Preet Bharara, the United States Attorney for the Southern District of New York, announced today that TRENDON SHAVERS, a/k/a “pirateat40,” pled guilty before U.S.Magistrate Judge Sarah Netburn to one count of securities fraud stemming from his involvement in a Bitcoin-related Ponzi scheme.SHAVERS was the founder and operator of Bitcoin Savings and Trust (“BCS&T”), which offered and sold Bitcoin-based investments through the Internet.In total, SHAVERS fraudulently obtained approximately 146,000 Bitcoin in BCS&T investments, which amounted to approximately $807,380 based on the average price of Bitcoin over the duration of the scheme.SHAVERS is expected to be sentenced before U.S.District Judge Lewis A. Kaplan on February 3, 2016.Bitcoin are a decentralized form of electronic currency, existing entirely on the Internet and not in any physical form.The currency is not issued by any government, bank, or company, but rather is generated and controlled automatically through computer software operating on a “peer-to-peer” network.

Bitcoin transactions are processed collectively by the software-enabled computers composing the network.Attorney Preet Bharara said: “Trendon Shavers has admitted that his high-yield Bitcoin investment program yielded high returns for himself rather than his investors.Instead of reaping gains, his investors were largely swindled out of their money in a cyber-age Ponzi scheme.Shavers now awaits sentencing for his crime.” According to the Indictment, other public records, and statements made today in court: From at least September 2011 up through and including September 2012, SHAVERS operated a Ponzi scheme.Specifically, SHAVERS solicited investments in BCS&T on the “Bitcoin Forum”—a public, Internet-based forum where, among other things, Bitcoin investment opportunities were posted.SHAVERS’s offer to investors was straightforward: investors who loaned Bitcoin to BCS&T would be paid up to seven percent interest weekly—an annualized interest rate of 3,641% per year—and investors could withdraw their investments in BCS&T at any time.

SHAVERS claimed that the Bitcoin invested by BCS&T investors would be used to support a Bitcoin market-arbitrage strategy, which included (i) lending Bitcoin to others for a fixed period of time; (ii) trading Bitcoin via online exchanges; and (iii) selling Bitcoin locally via private, off-markets transactions—i.e., “over-the-counter transactions.” SHAVERS also personally guaranteed that he would cover any losses in the event of a market change.bitcoin tax guidanceIn truth, SHAVERS largely failed to execute the claimed market arbitrage strategy, failed to honor all of his investors’ redemption requests as well as his personal guarantee, and failed to deliver the agreed-upon rates of interest.bitcoin armory windows 8In the end, BCS&T was simply a Ponzi scheme through which SHAVERS used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BCS&T investments.dogecoin down

In addition, SHAVERS diverted investors’ Bitcoin for day trading in his own account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S.dollars to pay his personal expenses.At the peak of the scheme, SHAVERS raised, and had in his possession, about seven percent of all the Bitcoin that was in public circulation at the time.At least 48 of approximately 100 investors lost all or part of their investment in BCS&T.bitcoin armory iphoneSHAVERS, 33, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.bitcoin peer to peer donation sitesThe maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as the defendant’s sentence will be determined by the judge.bitcoin atm mit

On September 18, 2014, in a separate civil action, the United States District Court for the Eastern District of Texas entered final judgment against both SHAVERS and BCS&T, and ordered SHAVERS to pay more than $40 million in disgorgement and prejudgment interest, and a civil penalty of $150,000 related to BCS&T.Bharara praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its invaluable assistance.dogecoin exchange rate chartThe charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.ethereum vietnamThe task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.peter joseph bitcoinWith more than 20 federal agencies, 94 U.S.

attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.For more information on the task force, please visit .This case is being handled by the Office’s Securities and Commodities Fraud Task Force.Attorneys Daniel S. Goldman and Michael Ferrara are in charge of the prosecution.As infamous bitcoin criminals like Ross Ulbricht have learned, it’s not impossible to get caught.And, as law enforcement has learned, the dark side of bitcoin has its perks.

At least, when it comes to catching criminals.Criminals, for example, like the Czech national Thomas Jiikovský, who pled guilty to operating a $150 million Ponzi scheme in what is believed to be the first bitcoin securities fraud case.And then, there was Mark Karpelès, the former bitcoin tycoon, who is in police custody in Japan under charges of fraud andembezzlement for his Mt.Gox bitcoin exchange that went bust.And now, a recent report from Science details how forensic researchers are using bitcoin for good, by tapping into its technology to catch those criminals who had the naive belief that they were safely cloaked in the veil of anonymity that was once thought to come married to bitcoin.Because even bitcoin has a trail.A trail that these researchers say comes with a treasure trove of data that can help law enforcement crack down on criminals using bitcoin to live outside the law.After all, where there’s a will, there’s a way.And through the use of academic researchers who use forensics, economics and a mix of computer science, there’s a way to fire back.

That’s according to Sarah Meiklejohn, a computer scientist at University College London.What Meiklejohn said is that the introduction of bitcoin initially sprouted fear within the law enforcement community, but as the past few years, packed with arrests and trials, have shown, bitcoin criminals aren’t always so difficult to catch.That’s led law enforcement to realize how cryptocurrency and its rich data can help them trace the bitcoin trail.And, according to Patrick McDaniel, a computer scientist at Pennsylvania State University, bitcoin is “the frontier of economics.” What this means is: If a bitcoin, hypothetically, is just hoarded and never mixed back into the system, the bitcoin is safe.But once that bitcoin is spent or transferred, it opens up a Pandora’s box of forensic data.Russia Looks To Crack Down On Bitcoin (Even More) Now, its lawmakers want to curtail any possible bitcoin activity by slapping a seven-year jail sentence on anyone who uses bitcoin for any sort of activity.

But on the odd side?The Central Bank of Russia still has plans to review blockchain technology.But, somehow, it still wants bitcoin activity to be illegal.At least, that’s what the draft proposal from the Russian Ministry of Finance is after in its new proposal.The lawmakers want to ensure that any currency in the country comes from the Central Bank of Russia.Sounds about right for Russia.The country already has laws in place that indicate that being involved in the production, sale or distribution of any digital currency could land someone with one year of a correctional labor sentence.I guess that’s better than seven?But, then again, the Ministry of Finance wants other stipulations attached to the laws, including a fine of up to 500,000 Ruble (~$7,100).And if the “criminal” can’t pay?They would have to give over their salary for a three-year period.Or go to prison for four years.It’s safe to say that Russia won’t be getting bitcoin-friendly anytime soon.Central Banks Eye Bitcoin-Like Digital Currency But all was not lost in the world of bitcoin and digital currency news this week.

While bitcoin was designed to be the libertarian-style currency — free from government rein — now, the chatter for central banks is how they could enable their own digital currency through a technology similar to bitcoin, in a manner that would be under the control of the central banks, like the Federal Reserve.What this will be is a system known as RSCoin, which was designed by researchers at University College London and inspired by suggestions from the Bank of England.Of course, the U.K.has been far more interested in initiating projects using bitcoin and the blockchain than the U.S.This research started last year but, since then, has been discussed in a more serious manner.Similar to bitcoin, RSCoin employs cryptography to form a digital currency.It also uses a process that involves verifying and recording transactions over a distributed ledger.But, unlike bitcoin, this ledger wouldn’t be controlled by a select number of users/computers (or have a limited number that’s causing the spat today in the bitcoin community).