Et tu Matt? Bitcoin Mag Founder Welches on Big Bet

A little under a month ago, a scandal was building in the Bitcoin world. For some time, a forum user going by the pseudonym “PirateAt40″ had been running “Bitcoin Savings & Trust” – a high-yield savings account that seemed too good to be true. For example, it earned twice the interest per week that a good savings account should be earning annually – a red flag if ever there was one. When Pirate started slipping on his payment schedule there was rampant speculation that he was about to skip town with his ill-gotten gains but a few folks remained optimistic. They began buying Pirate’s debt for pennies on the dollar in hopes that he would come back and turn those pennies into gold. Among all of the names betting that Pirate wasn’t a scam artist, one stood out: Matthew N. Wright.

MNW is a pretty well-known member of the Bitcoin community, and while many have labeled him obnoxious, annoying and in some cases downright trollish, he’s also a fairly respected name in some circles. While the methods used to get there weren’t necessarily the prettiest, he did launch Bitcoin Magazine and help it find its way into book stores nation-wide. So why is our featured image today a screen shot of his shiny new SCAMMER tag?

Well, it all began on August 19th, 2012 when MNW posted this thread on the BitcoinTalk forums, promising 100% ROI for anyone who thought Pirate was a fraud. Essentially, he was offering a straight bet that Pirate would pay out. Today many claim that his intent was to teach people to read carefully when going after what seems like easy money, and that’s certainly a valuable lesson, but some folks aren’t taking it so lightly.

It’s important to specify that no money ever changed hands in this betting process. MNW set up a Google Docs spreadsheet holding BTC amounts and addresses for the would-be bettors, with total amount bet exceeding 80,000 BTC (81,993 BTC – about $910,000 USD at the time of this writing). There is also speculation that some bettors may have deserved the scammer tag themselves for betting more BTC than they actually held or had the means to obtain, but none of that really matters considering that MNW is refusing to pay up.

In his original post, MNW used some vague language that would seem to indicate he’s making a straight bet, but in fact used the following language:

To make your bets easier to read, please stick to the following format:

20BTC

13dSK4663Ts7j2PwHS1eUVjycKLBwx7PJM
Optional comment

If I lose the bet, you get 20BTC sent to that address. If you lose, you’ll need to send 20BTC to my address.

Note that he said “to that address” – not “to your address as listed in the spreadsheet” or similar. Taken literally, this means that the bettors were never on the hook for the amount they actually bet, but rather for 20BTC, whether that was larger or smaller than their actual bet. Likewise, MNW was never on the hook to actually send BTC to the addresses listed in the spreadsheet, but rather to send 20 BTC to the address “13dSK4663Ts7j2PwHS1eUVjycKLBwx7PJM” once for each bettor – and of course that address is one he owns. Since there were 112 bets in his spreadsheet, he has to send 20 BTC to himself 112 times.

Again, and I can’t stress this enough, no money ever changed hands – but imagine if it had! Okay, Matt, we consider the point made. We’re supposed to start asking ourselves the hard questions now. Is MNW actually a scammer? Do people just need to read more carefully? It’s obvious here that his intent was to deceive, but I can’t be the only person in the world struck down by a twisted phrase in a deceptive contract written by perfectly legitimate businesses.

I personally feel like the scammer tag is deserved here, but it definitely drives home a few important lessons about trust, escrow, all things “too good to be true” and – above all – carefully reading the terms of anything we agree to.