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Perhaps his debt was in bitcoins, so it also increased (as priced in USD)

That is correct.

Trendon's whole scheme would have worked if the price of bitcoin had started falling, instead of rising so much.

No, really, the debt to depositors was owed in bitcoins. Don't know why I'm getting downvoted. It is a fact.

If he convert all bitcoin to USD and bitcoin value went down, he can the previous USD to buy the promised bitcoin and payback.