NEWS
NEWS
NEWS
Bitcoin Savings & Trust Ponzi scammer Trendon Shavers gets 18 months
Trendon Shavers, the mastermind behind the disgraced Bitcoin Savings & Trust Ponzi scheme, has been sentenced to 18 months in prison on one count of securities fraud.
In addition, Shavers was ordered to forfeit $1.23 million and to pay restitution in the same amount to victims of his scam.
Shavers, who ironically went by the name “pirateat40” online, was arrested in November 2014 following the ruling by a Texas judge for him to pay $40.7 million in a civil suit that alleged that in running Bitcoin Savings & Trust he used “deceptive and misleading tactics such as the promise of high profits based on seven percent weekly interest,” a figure which naturally led to the closure of the company when it was eventually unable to continue to pay investors.
According to the Department of Justice, Shavers fraudulently obtained approximately 146,000 bitcoin in investments, which amounted to approximately $807,380 based on the average price of Bitcoin over the duration of the scheme.
Bitcoin Savings & Trust ran from approximately September 2011 to September 2012, and offered a weekly interest rate of seven percent with the promise of an annualized interest rate of 3,641 percent.
The company claimed to be running a bitcoin market-arbitrage strategy, which included lending bitcoin to others for a fixed period of time, trading Bitcoin via online exchanges, and selling bitcoin locally via private, off-market transactions; in addition, Shavers also personally guaranteed to cover any losses in the event of a market change.
“Applying a modern spin to an age-old fraud, Trendon Shavers used a bitcoin business to run a classic Ponzi scheme,” United States Attorney Preet Bharara said in a statement. “Shavers raised money in the form of bitcoins by promising spectacular returns and personal guarantees, when all he was really doing was paying back old investors with new investors’ bitcoins.”
Precedent
The case is notable for being the first Federal securities fraud case involving a bitcoin scheme, and sets a precedent when it comes to potential future cases targeted against the outliers and other various bad actors at the edge of the bitcoin community who even today continue to pump out Ponzi schemes and other scams.
Image credit: Pixabay/Public Domain CC 0.
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