It shames me fierce to tell ye shipmate, but I lost me galleon in a game of cards. And worse yet the map was stolen by that terror, Captain LeFwee.
Upon arriving in Blood Bath Bay, Sly visits a local bar frequented by Black Spot Pete. He finds the aged pirate there and attempts to strike up conversation with him about his treasure. Being an outsider, Sly is immediately shunned by Pete, who explains that he only discussed his treasure with his shipmate Cantankerous Tim.
Sly learns that Tim died when his three of his shipmates mutinied on him. These three lieutenants then divided up Tim's treasure, including his clothes. If Sly stole each's lieutenants' share of the outfit, then he could disguise himself as Tim and fool Black Spot Pete.
The first lieutenant, Stone Jake, was in possession of Cantankerous Tim's eye patch. Sly whacked the trees near Jake in order to lure him under a large anchor. Once underneath, Sly dropped the anchor and stole the eye patch. The second lieutenant had Tim's peg leg, and Sly reluctantly sneaks behind him and unscrews the peg leg. Tim's captain's hat was held by the final lieutenant, Twitchy Ned, who is hiding up in a crow's nest in fear of his life. Sly locates Ned, and chases him down for the hat.
With all three pieces of the outfit, Sly confronts Black Spot Pete. Pete, with his "sunburnt eyes," mistakes Sly for his old shipmate. While Sly is eager to talk treasure with the old pirate, Pete challenges Sly to a round of "vinegar talk" first. Afterwards, Sly speaks with Pete and learns that he buried his treasure (along with the stolen diving gear of Reme Lousteau) on Dagger Island. However, the treasure map had been stolen and was in the possession of Captain LeFwee, who locked it away in Skull Keep. Before Sly leaves, Pete warns him of the danger that awaits him in Skull Keep.