News From The Crypto Currencies Scene

Texas Man Pleads Guilty To Operating a Bitcoin Ponzi Scheme

Texas Man Pleads Guilty To Operating a Bitcoin Ponzi Scheme

The Bitcoin history has been riddled with scams from the start, but at least it seems that some of the scammers are finally getting what they deserve. Trendon Shavers ran Bitcoin Savings & Trust, an online site that promised investors between one to seven percent interests on their bitcoins.

The problem in this was that he clearly didn’t have the funds to pay everyone the interest rates promised and ended up using new money to pay old debts - something which can never end well if you don’t have unlimited funds.

The ponzi scheme continued for a few years, with Shavers getting more and more debt to all the investors. At the same time, Shavers decided to take out funds to buy a car, have casino nights as well as use $1,000 on a steak dinner in Las Vegas.

Shavers knew that he had done wrong and pleaded guilty to one charge of securities fraud in the Manhattan Court. The case is interesting as it is seen as the first of its kind for Bitcoins and could potentially incriminate many more people and make scams less occurent in the Bitcoin world.

Shavers closed down the Bitcoin Savings & Trust in 2012, long before the peak of the Bitcoin price. Overall it is said that he held upwards of 7% of all Bitcoins in circulation, equalling a value at the time of around $150 million. He was only sued for $40.7 million initially though, as the attorneys had to find a price point realistic to the value at the time. Shavers reportedly only got out $165,000 for himself in the scam, where the rest has gone the story does not report.

Shavers can look forward to no less than 41 months in prison, but probably also more when the scam is of such a high amount of money. Hopefully this will scare away other potential scammers in the future.

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