The US Securities and Exchange Commission (SEC) has won a legal battle against GAW Miners and Zen Miners resulting in the now defunct companies shouldering the responsibility of $12 million in damages.Operated by Homero Joshua Garza, the two Connecticut-based companies were taken to court by the agency over allegations of operating as Ponzi schemes.SEC alleged that GAW Miners and Zen Miners defrauded investors by using "the lure of quick riches from virtual currency."Accordingto SEC, which released the details of the case on Monday, Homero Joshua Garza offered shares to investors in the companies' Bitcoin mining operation.Bitcoin mining used to be an easy way to secure the virtual currency before the idea became popular.You need computational power to solve complex equations, and when these have been solved, you are awarded units of the virtual currency.However, as there are only so many in circulation -- acting as a traditional currency in this manner -- the more that were mined, the fewer were left in the wild, and these Bitcoins require more and more power to secure.

Once the price of Bitcoin surged, many abandoned mining as individuals and joined mining "pools" in which numerous people add their own computing power to mine the virtual currency and take a slice of the profit.However, the price of Bitcoin, $2,904 per coin at the time of writing and based on scarcity, means that it usually costs more and more to run a system for mining.The complaint, filed 1 December 2015, alleged that the companies offered high-spec mining operations with the power necessary in return for investor funds.However, SEC said that GAW Miners and ZenMiner did not own enough computing power for the mining they promised, and as a result, "most investors paid for a share of computing power that never existed."Tokeep some investors off the scent, some returns were paid -- but these funds were generated through sales to other investors rather than mining.See also: Bitcoin scams: Beware of crooks trying to steal your cryptocurrency with these schemes On 2 June, the US District of Connecticut federal court sided with SEC and agreed to order that both GAW Miners and ZenMiner pay $10,384,099 jointly in disgorgement and prejudgment interest, as well as $1,000,000 fees in damages.

The companies themselves have been held accountable for the Ponzi scheme but SEC isn't finished yet as a separate case is ongoing against Garza.wie entstehen bitcoinAs noted by The Register, irony plays a part here.bitcoin time to find block calculatorShould the companies have simply purchased Bitcoin at the standard price at the time, between $400 and $450, considering the seriously inflated value of the virtual currency now -- upwards of $2,900 -- there would have been more than enough to keep the investors happy and have millions of dollars still left in the bank.doge coin buyersYou would have to have been holed up in a cave somewhere over the last few years to miss out on all the media attention to Bitcoin.raspi bitcoin miner

Bitcoin this, Bitcoin that, everybody's into Bitcoin.Perhaps not quite to the level of a media frenzy, but a good bit of attention, none the less.bitcoin wiki faucetAll of this media attention causes some people to scratch their heads and ponder what all this fuss is about?current bitcoin price audIs Bitcoin for real?bitcoin navy federalIs Bitcoin some secret plot of the Chinese government to undermine the U.S.akbar bitcoinPerhaps one of the more intriguing questions asked lately about Bitcoin is whether or not its a Ponzi scheme.ethereum purchase ukAfter all, not too long ago, Bernie Madoff shocked the nation with the size and scope of his scheme.

In fact, even to this day, the fallout from Bernie's shenannigans are still being felt.So back to the question of the day: Is Bitcoin a ponzi scheme, yes or no?As you will see in just a minute, the very nature of Bitcoin and its alternates violate the basic definition of a Ponzi scheme.For review, recall that a Ponzi scheme is a special type of fraud.This fraud works on the basis of paying out returns to from new members (investors).One key thing to remember with Ponzi schemes is that they typically involve putting money into arcane investments.In fact, the namesake, Charles Ponzi started by using arbitrage on international reply coupons for postage stamps.However, exotic investments aside, the point to remember is that oftentimes the exact goings on behind closed doors is a bit murky.Nobody is ever really clear what happens behind the curtain.In the beginning of the Ponzi scheme, the person or organization promoting this so-called super investment may indeed pay out returns along the way.

Often the organization will pony up statements showing positive returns and encourage the investors to stay the course or even add in more.The person running this fraud scores really big when his "investors" recruit other members into the scheme.All the while the organization is socking the money away.That is until the scheme falls apart, or like Bernie Madoff and his guilty conscious, who finally turns himself in.So, with that in mind, let's take a look at Bitcoin and see if it meets any of the criteria of a Ponzi scheme, even a little bit.Note that one key feature, one that many of its proponents are touting as a primary benefit is its transparency.In other words, everybody around the world can follow what's going on with Bitcoin.Yes, it is true, you may not know the inner workings of the Bitcoin exchanges, but you can know what is going on with Bitcoin at any moment of the day.Test number 1 results?Bitcoin is transparent, thus it does not meet one of the basic tenets of a ponzi scheme.