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, SouthernNEW YORK A Texas man was sentenced to one-and-a-half years in prison on Thursday for operating a bitcoin-related Ponzi scheme that prosecutors say resulted in the first U.S.criminal securities fraud case related to the digital currency.Trendon Shavers, who operated Bitcoin Savings and Trust, was also ordered by U.S.District Judge Lewis Kaplan in Manhattan to forfeit $1.23 million and pay restitution in the same amount for operating what the judge called a "class Ponzi scheme.""Youdefrauded innocent people," he said."You did it, in the last analysis, for personal gain."Shavers,who pleaded guilty in September 2015 to one count of securities fraud and who now supports himself as a cook, said in court he had "royally messed up," and had lost friends and embarrassed his family as a result of his fraud.

"I don't think this is something I'm ever going to get over," he said.Shavers, a Prosper, Texas, resident who went by "pirateat40" online, was arrested in November 2014, two months after a federal judge in Texas ordered him to pay $40.7 million in a related U.S.Securities and Exchange Commission civil lawsuit.Prosecutors said from 2011 to 2012, Shavers, 33, raised at least 764,000 bitcoins, which at the time were worth more than $4.5 million, for his Bitcoin Savings and Trust.He operated the business from his home, offering bitcoin-related investments through the internet.Prosecutors said Shavers solicited the investments on the website Bitcoin Forum, and promised interest rates of 7 percent per week to investors who loaned bitcoins to Bitcoin Savings and Trust while he pursued a market arbitrage strategy.While Shavers invested some of the bitcoins with Mt.Gox, the now-defunct Tokyo-based bitcoin exchange, he largely in typical Ponzi scheme fashion used new investors' bitcoins to pay back prior investors, prosecutors said.At the peak of the scheme, Shavers controlled about 7 percent of bitcoins in public circulation, prosecutors said.

In total, out of 100 investors, at least 48 suffered losses, prosecutors said.His lawyers said the losses equaled $1.23 million.Prosecutors said Shavers also misappropriated bitcoins to purchase a used BMW M5 sedan, to buy have a $1,000 steakhouse dinner in Las Vegas and to go to spas and casinos.The case is U.S.District Court, Southern District of New York, No.(Reporting by Nate Raymond in New York; Editing by David Gregorio)doge coin buyersA Texas man admitted Monday to running a bitcoin Ponzi scheme, which at one time controlled about 7% of digital currency in circulation, in what authorities described as the first such federal criminal securities fraud case.bitcoin como retirarTrendon T. Shavers, who went online by the name “pirateat40,” pleaded guilty Monday in Manhattan federal court to a charge... Most Popular Videos Film Clip: 'The Big Sick' Lower Your Wireless Bill With These Tips 'Bridge Crew': Voice Command Comes to 'Star Trek' VR Videogame A New Road to Income: Barron's Buzz Opinion Journal: Macron vs.bitcoin revenue calculator

Update: This post has been updated with a response from Amit Bhardwaj has made headlines in various media outlets lately due to the bitcoin mining pool accounting for of the network hashrate and ; however, there is a connection between GBMiners and , which is a cloud mining operation that is clearly operating as nothing more than a Ponzi scheme.The connection between GainBitcoin and GBMiners is , who is involved with both projects.At this time, it’s unclear if the hashpower pointed at the GBMiners mining pool comes directly from Gainbitcoin, but Bhadwaj is .Many bitcoin cloud mining schemes have turned out to be Ponzi schemes over the years, and GainBitcoin is no different.bitcoin com boletoThe combination of a cloud mining scam with a mining pool to .Gainbitcoin guarantees a 10 percent return on investments into their cloud mining scheme per month.bitcoin achat vente

This 10 percent return per month rate has no basis in reality.On the Gainbitcoin website, a 1.5TH/s mining contract is available for the price of one bitcoin.This means that the contract should earn buyers 0.1 bitcoins per month.According to the , 1.5 TH/s should earn less than 0.04 bitcoin per month.Additionally, buying the same amount of hashpower from , which is one of the few bitcoin cloud mining companies that hasn’t turned out to be a scam of some kind, costs $225—roughly a quarter of the price quoted by Gainbitcoin.The investment claims made by Gainbitcoin are even more absurd when considering the fact that a cloud miner isn’t going to receive the full amount of income from their equipment without any expenditures.litecoin gratisGainbitcoin also heavily relies on a referral process.litecoin in inrBhardwaj mentions Gainbitcoin’s use of multi-level marketing in .There seems to be no logical reasoning behind the price of cloud mining contracts on Gainbitcoin.bitcoin geld schicken

Prices for the contracts are denominated in bitcoin, and they haven’t changed at all since early 2016 even though the US dollar price of bitcoin essentially doubled over that period of time.Returns on cloud mining contracts also don’t seem to have been affected by the halving event from the past summer either.were halved, but cloud mining contracts purchased through Gainbitcoin continued paying the same rates.Contracts that used to cost 100 bitcoin are now discounted to 86 bitcoin until March.swtor bitcoinThis sort of discount has no basis in reality, and is often used by cloud mining Ponzi schemes to make sure money keeps flowing into the scam.A similar strategy was used by .Payouts for cloud mining contracts are sent out twice per month.If earnings are immediately reinvested into the cloud mining scheme, Gainbitcoin is basically claiming that 86 bitcoins can be turned into 309 bitcoins over the course of a year via the discounted offering.There is where users have been investigating the claims made by GainBitcoin.

has not found any evidence that Gainbitcoin has missed any payments yet, although that tends to be the nature of Ponzi schemes at first.It’s unclear how much money has been put into the Ponzi scheme at this time.In a , Indian bitcoin exchange warned their customers against the various cloud mining schemes that have become popular in India.“We are aware that there are one or two alleged bitcoin mining schemes, which are extremely popular in India,” said Zebpay COO Sandeep Goenka.“These mining schemes assure a fixed return in bitcoin, and some of them promise returns as high as 10 percent of the bitcoin investment per month.We are absolutely sure that this is not possible in mining.We are sure that no mining scheme can guarantee a fixed mining return.We are sure that these are scams.We want to warn our users against investing in these mining schemes.”“In absolutely clear words, we want to warn our users against investing in these bitcoin mining schemes which assure any kind of fixed return.

In our opinion, these are scams,” Goenka reiterated.Gainbitcoin investors are also now forced to receive their payouts into a bitcoin wallet associated with Bhardwaj, known as Coinbank.When looking at the wallet’s layout, it’s clearly just a rebranded version of the .According to , Coinbank will soon offer a 1.5 percent monthly interest rate on fixed deposits.“We launched CoinBank, a Bitcoin Bank where you can do fixed deposits and we offer 1.5% per month interest rate on a 6 months fix deposit, which is the highest offered by a bitcoin wallet [or] bank globally,” wrote Bhardwaj.A 1.5 percent monthly interest rate equates to a 20 percent return for investors per year when earnings are reinvested at the end of each month, which is another extraordinary claim—albeit not as amazing as the gains that are supposedly coming to Gainbitcoin investors.GBMiners was built out of a partnership between Bhardwaj and .In addition to GBMiners, Coinbank and something called the are also listed as technology partners on the Darwin Labs website.Darwin Labs is also behind , which is said to be an incubator for blockchain startups in Southeast Asia.

Amit Bhardwaj is listed as an investor on the incubator’s website alongside longtime bitcoin angel investor Roger Ver.Ver told that he has not yet committed any funds to Satoshi Studios.has reached out to Darwin Labs CEO Sahil Baghla about the topics covered in this article.Baghla has decided not to comment.Update: CoinJournal has received answers to questions sent to Bhardwaj.Bhardwaj’s answers have been edited for formatting purposes.CoinJournal: Gainbitcoin’s prices are denominated in bitcoin.Why did the prices not change when the bitcoin price in US dollars roughly doubled in 2016?Bhardwaj: Because the internal base price for Gainbitcoin is in BTC.Purchase and produce both are in BTC.So actual change in BTC price economics doesn’t impact the overall business.CoinJournal: Why do your cloud mining contracts cost four times as much as the same amount of hashing power on Genesis Mining?Bhardwaj: The price updates for contracts are done once in 6 months time frame.Gainbitcoin don’t use dynamic pricing structure as even the output for users is not dynamic.

Genesis Mining is genuine as per your take, but I can surely find a lot of disgruntled customers because of wrongful information passed to them In all practical sense generic customer doesn’t have enough information to choose the right mining contract.In case of Gainbitcoin, it’s users are included in the ecosystem with a positive response and not left on their own judgement; leading to better inclusion in the ecosystem.CoinJournal: Why does the mining calculator on Gainbitcoin project 0.1 btc earned per month for 1.5 th/sec when a normal mining calculator says 1.5 th/sec should provide 0.04 btc per month?Bhardwaj: Bitcoin mining calculators are good for people who want to run their own mining setup, and I assure you not good for cloud mining chaps.Whenever we get a chance to interact one to one I’ll personally explain u the maths behind Gainbitcoin successful pattern for the user gains.It’s very simple, only cloud mining people makes it too complex.From CoinJournal’s perspective, saying things like the price of bitcoin does not impact a bitcoin mining business only confirms the fraudulent nature of the business.