC, got back 0.015, put that back in again, and now I have 0.0225. I dare not try again, quite pleased with my USD$7 profit. There is definately something much scammier about it. The # of transactions doesn't increment, and with 150% payout it will die much quicker.

hrrsn 1035 days ago [-]

They're not incrementing because all of their HTML is still pointing to's web sockets. All I can see from their address on blockchain is lots of receiving and one sent transaction.

icpmacdo 1035 days ago [-]

heres the correct blockchain info on it.

runn1ng 1035 days ago [-]

now this one is a complete scam.

lucb1e 1035 days ago [-]

> We will pay back everyone we can. We are not making money from this.
Paying people back can be done instantly. Adding 20% needed a wait. If they stopped the experiment an hour ago, I'd say my coins should have returned by now :(

unclebucknasty 1035 days ago [-]

Unless you're one of the guys without a chair when the music stopped.

m_darkTemplar 1035 days ago [-]

They already paid back some people at 20%, so it's impossible for them to pay you back now. They are in 'debt,' even if they just gave coins back at 1:1 they can't repay.

corresation 1035 days ago [-]

Waiting out the confirmations does impose a pretty high floor -- see how many of the transactions are still unconfirmed.

lucb1e 1035 days ago [-]

I already had a few confirmations when they quit, and it would show up in my client without any confirmation (as unconfirmed, of course).

1Ponzi 1035 days ago [-]

New address: 1PonziAwQpnfj15Br4YFJHygWtd5LQKgN1 (without 1Ponzi in the wallet is not legit).

sillysaurus2 1035 days ago [-]

Interesting... This may be the first time someone's tried to use HN as a platform for phishing.

avn2109 1035 days ago [-]

I foresee a low conversion rate here. HN probably attracts almost the complement of the audience you want to phish in.

ohashi 1035 days ago [-]

There is a spammer in the chat room spamming a new address too.

maaku 1035 days ago [-]

And this is why no one should ever use vanity addresses.

runn1ng 1035 days ago [-]

What I realized now: if you look at their BTC balance


their "debt" - meaning, what other people have to bring into the system - is their balance + 20%. Right now, their debt is about 42 bitcoin.

eterm 1035 days ago [-]

Isn't their acrued "debt" actually 20% of what has been paid in? That's about 48 bitcoins as of now.
(Or perhaps that's what you meant?)

runn1ng 1035 days ago [-]

Hm, you might actually be right.
I am not sure what the balance actually represents.

maxerickson 1035 days ago [-]

There is some list of unpaid 'investors'.
If they are operating as they say, the balance should always be less than 1.2 times the amount put in by the first entry on that list (or so, they could be combining payments or what not).

yxhuvud 1035 days ago [-]

Remember that it takes a while for transactions to complete, so the balance could be a simple counter of outstanding outgoing transactions.

dwaltrip 1035 days ago [-]

No one finds this repulsive? People will lose money to this. Yes, they are dumb, yes it is obvious. But those who participate are still morally complicit. Enabling others who suffer from serious issues (addiction, gambling) seems like a pretty shitty thing to do.

gojomo 1035 days ago [-]

It's as repulsive as state-run lotteries.
The expected return to entrants, over all entries through its collapse, is likely even better than lotteries.

At least this isn't advertising on TV and YouTube to attract even more vulnerable and unsophisticated players!

fragsworth 1035 days ago [-]

It's really not much different from gambling. It's not repulsive if they are honest about how it works.

Tohhou 1035 days ago [-]

I love people like you who think they are smarter and better than anyone who would do things they don't like. Kudos.

gojomo 1035 days ago [-]

I don't think you understand my comment.
What activities do you think I don't like?

Anderkent 1034 days ago [-]

I love people like you who think it matters if you like a lottery or not. Free money!

sehr 1035 days ago [-]

It's horrible. But it's like watching a trainwreck to be honest, you know exactly what's going to happen yet it's still intriguing.

spaceborn 1035 days ago [-]

How so? No one is being deceived. Everyone who participates does so of their own volition. Is individual volition repulsive?
Are they really dumb? Is the guy in the middle of the scheme who makes out with a profit dumb? There's known risk - some will decide they'll risk it. It may not be wise (I wouldn't participate, myself), but I wouldn't be so bold as to assume they're dumb.

> But those who participate are still morally complicit.

Who are these morally complicit participants if not the "obviously dumb" persons whom you just described? Are they victims with "serious issues" or are they morally corrupt enablers?

You may mean that the morally-corrupt-enabler(s) are whomever set this up, but that's not really what's suggested by such a broad phrase as "those who participate".

dwaltrip 1035 days ago [-]

Humans are not robots, we make mistakes and often do things that we later regret. I don't have the concept of morality worked out perfectly. However, it feels wrong to influence people in a way that increases the frequency of said regretful events, especially when potentially large sums of money are involved. It looks like over 200k went through the site before it shut down? Nothing to sneeze at.
You are right, there is a distinction to be made between those who created the site, and those throw money at it.

Some who throw money at the site are well off and are essentially using the scheme as entertainment. They likely would not be too upset if the money didn't come back. One could make the argument that these people are morally entangled to a degree, as they increase the volume of funds flowing through the site, which draws in additional people, and makes it more likely that someone who actually has financial or gambling problems is tempted to bet on the site. However, this is argument is somewhat weaker than the one against the actual creators of the scheme.

jaekwon 1035 days ago [-]

Just because your expected return is negative doesn't mean it's dumb to partake in it. Nor is the outcome obvious.
The site wasn't created for the purpose of hooking in gambling addicts, so I see no problem with it. Also, you have no evidence that an explicit bitcoin ponzi scheme draws in gamblers who put in more money than they can afford to lose.

dwaltrip 1035 days ago [-]

Things created for one intent often have unintended side effects.
And you are right, I don't have any hard data or evidence off the top my head. I have read many accounts about gambling in general though. It can be quite insidious. Putting money into the scheme from the OP is virtually the same thing as gambling. If the site actually ran for any decent length of time, I think it is extremely likely that some people who are struggling financially would have made bets on this site that they would then later regret. I also doubt you have evidence that implies otherwise ;)

Personally, I think that facilitating such events is morally dubious. I understand that not everyone shares this view.

X4 1035 days ago [-]

Theft is theft, even when you label yourself "we steal". Making this do actual and not fake transactions is criminal.

Anderkent 1035 days ago [-]

But saying "We'll take your items, if you give them to us" is not theft.

legojoey17 1035 days ago [-]

I deposited the minimum just to give it a go (80c... Can't hurt?) and the Ponzi sent me back an absurdly larger amount of bitcoins... Not quite sure what happened, but hey. When this hit the top of Hacker News the site wasn't loading any bitcoin stats or such so I feel the load must have had something to do with it possibly. (That or I just got double spent on, which would be a real sneaky trick to get a user to send back the 'perceived' amount, but coming out of their pocket.
This is personally why I wouldn't trust any programs to handle currency so openly on the web. The inability of the average user to stress test or put proper testing through applications can cause quite a fault. Having experienced the methods that banks undergo for software cycles there is a tiny chance someone would have the resources to properly engineer something so fragile (relative to money) properly.

Because of this I would assume the main reason the author actually shut the site down (or at least so suddenly) was because of scaling technical issues.

runn1ng 1035 days ago [-]

I will add, since this hit the frontpage: nobody post any big money there. It's a Ponzi scheme. It says so in the title.

mikkom 1035 days ago [-]

Ponzi scheme is ok if you are in at the beginning of the scheme. That's what makes this interesting - it's basically a bet that other people will also believe this will go on.

sklivvz1971 1035 days ago [-]

Unless someone runs off with the money (and in any case, unless you are the first, you never know if you are at the "beginning")

eschaton 1035 days ago [-]

Ponzi schemes aren't OK. They're a form of theft, both immoral and illegal.

omni 1035 days ago [-]

Please justify the usage of the word "theft" to describe this if it is perfectly upfront about what it's doing. Surely you meant to say gambling.

jacob019 1035 days ago [-]

by that logic the loto is immoral theft also, seems more like consenting individuals engaging in gambling.

ryanskidmore 1035 days ago [-]

Something is not quite right.
Deposited 0.05859407 BTC ( )

Recieved 0.0599 BTC back ( )

1.2 * 0.05859407 = 0.070312884 BTC

So, somebody owes me 0.010412884 BTC

datphp 1035 days ago [-]

0.05 * 1.2 ~= 0.0599, maybe they round to 2nd decimal?

negamax 1035 days ago [-]

Transaction fee?

udfalkso 1035 days ago [-]

So how do the creators of this make money from it?
The best solution is one that doesn't infringe on the "correctness" of the game, and it's a simple one. Simply play the game yourself. Send money in, let the system send money back. Do it a lot. Many small transactions. You will never lose, because when the game ends you are the owner of the actual account and won't get screwed like everyone else.

Right? So, perhaps many of the transactions we're seeing go into this are suspect and the total amounts aren't to quite be trusted?

judk 1035 days ago [-]

The creators buy the first N shares, for guaranteed no-loss.

udfalkso 1035 days ago [-]

Yes, but they can keep playing as it goes in addition. Making money and reinvesting it.

DelightfulScone 1035 days ago [-]

Or you know, take the currency since this is a ponzi scam and ponzi scammers don't want to let pay-outs go to anyone but themselves.
Why is HN giving traffic to scam sites now?

shalmanese 1035 days ago [-]

If you think Ponzi schemes won't work if you tell people that they're a ponzi scheme, MMM-2011 was a Ponzi scheme in Russia that hooked people despite nakedly advertising that it was a scam:

sashazykov 1035 days ago [-] is 3 years old (and still paying :))

sashazykov 1035 days ago [-]

Moreover it was the first profitable pyramid.
Income: 751.63949374 btc Deposits: 692.04538439 btc Donations (ads): 59.59410935 btc Expenditure: 748.05864780 btc Withdrawals: 739.21264780 btc

dclara 1035 days ago [-]

scammed: ponzi is a SCAM
I copy-pasted from the site.

BTW, any pyramid scheme is bad and should be prohibited, right?

But the site is cool though.

tobz 1035 days ago [-]

I wouldn't recommend a pyramid schema. You'll run into migration problems down the road. Better to keep it flat.

dclara 1035 days ago [-]

I guess we are talking about difference things.
Sorry, I meant Pyramid scheme:

But regarding pyramid schema, you mean hierarchical structure, right? I have the same concern, but flat tagging does not help much as we can observe from many sites.

Let people browsing from multiple levels of the category is fun. The rule of thumb is: don't expect perfect structure and don't need to have everybody agree on that. Ad hoc hierarchy should be good enough like Amazon product list. Also keep it away from people who don't need to browse it.

plumeria 1035 days ago [-]

I think it was a joke?

dclara 1035 days ago [-]

It's a nice practice and showing people how he can manage this type of thing. Couldn't be serious about it, even the real-time data might be fake.
There are a lot of people like to participate in the BTC game, it's not bad. But if people take it seriously, it may impact on BitCoin's credibility.

tommorris 1035 days ago [-]

I'm sure the Dogecoin Ponzi scheme will be better.

bendoernberg 1035 days ago [-]

Ah, you mean Been up for over a week :)

amark 1035 days ago [-]

Dogecoin's already innovating faster then bitcoin!

haakon 1035 days ago [-]

Bitcoin had these "gem" and "diamond" and "treasure" sites ad nauseum a year ago or more.

RRRA 1035 days ago [-]

To the moon!

dogewow 1035 days ago [-]

As I mentioned below, my money is on (literally)

sillysaurus2 1035 days ago [-]

Here's someone who recently sent 1 BTC to this ponzi scheme:

I'm going to watch and see what happens to them. If they don't lose their 1 BTC, then that's at least slightly interesting.

EDIT: It's been more than an hour; no repayment yet.

magic8ball 1035 days ago [-]

The payout system does not seem to be FIFO, that is, just because you put in money before person B does not mean you'll get paid out before person B. I also put in 1BTC (far before these people) and followed it up with a small transaction. The small transaction got paid back (also incorrectly) whereas my 1BTC was never returned. Oh well, it was fun to watch.

jacob019 1035 days ago [-]

such a great attitude for losing USD $700

corin_ 1035 days ago [-]

I've lost more in casinos and left with a "oh well" attitude too. Pretty sure plenty of people have. Of course, I've also left casinos with "fuck that sucked" attitudes, and also "look at all the money I just won" attitudes.

tobz 1035 days ago [-]

Why bother with a faceless ponzi scheme? Send your bitcoin directly to me, and I will invest it by hand, making sure to maximize your return: 1HbNxRhrv5Jocr7Q9ZqbbqCwuNNy4UsR77
This is totally legit. Seriously.

jaekwon 1035 days ago [-]

I have sent you $50 though coinbase.
I expect you to honor your word.

Return address: 1JEGu8qiaKbLgheAWCjRkeZNyEqhhaFVY3

blantonl 1035 days ago [-]

He really did:

So far, no such honor has been extended from the OP:

This is one of the beauties of Bitcoin - complete transaction transparency.

logicallee 1035 days ago [-]

how is that "beautiful". what business is it of yours what these two posters' financial histories are?

dav- 1035 days ago [-]

Jesus, man. If you want to go around throwing away money, why not give it to me? 1QHz6XPn8m8ujpMK1iCBaZfD5FTStfnk58

tobz 1034 days ago [-]

Just waiting on the next person to send me some skrilla then you can reap your reward.

jaekwon 1034 days ago [-]

Some what?

tobz 1033 days ago [-]

Skrilla. Clams. Dough. Greenbacks. Dolla dolla bills.

jaekwon 1032 days ago [-]

So you just admitted that you're running a ponzi scheme? That wasn't disclosed.
Give me my money back.

judk 1035 days ago [-]

I wonder how much enforcement action I could get if I acted on your post at face value...

jccooper 1034 days ago [-]

Looks like the operator had seconds thoughts--or plain got scared. I was interested in how trackable he is.
The domain is registered under a fake name and DNS is from Namecheap. It's a funny whois entry, lacking all the usual boilerplate, so I'm not entirely sure it's Namecheap; some sort of reseller? Doesn't match what I see from Namecheap itself, but Namecheap does take bitcoin now, so it seems plausible.

Hosting is, a bitcoin-paid host. Hosted "offshore"; company appears to be in US.

If a US authority leans on libertyvps, they can get an email and blockchain address, and maybe an IP. Tracing the person would be hard if Tor was used for setting up (and using) the email and all host access, and a decently anonymous acquisition of the bitcoin.

A US authority could also get to Namecheap. Using the registrar safely requires about the same precautions, notably access via Tor and acquiring the payment BTC (or pre-paid card) in a non-traceable manner. Done right, they could shut the domain down, but not find the person.

Anyway, looks like the top-level bases were covered. But there's a lot of links in the chain. Perhaps the operator got nervous that he didn't cover all of them--and it only takes one. (Against a determined LE agency with jurisdiction or no scruples.)

Kiro 1035 days ago [-]

"The experiment is over. We will pay back everyone we can. We are not making money from this."

dror 1035 days ago [-]

This is almost perfect except for not including a warning:
"Warning, if people stop depositing money, you won't get 120% back, and you could lose all your money."

Also, it seems like the person running the site is not taking a cut. If that's right, he's not making a profit, and he's less likely to get in trouble when things collapse.

judk 1035 days ago [-]

Or the feds will convince a judge that the runner owns the anonymous addresses that got paid.

coherentpony 1035 days ago [-]

Oh jesus fucking christ. People have sent over 200 BTC to that. :/

bbosh 1035 days ago [-]

It is either a scam or very poorly coded. I've seen one transaction in the blockchain for 7BTC from yesterday that hasn't been paid. But, people sending 0.01BTC today are being paid. Any proper Ponzi scheme would pay back in time order, not by order of value.

bbosh 1035 days ago [-]

I found this at "Actually, I set it up to prioritize the small transactions. The 1 BTC depositor will have to wait a while, and everyone else will get paid out as soon as their transaction confirms (this makes sense since the 1 BTC guy is making more money anyway)." Clearly doesn't understand the concept.

pmikal 1035 days ago [-]

Website shows they've shut it down.
"The experiment is over. We will pay back everyone we can. We are not making money from this."

runn1ng 1035 days ago [-]

well, that was quick.
note: I did not post the website to make money or anything (and I was not affiliated with the author in any way). I thought it was funny, and I thought nobody will seriously put money into it. I was probably wrong.

radicality 1035 days ago [-]

Could have let it run its course to actually make it an 'experiment', couple of hours of popularity is a bit too short to shut it down :(

icpmacdo 1035 days ago [-]

haha seconds after I send money to it. This is what I was expecting. I was going to see how long I could save that 0.1 return.

a3_nm 1035 days ago [-]

This would be cooler with one of those other cryptocurrencies that feature a Turing-complete scripting language: the code of the scheme could be public and run in the blockchain so that everyone would know the system is fair.

tobias2014 1035 days ago [-]

Which cryptocurrencies have such a feature?

a3_nm 1035 days ago [-]

There's but I'm sure there are others.

breeezzz 1035 days ago [-]

I threw some old satoshi-dice coins at it (0.25) and was saddened at the header mocking that "The experiment is over.".
1.5 hours later 0.30BTC showed up in my wallet! Wow, did not expect that!

lucb1e 1035 days ago [-]

Spent 0.03 saw 0.0 in return so far :S

makomk 1035 days ago [-]

There have been a few Bitcoin sites like this, I think the original one was Bitcoin Gem. Most of them turned out to be scams (and I don't just mean that they were Ponzis).

runn1ng 1035 days ago [-]

Well, (1) they weren't so hilariously open about their scam nature, (2) they weren't so nicely done and so transparent.
On the other hand, this is going for just a few days, it might go south quickly.

CurtMonash 1035 days ago [-]

To be technical, there are multiple inaccuracies in "Get 120% back when the next person sends".
First, as per the central problem of Ponzi schemes, it is missing an "... if ever" at the end.

But further, it is oversimplified, because people can submit different amounts of bitcoins. Covering up that uncertainty -- which while apparent is not as clearly disclosed as the "Ponzi" aspect -- makes it harder for people to assess the likelihood they will get the promised return.

avodonosov 1035 days ago [-]

I think "when" is perfectly precise, and includes the "... if ever" meaning.

FiloSottile 1035 days ago [-]

I think the completely honest thing to do would be to show another number (total sent * multiplier), explaining that if you send now, you will get the amount back when the total counter reaches that amount.

CurtMonash 1035 days ago [-]

Sounds like it might work.

refrigerator 1035 days ago [-]

If I had any Bitcoin, I would definitely play this once or twice

lucb1e 1035 days ago [-]

> once or twice
That's what they all say

thret 1035 days ago [-]

That's why it works. Get 1.2x on your penny, in for a pound.

kokey 1035 days ago [-]

I've always been fascinated by ponzi schemes, or other pyramid and chain structures. Most of the legislation against it that I've looked at, attacks it from a deception angle. So, basically, if it's honest about what it is and your chances are to make or not make money from it, it may be within the law of many countries. I have never looked at it from a cross border legal perspective, that might make it even more interesting.

randomflavor 1035 days ago [-]

Just tried sending .2, and got back .119 - so therse a bug or he's skimming. lol, anyway interesting to make this

ck2 1035 days ago [-]

I'm impressed by the vanity address, must have taken a lot of cpu power to hash that one out.

GigabyteCoin 1035 days ago [-]

CPU power, maybe. Vanitygen works with GPU power now, however.

kordless 1035 days ago [-]

Probability on a low end machine is 50% in 2.6 hours.

Kiro 1035 days ago [-]

A bit OT but how do you build automatic Bitcoin services like this?

hendzen 1035 days ago [-]

If you like Java (or other JVM langs), check out BitcoinJ. By far the most solid Bitcoin library.

jccooper 1034 days ago [-]

The official bitcoin client (and all its alt forks) runs as a JSON-RPC server. It also runs as a graphical and/or command-line client for said server. You can thus communicate directly, or you can script calls of the command-line client (which gives back the direct JSON responses.) There are also plenty of language libraries that wrap the JSON-RPC calls.

I find the naming of the API a little peculiar, but it's simple enough.

guard-of-terra 1035 days ago [-]

Using RPC API of the official client? Unless you do something smarter like bitcoin lottery (I forgot how it is called).

runn1ng 1035 days ago [-]

If you have just a few transactions then yes, but the official client has a few caveats that can show up as problematic.
I would write it myself, but there is far better explanation here on reddit


- the difficulty of finding available addresses is quadratic to the number of unspent transactions

- someone can slightly change the transaction so it's still valid, but have a different transaction ID - that can mess up clients and break chains of unconfirmed transactions

3rd3 1035 days ago [-]

How does that work exactly? I pay in X BTC and two other people pay in say 0.5 X and 0.7 X then I get these BTC back? How exactly will my X BTC be distributed among other gamblers?

sp332 1035 days ago [-]

You don't get the original money back at the end, you just get the 1.2x BTC that other people gave you.

maxerickson 1035 days ago [-]

It's interesting that this is exactly what a 'high risk' mixer looks like.

dzhiurgis 1035 days ago [-]

Or money laundering scheme. Genius idea.

loucal 1035 days ago [-]

I'm wondering though how they can afford to pay some people 400% Kind of seems like a bug might be making this less sustainable than it normally would be.

loucal 1035 days ago [-]

make that 500%... the original 79mBTC got refunded to it 2 hours later...

harrigan 1035 days ago [-]

This was tried out about a year ago: The rules were originally very similar to the website above; then the owner modified them so that the gem randomly "reset".

agent462 1035 days ago [-]

First, I fully understood what I was getting in to.
I first deposited .1 bitcoin to see if it was real and got 0.11978 back.

Ok, this will be fun.

I then deposited .8591 and got back 1.1999. Ha this is hilariously fun. More gambling!

I then sent 1.2001 and got back 0.8589. Wait what..

The game ended and he skimmed from me to hopefully pay someone else back and not pocket it.

jacob019 1035 days ago [-]

So you actually have 0.01938 more than you started with, 0.01938 of someone elses coins who didn't get them back and you feel that he skimmed you?

agent462 1035 days ago [-]

I think you're missing my point. I'm not saying I feel skimmed. I'm just stating what happened.
What I'm saying is that he skimmed from my last deposit. I'm hoping he did use it so others got their coin back.

jacob019 1035 days ago [-]

kind of seems like he purposefully gave you just enough to cover your deposits

fnsa 1035 days ago [-]

shameless plug: my ncurses thin SPV bitcoin client for linux/mac:

* 100% C code,
* support for linux and mac platforms,
* console based: uses ncurses,
* home grown async network i/o stack,
* home grown poll loop,
* home grown bitcoin engine,
* supports encrypted wallet,
* supports Tor/Socks5 proxy,
* multi-threaded,
* valgrind clean.
You'll need basic dev skills to install it: check-out the code, install dependencies then build. It's all in the README file. I'm interested in all kinds of feedback you may have: feature requests, bugs, etc. Thanks!

fnsa 1035 days ago [-]

it looks like this:

sunshinerag 1035 days ago [-]

I bet this ponzi scheme will be much short-lived compared to the one run by

epmatsw 1035 days ago [-]

Huh. I got paid back. I'm actually somewhat surprised. Well, I made 0.0002.

yownie 1035 days ago [-]

same here, made .0999

yatakaka 1035 days ago [-]

Careful. I just sent .3, complained in the chat and was subsequently blocked...

RobinL 1035 days ago [-]

What a great illustration of how investment bubbles can rationally occur.

aestra 1035 days ago [-]
The greater fool theory says there are fools who know their purchase is either worthless or overpriced but purchase it anyway in order to sell it to greater fools at a profit.

thrush 1035 days ago [-]

How much does creator make?

hackinthebochs 1035 days ago [-]

The creator makes what's leftover in the end of non-payouts whenever he decides to pull the plug.

judk 1035 days ago [-]

Why would there be any leftover? If creator isn't flat out stealing (which is a possibility, but obviously illegal and risks penalty), all payins would go to payouts.

ilya89 1035 days ago [-]

he probably funded the first 10-100 btc, 20% profit. do the math.

thrush 1035 days ago [-]

are you sure 20% profit is the right number? Imagine two people use it, and they both pay 1 BTC.
Time | Event
1 | First person pays 1 BTC
2 | Second person pays 1 BTC
2 | First person gets paid 1.2 BTC
The creator makes .8 BTC in this case. Pretty solid return if you ask me.

jkrems 1035 days ago [-]

Only if you ignore that the 3rd person would get the 0.8 BTC (as long as the scheme goes on). At some point he stops, but how much money he made depends exactly on how many people he didn't pay back. So, in the simplest case:
Time | Event
1 | First person pays 1 BTC
The creator makes 1 BTC in this case. Even better return.

WWKong 1035 days ago [-]

Keep going. Then a third person joins. Second gets 1.2. Creator now has only 0.6. Then a fourth one joins…

ilya89 1035 days ago [-]

my thought process is: one large BTC pool. all transactions are feed into the pool. the order of the deposits dictate priority of withdrawal. Owner does not skim the transactions, only makes a large initial deposit and then markets the site like crazy. Big assumption here is that he is running an "honest" ponzi operation.

thrush 1035 days ago [-]

why would he even need an initial deposit? he can simply delay to pay people until enough other people have paid.

cdcarter 1035 days ago [-]

So that he can "honestly" take the 20% additional of that first deposit.

jasonvolpe 1035 days ago [-] is a more interesting experimental art piece as it's not a blatant scam.

n1c 1035 days ago [-]

Funny, I also built something like this in December.

RRRA 1035 days ago [-]

Can anybody tell me how you come I've sent close to the minimum and got almost 100 time more? (this is not a joke, algo. fail?)

omni 1035 days ago [-]

I sent them 0.001 BTC and got 0.00256 in return over two transactions. Something screwy is definitely going on.

mmaunder 1035 days ago [-]


RRRA 1035 days ago [-]

Well, it seems the experiment is over and they tried to pay back everyone, but have a look at my wallet:
I sent 0.0012408 + 0.0001 fee and got 0.1199 back... So I just tried again before seeing that it was over and probably will not get anything back from that payment.

So, in total, I "lost" 0.0013408*2 and got 0.1199. That's 76$ profit, at current rate anyway!

bbosh 1035 days ago [-]

I don't know why you've gone to the effort of blacking out the other addresses, when the blockchain is public. Here's a definitive proof of the transactions:

RRRA 1035 days ago [-]

Good point, I guess I'm still new to this, I just bought some BTC from the new Montreal's ATM yesterday. I guess that by blacking out the time or part of the amount I would have made it "uncertain"...
So yeah, point is, it's true, screwed up big time in my favor (and I just got the 6th verification).

And ... it's Saturday, and I've just got some "money" for free booze.

cheers! ;)

Kiro 1035 days ago [-]

I just tried and got paid within 30 minutes.

erikb 1035 days ago [-]

I would not wonder if it was posted by the actual author and if his advertisement here is actually successful.

kolev 1035 days ago [-]

So, is a Ponzi scheme squared?

leugim 1035 days ago [-]

Cool cool cool
The human stupidity in one web, from the same Carlo Ponzi to Bernard Madoff. All Ponzi scheme portrayed in a web.

I love it.

amenghra 1035 days ago [-]

A few small teaks could make this into a money laundering / mixing money trail tool.

magic8ball 1035 days ago [-]

Just received my 1BTC back. The "experiment is over" seems to be legitimate.

xcyu 1035 days ago [-]

Refresh the page to see some "live" action.

dogewow 1035 days ago [-]

Looks like the fun has moved to
Who wants to make some money before the prices get too high ;)

jheriko 1035 days ago [-]

whatever happened to ethics and demonstrating problems without victimising people?
its not big or clever. :/

once again disappointed in the community...

melarina 1035 days ago [-]

> Transparent Bitcoin Ponzi scheme
needs more parentheses

gorteks 1035 days ago [-]

A clone is already up at

vezzy-fnord 1035 days ago [-]

Charles would be proud.

tzakrajs 1035 days ago [-]

A ponzi scheme on top of a ponzi scheme. Brilliant.

avodonosov 1035 days ago [-]

very good idea

97s 1035 days ago [-]

This is amazing.

kenrose 1035 days ago [-]

What is amazing is that (at the time of this writing), they've had 205 BTC deposited. At today's value, that's $140,000 USD. For a site that looks to be just over one week old.
In a way, this is almost sort of like gambling. You either get 1.2x your money, or lose it all. Odds depend on the hype of the site.

Cute whois information too: Owner : Charles Ponzi

orn 1035 days ago [-]

The site seems to have crashed, maybe it's Game over ?

BobMarin 1035 days ago [-]

You do realize that the site is a joke, don't you?

ryanjshaw 1035 days ago [-]

The blockchain doesn't lie:

kenrose 1035 days ago [-]

What do you mean a joke? Looking at the blockchain, it seems to be a full fledged, serious, Ponzi scheme. They're taking in BTC and paying it out again to the early investors.
EDIT: +1 to ryanjshaw for showing the blockchain:

asveikau 1035 days ago [-]

Even though it is a functioning ponzi scheme, it could still be classified as a joke. I'd go so far as to say if you don't see humor in it there might be something wrong with you.
Although there is the legal question. I'm not sure it would be so funny to tell it to a judge.

BobMarin 1035 days ago [-]

wow did not expect that, my bad...
I just glanced over and saw all the automated responses and figured it's a joke. I'm actually still not convinced it's not an elaborate joke

BlackDeath3 1035 days ago [-]

The lesson - don't leave sarcastic, condescending responses to people before doing your own research.

cozuya 1035 days ago [-]

No one deserves the horrors they face by being on the receiving end of the dreaded #828282.

97s 1035 days ago [-]

There is a block chain man. It's not a joke, how can you be so silly. BTC has a 100% record of everything that happens to it.

smartistone 1035 days ago [-]

Well, this is how folks get rich in the smartist era, by creating schemes like this. Or buying facebook & google stock. Or creating/investing in the next web 2.0 billion dollar company. A 9-5 chump would have to work for years to make this kind of money, assuming he paid off all his college loans.

yatakaka 1035 days ago [-]


breaker05 1035 days ago [-]

I'd love people to donate a few BTC that I can use for more noble causes.

powera 1035 days ago [-]

This is quite possibly the worst post to ever hit #1 on Hacker News. Why are you people voting it up? Just because it admits that it's a scam (and "get your money plus 20% back for nothing ALWAYS ENDS UP A SCAM") doesn't mean that it should get posted here.

Avitas 1035 days ago [-]

Just because it is [a naked/unabashed Ponzi scheme] is precisely WHY readers are interested. You obviously know this and are feigning I-don't-know-what...

sehr 1035 days ago [-]

Because it's interesting?

powera 1035 days ago [-]

"On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity." - I maintain that a "good" hacker wouldn't find a blatant scam interesting. Especially not "just because it uses bitcoin".

GeneralMayhem 1035 days ago [-]

It's beyond blatant; it's unabashed and self-aware. That's interesting - who would make such a thing? Who would pay into it? Will it still work even when people know what it is?

runn1ng 1035 days ago [-]

This is why I posted it.
I didn't think it will reach #1 spot, but here we go.

powera 1035 days ago [-]

"Every time you send money to the Ponzi address, you'll get back 1.2x what you put in." - honestly, it sounds like a normal Ponzi scheme to me. It's probably targeting people who don't realize that Ponzi schemes by their nature always end up as scams.
"All of our activity is is open and public on the blockchain. It's impossible for us to cheat anyone out of their payout without everyone knowing." - completely ignores the point. 15% of the people who put money in WILL lose all of it. Period.

peeters 1035 days ago [-]

> "Every time you send money to the Ponzi address, you'll get back 1.2x what you put in."
You're cherry picking a quote from the FAQ section answering what the payout ratio is. All prior mentions of the 120% payout are clear that the payout occurs only if people invest after you. Such as the "How does this work?" section:

>Send bitcoin to 1ponziUjuCVdB167ZmTWH48AURW1vE64q, and you'll get back 120% of the deposit. The returns on your investment come from other investors, so as long as people invest after you, your payout is guaranteed!

Or the main page:

>Get 120% back when the next person sends.

hackinthebochs 1035 days ago [-]

It's not a scam any more than gambling is. Scams are things that appear to be one thing but are another. This is not that.

Detrus 1035 days ago [-]


Man who started well known Ponzi scheme in 1990's Russia is at it again, this time with full disclosure. People already lost money on the new one.

They will continue, it's like gambling. You're probably better off gambling on crypto dice sites like though. Bet on 80% odds for a 1.2% payout. Results are instant, so you can develop an addiction.

sehr 1035 days ago [-]

So because it doesn't fit your subjective view of what a 'good hacker' finds interesting, it shouldn't be at the top of HN? : Fx Primus Europe Cy Ltd, Cyprus is owned by Fx Primus Europe Cy Ltd (Fx Primus Europe (cy) Ltd). Find domain names registred with Try our ... -
Dec 16, 2015 - Registrant Email: Admin ID: CR211526230 Admin Name: Raj Kumar Admin Organization: FX Primus Europe CY Ltd - Email Data - Whoismind
Discover who owns the Email Address, which domains, hostnames and names are related.

Fxprimus : Website stats and valuation
... Phone: +357.25030072 Registrant Phone Ext: Registrant Fax: +357.25030072 Registrant Fax Ext: Registrant Email: Registry Admin ... - SiteGur
... Phone: +357.25030072 Registrant Phone Ext: Registrant Fax: +357.25030072 Registrant Fax Ext: Registrant Email: Registry Admin ...
Registrant Fax Ext: Registrant Email: Registry Admin ID: Admin Name: FX Primus Admin Organization: FX Primus Europe (CY) Ltd - FXPRIMUS | Online Trading Platform - Trade Forex ...
... Phone: +357.25030072 Registrant Phone Ext: Registrant Fax: +357.25030072 Registrant Fax Ext: Registrant Email: Registry Admin ... : FXPRIMUS | Online Trading Platform - Trade Forex ...
Registrant Fax Ext: Registrant Email: Registry Admin ID: Admin Name: FX Primus Admin Organization: FX Primus Europe (CY) Ltd

Fx Primus Europe (Cy) Ltd Domains Info | Whois Repo
... 1st Floor, Suite 102,. City, Limassol. Country, CY. Postal Code, 4103. Phone, +357.25030072. Fax, +357.25030072. eMail, ... Review - Stat Analysis Report
Nov 30, 2015 - Registrant Email: Registry Admin ID: Admin Name: FX Primus Admin Organization: FX Primus Europe (CY) Ltd

page: 2

FXPRIMUS | Online Trading Platform - Trade Forex, Commodities ...
Apr 11, 2016 - Registrant Email: Registry Admin ID: Admin Name: FX Primus Admin Organization: FX Primus Europe (CY) Ltd -
mname: rname: serial: 2021735624 refresh: 10000 retry: 2400 expire: 604800 minimum: 3600. Nameservers. Review, Whois, SEO, Analysis, Worth, PageRank
Aug 5, 2016 - Email: Registry Tech ID: Not Available From Registry Tech Name: FX Primus Tech Organization: FX Primus

Primusmarkets : 403 Forbidden
Aug 5, 2015 - Registrant Email: Registry Admin ID: Admin Name: Kumar Raj Admin Organization: FXPRIMUS Europe (CY) Ltd whois history records
FX Primus Europe CY Ltd resides in Limassol, Cyprus and their email is Earlier, FXPRIMUS owners included FX Primus of FX Primus ...

Tan Kok Seong FX1 Academy Pte Ltd at Website Informer
... (Tan Kok Seong). Address: 883 North Bridge Road, Southbank, 13-04 Singapore None 198785 SG Phone: +65.061004391. Email: ...

Raj Kumar Wealth Vertex Pte Ltd at Website Informer
Address: 100 Jalan Sultan, #07-00, Sultan Plaza Singapore Singapore 199001 Singapore Phone: +60.162127890. Email: ...

FX Primus Europe CY Ltd (FX Primus Europe (CY ... - Website Informer
Address: 57 Kolonakiou Str, 1st Floor, Suite 102, Limassol Limassol 4103 CY Phone: +357.25030072. Fax: +357.25030072. Email: ... domain information - VirusTotal
What does VirusTotal know about Passive DNS replication server information, virus incidents, malware communication points, engagement in ...

IP: |
Domain, Emails, First seen, Last seen, Sources. ·, 2016-01-22 14:40:40, 2016-05-13 14:43:23, Native ...

page: 3

FXPRIMUS | Online Trading Platform - Trade Forex, Commodities ...
How can I contact the owner of this domain? You can contact the owner by emailing them at What is this domain's address?

Level 1 Internet Domains in Tumia-&dname=guru this page
Level 1 Internet Domains in Tumia @ Tumia - Saraka Internet Nyobjectoriented - Page 22 ya 41.

Level 1 Internet Domains in Tumia @ Tumia - Saraka Internet ...
Level 1 Internet Domains in Tumia @ Tumia - Saraka Internet Nyobjectoriented - Page 1 ya 41.

Level 1 Internet Domains in Tumia of class Chart
Level 1 Internet Domains in Tumia @ Tumia - the Objectoriented Internet Directory - Page 1 of 41.

Level 1 Internet Domains in Tumia-&dname=asia - Asia-Pacific
Level 1 Internet Domains in Tumia @ Tumia - the Objectoriented Internet Directory - Page 10 of 41.

Level 1 Internet Domains in Tumia @ Tumia - Saraka Internet ...
Level 1 Internet Domains in Tumia @ Tumia - Saraka Internet Nyobjectoriented - Page 18 ya 41.

Level 1 Internet Domains in Tumia-&dname=mu - Mauritius&dsid=0 this page
Level 1 Internet Domains in Tumia @ Tumia - Saraka Internet Nyobjectoriented - Page 15 ya 41.