Attorneys » Southern District of New York » News » Press Releases Justice News Share Facebook Twitter Google+ LinkedIn Digg Reddit StumbleUpon Pinterest Email Texas Man Sentenced For Operating Bitcoin Ponzi Scheme USAO - New York, SouthernPrimary Section I haven’t written on bitcoin for a while despite it going nuts: The reason is very straight forward.This is a global ponzi scheme and that’s the end of it.As a super-national currency, the only appropriate comparison with bitcoin is gold or other hard assets that hold their value when sovereign paper money does not.Is that going to happen with bitcoin if we reach some at which sovereign currency loses all value?It’s going to be worthless as well.As well as that, the regulatory risk is enormous.Folks are putting this latest bubble down to a flood of Chinese dough after its recent tightening hit stocks and bonds: You don’t have to be Einstein to see that a super-national currency like this fundamentally undermines the power of authoritarian states like China, not to mention liberal democracies as well.

If you can tell me where that risk leads then you are Albert Einstein.Play it, own it, do what you like with it, but always remember that it is nothing more that an intrinsically worthless global pyramid scheme that could collapse at any moment.Press Release FOR IMMEDIATE RELEASE 2013-132 Washington D.C., July 23, 2013— The Securities and Exchange Commission today charged a Texas man and his company with defrauding investors in a Ponzi scheme involving Bitcoin, a virtual currency traded on online exchanges for conventional currencies like the U.S.ppc to bitcoindollar or used to purchase goods or services online.bitcoin report goldman sachsThe SEC alleges that Trendon T. Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers “Pirate” and “pirateat40.”  Shavers raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments were offered and sold.bitcointalk wallet

Today the value of 700,000 Bitcoin exceeds $60 million.The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities.In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments.reddit bitcoin donationShavers also diverted investors’ Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S.bitcoin site achatdollars to pay his personal expenses.bitcoin order book depthThe SEC issued an investor alert today warning investors about the dangers of potential investment scams involving virtual currencies promoted through the Internet.how to set up bitcoin donations

“Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.“Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed.” According to the SEC’s complaint filed in U.S.bitcoin exchange ipoDistrict Court for the Eastern District of Texas, Shavers sold BTCST investments over the Internet to investors in such states as Connecticut, Hawaii, Illinois, Louisiana, Massachusetts, North Carolina, and Pennsylvania.ethereum brasilShavers posted general solicitations on a website dedicated to Bitcoin discussions, and he misled investors with such false assurances about his investment opportunity as “It’s growing, it’s growing!”

and “I have yet to come close to taking a loss on any deal,” and “risk is almost 0.”  Contrary to the representations made to investors, BTCST was not in the business of buying and selling Bitcoin at all.The SEC alleges that Shavers, who lives in McKinney, Texas, paid 507,148 Bitcoin in investor withdrawals and purported interest payments.He transferred at least 150,649 Bitcoin to his personal account at an online Bitcoin currency exchange.Shavers suffered a net loss from his day trading, but realized net proceeds of $164,758 from his sales of 86,202 Bitcoin.Shavers transferred $147,102 from his personal account at the online Bitcoin currency exchange to accounts he controlled at an online payment processor as well as his personal checking account.He used this money to pay his rent, utilities, and car-related expenses as well as for food and retail purchases and gambling.The SEC’s complaint charges Shavers and BTCST with offering and selling investments in violation of the anti-fraud and registration provisions of the securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5.