BREAKING: SEC Charges pirateat40 With Running Bitcoin-Denominated Ponzi Scheme

[threeip]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue7BndLvuHO

SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme
  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. dollar or used to purchase goods or services online.

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.

Full text here in case source goes down/changes.

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[flix]

Extremely funny. I guess he wasn't so hard to find after all...

[uyjulian]

Wow, I didn't know SEC can go after Bitcoin (and other "digital currencies")...

Oh, and this thread is a duplicate.

[Nagle]

That Ponzi scheme collapsed last year. The guy behind it ripped off people for around $5 million. The SEC has charged him with a crime, which is what they're supposed do. It was a classic Ponzi scheme ("7% a month returns"); it just happened to involve Bitcoins.

[hathmill]

WOW! For everyone who have been following this story, this is really wow worthy news.

[Moogle]

make me nervous about my money in coinlenders now. my heart jumped when i first read it

[btceic]

Is this the same as the scotaloo character? If so:

[TheKoziTwo]

Unbelievable how stupid this guy is. Ripping off that much bitcoin and ending up with so little $, moving it all into the exchange at once, putting his name out there and thinking he can get away with it.

This is great news, a big slam it the face of everyone saying that agreements made over internet with "stupid internet money" can't be prosecuted. I'll be using this case for all it's worth.

[greyhawk]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

[Dice]

Very good news finally a bit of closure whether i get my money back or not.

[threeip]

Unbelievable how stupid this guy is. Ripping off that much bitcoin and ending up with so little $, moving it all into the exchange at once, putting his name out there and thinking he can get away with it.

Not to mention 'pay his rent, utilities, and car-related expenses as well as for food and retail purchases and gambling'...

A guy told me one time, "Don't let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner"

Foolish fools do foolish fool things 

[btceic]

we should all go visit him in prison and get our last laugh!

[Severian]

Unbelievable how stupid this guy is.

He's just a little smarter than the people that gave their bitcoins to him and won't ever see them again.

[BorderBits]

The SEC should have deferred to BTCTalk for punishment.  A bunch of fucking idiots who believed 7% weekly returns are a possibility should be happy with their scammer tag above his avatar.  It would be a real shame if all of the fucking morons who threw their bit at such stupidity were able to recoup anything.   

[piotr_n]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

[elux]

Well, well, well. About damn time.

Read the whole complaint (the actual indictment) here.

I hope they keelhaul him and flog his co-operators.

[IIOII]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

Didn't he ''invest'' the coins in another ponzi?

[greyhawk]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

Didn't he ''invest'' the coins in another ponzi?

Nope. According to the indictment he invested them into his gut.

[Phinnaeus Gage]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

Didn't he ''invest'' the coins in another ponzi?

You know what? That's a valid point! Maybe not a ponzi, per se, but a business. I believe that Trendon Shavers was the VC that funded BF Labs Inc. I think the SEC should look into Butterfly Labs to make sure that wasn't the case. It sure would explain why BFL never stated who the VC was, in spite of many request.

[zoinky]

Good riddance. Glad to see justice is being served.

[gweedo]

Round them up. When is payb.tc who is now Hightower, going to get some charges. He is another croward, just changes his name so the heat can't stick. I hope he faces some charges, I hope he is scared like the croward he is.

I am also glad to see my call with the SEC back when it was happening actually lead to charges!

[btceic]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

Didn't he ''invest'' the coins in another ponzi?

You know what? That's a valid point! Maybe not a ponzi, per se, but a business. I believe that Trendon Shavers was the VC that funded BF Labs Inc. I think the SEC should look into Butterfly Labs to make sure that wasn't the case. It sure would explain why BFL never stated who the VC was, in spite of many request.

Phinnaeus,
You need to try harder on this crusade youv'e got going on bfl, do something that really affects their business and then you've got something! Maybe a couple of websites, some adwords campaings etc.

[bitcoindigi]

make me nervous about my money in coinlenders now. my heart jumped when i first read it

you make like 1.8% per month, that's at least nothing too uncommon

[candoo]

maybe we will see the stolen BTC coming back!

hahaha the btc had been paid to other investors.  Some of them cashed out instead of keeping all the profits.

[greyhawk]

some light reading for those of us who was not around a year ago :-)

https://bitcointalk.org/index.php?topic=82849.0
https://bitcointalk.org/index.php?topic=91306.0
https://bitcointalk.org/index.php?topic=103623.0
https://bitcointalk.org/index.php?topic=91661.0
https://bitcointalk.org/index.php?topic=91252.0
https://bitcointalk.org/index.php?topic=101751.0
https://bitcointalk.org/index.php?topic=50822.0
https://bitcointalk.org/index.php?topic=102918.0
https://bitcointalk.org/index.php?topic=91508.0
https://bitcointalk.org/index.php?topic=79294.0
https://bitcointalk.org/index.php?topic=101152.0
https://bitcointalk.org/index.php?topic=103145.0
https://bitcointalk.org/index.php?topic=91779.0
https://bitcointalk.org/index.php?topic=101461.0
https://bitcointalk.org/index.php?topic=100696.0
https://bitcointalk.org/index.php?topic=101528.0
https://bitcointalk.org/index.php?topic=96139.0
https://bitcointalk.org/index.php?topic=96139.0
https://bitcointalk.org/index.php?topic=91607.0

Please tell me you pulled that list out of a folder tagged "Incriminating material in case I need it"

[Phinnaeus Gage]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

Didn't he ''invest'' the coins in another ponzi?

You know what? That's a valid point! Maybe not a ponzi, per se, but a business. I believe that Trendon Shavers was the VC that funded BF Labs Inc. I think the SEC should look into Butterfly Labs to make sure that wasn't the case. It sure would explain why BFL never stated who the VC was, in spite of many request.

Phinnaeus,
You need to try harder on this crusade youv'e got going on bfl, do something that really affects their business and then you've got something! Maybe a couple of websites, some adwords campaings etc.

Funny thing is others were saying the same thing about Pirate till after the fall, then a different tune was heard a playin'.

Do people need to be hit over the fuckin' head to be shown that BFL is not operating on the up-and-up?

[Phinnaeus Gage]

some light reading for those of us who was not around a year ago :-)

https://bitcointalk.org/index.php?topic=82849.0
https://bitcointalk.org/index.php?topic=91306.0
https://bitcointalk.org/index.php?topic=103623.0
https://bitcointalk.org/index.php?topic=91661.0
https://bitcointalk.org/index.php?topic=91252.0
https://bitcointalk.org/index.php?topic=101751.0
https://bitcointalk.org/index.php?topic=50822.0
https://bitcointalk.org/index.php?topic=102918.0
https://bitcointalk.org/index.php?topic=91508.0
https://bitcointalk.org/index.php?topic=79294.0
https://bitcointalk.org/index.php?topic=101152.0
https://bitcointalk.org/index.php?topic=103145.0
https://bitcointalk.org/index.php?topic=91779.0
https://bitcointalk.org/index.php?topic=101461.0
https://bitcointalk.org/index.php?topic=100696.0
https://bitcointalk.org/index.php?topic=101528.0
https://bitcointalk.org/index.php?topic=96139.0
https://bitcointalk.org/index.php?topic=96139.0
https://bitcointalk.org/index.php?topic=91607.0

Please tell me you pulled that list out of a folder tagged "Incriminating material in case I need it"

I don't think so, GH. He took 30 minutes to search this forum. 

[elux]

I've answered your question, Pirate.

Now you answer mine please.

Is there any hard evidence of any value producing economic activity of your operation except taking deposits, paying "dividends" and converting BTC into USD?

i.e. marketing, PR and damage control do not count.

I think it is a simple and fair question that any legitimate business, even anonymous one, should be able to answer quickly and easily.

If I pulled all my influence on the market things would be much different.  Everyone assumes I'm always applying the brakes (ask walls) in the market but the door swings both ways.  I've been present in the market since day one.

Not a shred of hard evidence, just some cheap rhetoric, unfortunately. I've been absent in the market since day two, so what?

You want evidence? LOL, if you knew what I know, I'd be hounding you.

fixed the quotes for ya. np.

How mysterious. Still only cheap rhetoric, though.

let's be objective.

- plenty of evidence of taking "deposits"
- plenty of evidence of paying "dividends"
- no evidence whatsoever of any economic activity and no any viable hypothetical biz models even.
- ALL the signs of a ponzi scheme in abundance.

In any case, we will know everything soon, right, was it 27th of July?
It could fold quicker, though, some unexpected newsflow and change of market conditions could force the matter before that perhaps.

The tide will go out eventually.

Right it's a ponzi you WIN.  Take out all the money you have in my operation.  RUN FOR THE HILLS!!

You don't have a shred of evidence or even an idea of what I do.  I truly don't think I could think as slow as you if I tried.

Keep up your good will!!!! TEACH FEAR!

This was... Ahh, five weeks and change before closing day.

[greyhawk]

I don't think so, GH. He took 30 minutes to search this forum. 

That'll teach me to get my hopes up.

[Phinnaeus Gage]

The only question is: where is the money?
Someone obviously took it, and IMO pirateat40 was just a poor sucker, in all this scam.

Didn't he ''invest'' the coins in another ponzi?

You know what? That's a valid point! Maybe not a ponzi, per se, but a business. I believe that Trendon Shavers was the VC that funded BF Labs Inc. I think the SEC should look into Butterfly Labs to make sure that wasn't the case. It sure would explain why BFL never stated who the VC was, in spite of many request.

Phinnaeus,
You need to try harder on this crusade youv'e got going on bfl, do something that really affects their business and then you've got something! Maybe a couple of websites, some adwords campaings etc.

I'll just add this quote to this one:

Howdy Y'all

So there seems to be an ever-growing list of topics and links regarding information about what exactly I do to pay my lenders.  Most of the information seems to be fabricated by people wearing pointy foil hats.  On the other hand there are a few respected members of the community that seem to have fallen into the FUD world which has become... this forum.  As you can imagine, knowing what I know about what I do, it's been pretty entertaining to watch.  I must admit, I do enjoy the thrill of getting a reaction from some of these nuts, but there does come a time when you have to stop throwing fuel on the fire.

[jackjack]

Do people need to be hit over the fuckin' head to be shown that BFL is not operating on the up-and-up?

Yes

[greyhawk]

I'll just add this quote to this one:

Howdy Y'all

So there seems to be an ever-growing list of topics and links regarding information about what exactly I do to pay my lenders.  Most of the information seems to be fabricated by people wearing pointy foil hats.  On the other hand there are a few respected members of the community that seem to have fallen into the FUD world which has become... this forum.  As you can imagine, knowing what I know about what I do, it's been pretty entertaining to watch.  I must admit, I do enjoy the thrill of getting a reaction from some of these nuts, but there does come a time when you have to stop throwing fuel on the fire.

I like that quote. It's so Zerlan.

[Phinnaeus Gage]

Do people need to be hit over the fuckin' head to be shown that BFL is not operating on the up-and-up?

Yes

Mmmkay!

[Phinnaeus Gage]

I'll just add this quote to this one:

Howdy Y'all

So there seems to be an ever-growing list of topics and links regarding information about what exactly I do to pay my lenders.  Most of the information seems to be fabricated by people wearing pointy foil hats.  On the other hand there are a few respected members of the community that seem to have fallen into the FUD world which has become... this forum.  As you can imagine, knowing what I know about what I do, it's been pretty entertaining to watch.  I must admit, I do enjoy the thrill of getting a reaction from some of these nuts, but there does come a time when you have to stop throwing fuel on the fire.

I like that quote. It's so Zerlan.

You're just saying that because there's an extra space after each period.

You'll love the next quote by Trendon.

Q - Are you running a drug ring and laundering money for Silk Road?

A - Are you kidding me? I live in the US.  If anything I was doing was illegal, my CPA, attorneys, and scariest... my wife would have my head.  So to make it clear, nothing I'm associated with is illegal.

[greyhawk]

I don't think so, GH. He took 30 minutes to search this forum. 

That'll teach me to get my hopes up.

lol, actually I took 5 minutes encrypting that folder an searching there and some time for a little refresher, reading it.

Good, now I feel better.

[Phinnaeus Gage]

To misquote what MNW once wrote about Pirate:

I like Butterfly Labs for one, even if they are running a likely illegal and undercover operation for three reasons:

• They make bank
• They piss everyone else off in how they do it
• No one can stop them because people follow the money
• They don't constantly defend himself on a bullshit unrelated forum, sans Inaba when he's off his meds

What do they call this in the real world again? Oh yea, professionalism.

[moni3z]

I knew he just pissed it all away on gambling and other bullsiht. I bet he has nothing left to show for it except a handful of empty online poker accounts, a car with multiple loans against it, and one unused ticket to Brazil.

I predict the following:

- pirateat40 is so deluded, chronic liar/crazy narcissist he will defend himself
- he will honestly believe he has a chance of not being convicted
- instead of grovelling and pleading out he will lose and get sent away 80+ years
- nobody will get any coins back

[uyjulian]

I wonder how bitcoins will be frozen.

[jackjack]

I predict the following:

- pirateat40 is so deluded, chronic liar/crazy narcissist he will defend himself
- he will honestly believe he has a chance of not being convicted
- instead of grovelling and pleading out he will lose and get sent away 80+ years
- nobody will get any coins back

[threeip]

I predict the following:

- pirateat40 is so deluded, chronic liar/crazy narcissist he will defend himself
- he will honestly believe he has a chance of not being convicted
- instead of grovelling and pleading out he will lose and get sent away 80+ years
- nobody will get any coins back

You forgot:
-lawyers get richer
-SEC gets 'manual relief' from its AlphaSoup friends

and one unused ticket to Brazil

Let me guess, he spent all this time learning Spanish, only to discover...

[DeathAndTaxes]

The SEC should have deferred to BTCTalk for punishment.  A bunch of fucking idiots who believed 7% weekly returns are a possibility should be happy with their scammer tag above his avatar.  It would be a real shame if all of the fucking morons who threw their bit at such stupidity were able to recoup anything.  

They won't.  Reading between the lines, Pirate lost most (90%+) of the stolen funds day trading.  He siphoned off ~150K BTC of victims funds (~700K BTC deposited, ~550K BTC paid back as withdrawals & interest).  At the time 150K BTC was worth >$1M yet he had trading losses and withdrew less than $150K from the exchange account.  So most of what was stolen is either a)imaginary interest which is never coming back or b) money Pirate lost playing day trader.  

Of the remaining $150K I would imagine he has probably wasted a good chunk of that. Say there is $50K left, remember this was a BTC based scam and the price of BTC has risen 10x to 15x since then.  Today $50K/$100 ea = 500 BTC.   500 BTC out of ~150,000 BTC stolen isn't much of a recovery. 

TL/DR Pirate stole siphoned off ~150,000 BTC and best case scenario the feds might be able to recover 500 BTC (0.3%).  The feds may simply seek in reim forfeiture as the entire operation violated federal law and victims will never see a dime.  Not saying it is fair but honestly we are talking a 99% to 100% loss for investors.

[simonk83]

Excellent news, hopefully he gets plenty of time in a nasty place

[lenny_]

Wow! I didn't believe it first. Was he so stupid to get busted?

[nimda]

I'm trying to dig up that email that I got from the SEC...

Ah yes. 2012-09-24

[ibminer]

This thread makes me happy 

[btc237ftw]

What, if at all, impact do you think this will have on the price of BTC?

[razorfishsl]

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.  Today the value of 700,000 Bitcoin exceeds $60 million.

LOL.... if he had only offered a 'yearly' return of say 200% everything would have been clean...

[fenican]

When I saw the story, I thought the feds had finally busted BFL.  Perhaps some other day

[bitrick]

we should all go visit him in prison and get our last laugh!

IANAL, but it looks like a civil complaint - a lawsuit seeking an injunction, disgorgement of ill-gotten gains, and penalties.

It also seeks a finding that the defendant violated securities law, but I don't know if that means this case could result in jail time.

Does anyone know if there will be a separate criminal action?

[Phinnaeus Gage]

Excellent news, hopefully he gets plenty of time in a nasty place

I'm guessing a year--time served--and a fifty buck fine, half the amount that Sonny Vleisides got for ripping off poor little old ladies totally millions with his lottery scheme. Reason? Trendon did this to fellow bitcoiners ONLY! Not a single non-bitcoiner lost a single satoshi with his scheme. Think about that for a second.

Enjoy the following:

This is a great exercise, I just hope people stay the course and realize this is not just, " someone did something wrong in the past let's forget about it. "

The guy pulled a multi-million dollar scam and people here and elsewhere have invested hundreds of thousands of dollars in upfront money which can be EASILY stolen since the bulk of it is in BTC.

I have heard many of the same excuses so far in this matter which were used to justify pirate40's behavior. Stop being so naive and understand this is not just someone getting arrested in the past for a minor crime.

Any legitimate business owner would have to answer to this in the real world.

I hope it works out and if BFL has good intentions then this should end the criticism's of their company once and for all.

[gamer4156]

Yall better hope this case gets dismissed on a 12b measure.

[jbreher]

What, if at all, impact do you think this will have on the price of BTC?

SEC now thinking that BTC is legit will over all be bullish IMO.

Let's all be careful for which we ask.

I'm thinking the SEC has already built a case game plan that tarnishes the entire concept of free currencies by painting them with a broad brush of nefariousness, piracy, drugs, flag-burning, cannibalism, and kiddie porn.

For the record, I lost a not-insignificant sum in the BTCST debacle. I just think we need to be rather discerning in whatever cheerleading for the SEC it is in which we engage.

[Stunna]

This is great news but I doubt any victim is going to see anything returned to them. Hopefully he'll end up in jail and justice will be served.

[Realpra]

What, if at all, impact do you think this will have on the price of BTC?

SEC now thinking that BTC is legit will over all be bullish IMO.

Agree, this screams: "The government will help keep you and your Bitcoin safe"

(while strangling you with regulation, but anyways...)

[QuestionAuthority]

Investors will get nothing back, Shavers will get a slap on the wrist and will retire on the 100k Bitcoins he gambled (wink wink).

[jubalix]

make me nervous about my money in coinlenders now. my heart jumped when i first read it

coin lenders is at a much lower rate than 7% per month!!!!

[danieldaniel]

What, if at all, impact do you think this will have on the price of BTC?

SEC now thinking that BTC is legit will over all be bullish IMO.

Let's all be careful for which we ask.

I'm thinking the SEC has already built a case game plan that tarnishes the entire concept of free currencies by painting them with a broad brush of nefariousness, piracy, drugs, flag-burning, cannibalism, and kiddie porn.

For the record, I lost a not-insignificant sum in the BTCST debacle. I just think we need to be rather discerning in whatever cheerleading for the SEC it is in which we engage.

People use fiat for that stuff too. Btc was never going to be more clean than the usd.

Im not happy the sec is doing this but for the markets and over all acceptance i think its bullish.

Just my thoughts.

Why wouldn't you be happy that the SEC made a complaint against Trendon?

I think that it's great, as more people will view the currency as "legit" instead of "play money" if it actually gets regarded as real money in the court system.

[Serenata]

I'm reading... "....and while he paid back 507,148 Bitcoins to investors...." at http://www.theregister.co.uk/2013/07/23/bitcoin_ponzi_scheme/

Is that accurate? And if so, how did he pay back and when?

[Scott J]

I'm reading... "....and while he paid back 507,148 Bitcoins to investors...." at http://www.theregister.co.uk/2013/07/23/bitcoin_ponzi_scheme/

Is that accurate? And if so, how did he pay back and when?

That cannot be accurate.

This is his address, I think:

https://bitcointalk.org/index.php?topic=94675.0

[bitcool]

I'm reading... "....and while he paid back 507,148 Bitcoins to investors...." at http://www.theregister.co.uk/2013/07/23/bitcoin_ponzi_scheme/

Is that accurate? And if so, how did he pay back and when?

That refers to the monthly payouts i think.

[greyhawk]

I'm reading... "....and while he paid back 507,148 Bitcoins to investors...." at http://www.theregister.co.uk/2013/07/23/bitcoin_ponzi_scheme/

Is that accurate? And if so, how did he pay back and when?

That refers to the monthly payouts i think.

That it does.

[Phinnaeus Gage]

I miss Loup!

Which is why each and every one of us needs to look at our own belief structure and decide how the cost/benefit equation works for us personally. For some, working with the SEC and other investigators to pursue "traditional" justice will be the right call. Others might shy away from this because they don't trust the "traditional" methods to treat them right, or to stay out of a wider investigation that might net things as-yet unthought of to review. Yet others still might choose to find Trendon, and take their retribution out of him physically, or the threat of doing so out of his family unless he is willing to ransom their lives with his stolen gains.

And some may even go through different versions of this cycle to decide what is the right way for them personally. There is no universal truth on how to best prosecute a scumbag like pirate. Personally I think that having the SEC mess up his life for the next couple of years with an investigation is a damn good start, assuming they have frozen all of his assets and taken the sorts of precautionary moves that they and their wicked step-sisters at the IRS are known for. But the whole "hold a gun to his head until he decides to find honor" has a certain appeal too.

[chsados]

The SEC should have deferred to BTCTalk for punishment.  A bunch of fucking idiots who believed 7% weekly returns are a possibility should be happy with their scammer tag above his avatar.  It would be a real shame if all of the fucking morons who threw their bit at such stupidity were able to recoup anything.  

They won't.  Reading between the lines, Pirate lost most (90%+) of the stolen funds day trading.  He siphoned off ~150K BTC of victims funds (~700K BTC deposited, ~550K BTC paid back as withdrawals & interest).  At the time 150K BTC was worth >$1M yet he had trading losses and withdrew less than $150K from the exchange account.  So most of what was stolen is either a)imaginary interest which is never coming back or b) money Pirate lost playing day trader.  

Of the remaining $150K I would imagine he has probably wasted a good chunk of that. Say there is $50K left, remember this was a BTC based scam and the price of BTC has risen 10x to 15x since then.  Today $50K/$100 ea = 500 BTC.   500 BTC out of ~150,000 BTC stolen isn't much of a recovery. 

TL/DR Pirate stole siphoned off ~150,000 BTC and best case scenario the feds might be able to recover 500 BTC (0.3%).  The feds may simply seek in reim forfeiture as the entire operation violated federal law and victims will never see a dime.  Not saying it is fair but honestly we are talking a 99% to 100% loss for investors.

A nifty visual representation:

[chsados]

Wow, where did you get this? And also can they make this stuff public if he has not been found guilty yet?

http://www.techdirt.com/articles/20130723/16121723913/sec-confirms-that-bitcoin-savings-trust-was-ponzi-scheme-files-lawsuit.shtml

Official source of image: https://www.documentcloud.org/documents/739199-gov-uscourts-txed-146063-4-6.html

[worldinacoin]

Hopefully he will be spending a holiday in one of the country's run resort rather than a virtual jail.   And Hopefully he has a long long stay

[nimda]

A nifty visual representation:

That lead me to a TechDirt article which I must quote here:

Either way, the real irony may be that those who chose not to invest with Shavers and to just hold onto their Bitcoins clearly were better off not just because they still had their Bitcoins, but because the (wildly fluctuating) value of Bitcoins rose even higher than the insane interest promises.

Ironically, investors who had simply bought and held bitcoins during the period the alleged Ponzi scheme was in operation would have made a killing. While one bitcoin was worth about $6.56 on average between September 2011 and September 2012, they were valued Tuesday at $95.30 each.

[Turks]

When I saw the story, I thought the feds had finally busted BFL.  Perhaps some other day

I lol'd

[QuestionAuthority]

Hopefully he will be spending a holiday in one of the country's run resort rather than a virtual jail.   And Hopefully he has a long long stay

Well from my limited understanding of this, this is only a civil lawsuit where the SEC is trying to collect the few fiat dollars he has left.

The DOJ or someone else will have to file criminal charges if he is to be jailed.

Well I can see from the flow chart above that he at least used some of the money for day spas. That's a good thing because it will make his little white butt nice and supple for all the bruthas that want to squeeze it and make him their lil sistah girl.

[DeathAndTaxes]

If anyone wants more details then the press release additional docs are available (found via links from techdirt article).
http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.docket.html


Some interesting ones:

The complaint filed (preview of SEC case):
http://ia600904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.1.0.pdf

The summons:
http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.9.0.pdf
Looks like Mr. Shavers had 21 days to respond from the date of the summons (07/23/2013) or a summary judgement in the governments favor will be awarded (seizure of all funds listed in the order to freeze). 

Looks like the order to freeze accounts is supported by one "Philip Moustakis".  Does that name ring a bell?  IIRC someone was posting something about being contacted by someone in a government agency about the ponzi scheme.
http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.4.1.pdf

If anyone naively thinks the SEC doesn't read this forum the doc above should finally squash that once and for all.  Detailed dates, times, posts, quotes, etc to provide supporting context.  

[DeathAndTaxes]

LOLZ Pirate is more stupid then I thought.

From the above complaint.

III. SHAVERS’ ADMISSIONS
In an October 3, 2012 interview with Commission staff, Shavers admitted, among other
things, that:
Case 4:13-cv-00416-RC-ALM Document 3 Filed 07/23/13 Page 6 of 18 PageID #: 22SEC v. Trendon T. Shavers, et al. 6
Plaintiff’s Emergency Motion for Order to Show Cause, Asset Freeze and Other Ancillary Relief
a. His Internet name was pirateat40; he posted the November 3, 2011 BTCST
solicitation on the Bitcoin Forum; all other statements attributable to
pirateat40 on the Bitcoin Forum were his own; and he, alone, was responsible
for creating and operating BTCST (Id. at ¶ 27);
b. He sold BTCST investments to 446 investors, but claimed that he produced
documents to staff for only 46 BTCST investor accounts because all records
for closed accounts had been deleted (Id.);
c. He used new BTCST investor BTC to pay the promised returns on
outstanding BTCST investments (Id.);
d. He comingled BTCST investor BTC with his personal BTC and BTC received
from customers of GPUMAX Technologies, LLC (“GPUMAX’), a BTC
mining company he co-founded with friends (Id.);1
e. He made preferential redemptions to friends and longtime BTCST investors,
in August 2012, as he closed BTCST (Id.); and
f. He was still in possession, at the time of the interview, of approximately
100,000 BTC (Id.).

In the same interview, Shavers claimed to generate BTCST investor returns by lending
BTCST investor BTC to anonymous borrowers he met online who wanted enough BTC to
manipulate or control the price of BTC on Mt. Gox, the leading BTC currency exchange
(headquartered in Tokyo, Japan), and other BTC currency exchanges. (Id. at ¶ 28.) Shavers
claimed these anonymous borrowers paid him at least 10% interest weekly on the BTC he lent to
them. (Id.) Shavers claimed to generate additional returns for BTCST investors, up to 4% daily,
by lending BTC to an online service which provided users with leverage for purposes of trading
BTC on BTC currency exchanges. (Id.)

All that will be used against him in any civil or criminal trial.  Miranda doesn't apply if he wasn't a suspect of any criminal investigation at the time. His statements (assuming they are recorded) make any defense much harder (dare I say impossible).  It now requires an affirmative defense.  If he did run BTCST and it lost funds "legitimately" he can't just rely on a lack of evidence, he needs to prove that.  

I also found e to be interesting.  While I am not sure the SEC will seek it (given the relatively small scale), they can attempt to locate those who benefited from the ponzi and clawback any net gains.  Also given how upstanding Shavers is, if pressed with even the possibility of jailtime I wonder who he will roll on and how much evidence he kept.

[DeathAndTaxes]

Philip Moustakis ran the SEC investigation. He did send out the e-mails and collected evidence.

Well I guess the wheels of justice do indeed turn, too bad they turned soooooooo slowly that according to SEC docs Pirate already burned through or lost playing day trader 90%+ of what he defrauded.

Also looks like Mr. Moustakis asked the Eastern Texas courts for the right to appear "Pro Hac Vice".  Simple version Pro Hac Vice is a request for an attorney to practice in a specific case outside of their jurasdiction.  Rather than have the plantiff (SEC) be represented by a TX based attorney they petition the courts to allow Mr. M (who has license to practice law in NY) the right to appear in the TX court.  It would appear the request has been granted.

http://ia600904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.12.0.pdf

[notme]

f. He was still in possession, at the time of the interview, of approximately
100,000 BTC (Id.).

 

Shavers claimed to generate additional returns for BTCST investors, up to 4% daily,
by lending BTC to an online service which provided users with leverage for purposes of trading
BTC on BTC currency exchanges. (Id.)

Bitcoinica?

[DeathAndTaxes]

Some more interesting excerpts (whenever possible I like to go to the original source):

SEC rational for seizing his assets (and it looks like they will be seeking additional seizures and records if/when necessary).  Given they already know his exact trading losses I would assume MtGox has supplied detailed records.  I would hope MtGox waited until served rather than just hand over information without due process.  Maybe MtGox can comment? 

Here, the Commission easily makes a prima facie showing that Defendants: (1) operated
a Ponzi scheme in violation of Securities Act Section 17(a), and Exchange Act Section 10(b) and
Rule 10b-5; and (2) sold unregistered securities in violation of Securities Act Sections 5(a) and
5(c). Moreover, Shavers diverted BTCST investors’ BTC to a BTC currency exchange
headquartered in Japan, misappropriating it for his personal use. Given the nature the conduct
and these violations, a preliminary order freezing Defendants’ assets, authorizing expedited
discovery as to the location and extent of their assets, directing them to repatriate ill-gotten gains,
directing them to provide verified accountings, and requiring them to preserve evidence is appropriate
and necessary to preserve assets for possible recovery for victims of this fraud. For
the same reason, an order temporarily freezing Defendants’ assets and requiring the preservation
of evidence is warranted to preserve the status quo pending a preliminary injunction hearing.

The big one.  "Bitcoins based investments are investments".  This should silence any dubious claims that BTC based investments aren't "really" investments because they are based on play money, etc.

The BTCST Investments Are Securities as Defined by the Federal
 Securities Laws
The definitions of “security” under Section 2(a)(1) of the Securities Act [15 U.S.C. §
77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 77c(a)(10)] include both
“investment contract” and “note.” Courts “are not bound by legal formalism, but instead take
account of the economics of the transaction” to determine whether a security exists. Reves v.
Ernst & Young, 494 U.S. 56, 61 (1990); see, e.g., SEC v. SG Ltd., 265 F.3d 42 (1st Cir. 2001)
(holding virtual shares in virtual company existing only online were securities). “Congress’
purpose in enacting the securities laws was to regulate investments, in whatever form they are
made and by whatever name they are called.” Reves, 494 U.S. at 61. (emphasis in original). The
BTCST investments qualify as both investment contracts and notes and, thus, are securities.
An investment contract is any contract, transaction, or scheme involving (1) an
investment of money, (2) in a common enterprise, (3) with the expectation that profits will be
derived from the efforts of the promoter or a third party. SEC v. W.J. Howey & Co., 328 U.S.
293, 298-99 (1946); see Long v. Shultz Cattle Co., Inc., 881 F.2d 129, 132-33 (5th Cir. 1989).
The “investment of money” element may be satisfied by consideration other than money. See
Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am., 439 U.S. 551, 560, n.12
(1979) (the “investment” may take the form of “goods and services”). Moreover, BTC is money.
BTC may be used to purchase goods or services, or exchanged for conventional currencies,
including the U.S. dollar, Euro, Yen, and Yuan. Recognizing as much, the Department of the
Treasury issued guidance concerning the applicability of the regulations implementing the Bank
Secrecy Act to virtual currencies such as BTC. See Treasury Guidance (FIN-2013-G001) –
Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual
Currencies (Mar. 18, 2013). In the Fifth Circuit, the second and third elements of an investment
contract are met where investors are dependent upon a promoter’s expertise, just as the BTCST
investors were dependent upon Shavers’ supposed expertise in BTC market arbitrage, to generate
the returns promised on their investments. See Long, 881 F.2d at 140-41.
Any note is presumed to be a security unless the presumption can be overcome because
the note bears a strong resemblance to one of several judicially-enumerated instruments that are
not securities. Reves, 494 U.S. 56. The types of notes that are not securities include a consumer
financing note, a note secured by a mortgage on a home, a short-term note secured by a lien on a
small business or its assets, and a note which simply formalizes an open-account debt incurred in
the ordinary course of business. Id. at 65. The factors used to determine whether a note
sufficiently resembles these “non-securities” and, thus, is not a security under the federal
securities laws are: (1) the motivations that would prompt a reasonable buyer and seller to enter
into the transaction; (2) the plan of distribution of the instrument; (3) the reasonable expectations
of the investing public; and (4) whether some factor, such as the existence of another regulatory
scheme, significantly reduces the risk of the instrument, thereby rendering application of the
securities laws unnecessary. Id. at 65-67. Here, the transaction between Defendants and the
BTCST investors had all the earmarks of an investment, suggesting a security, and no
commercial or consumer aspect, as with the judicially-enumerated instruments that are not
securities. The BTCST investments were offered and sold to a broad segment of the public as
Plaintiff’s Emergency Motion for Order to Show Cause, Asset Freeze and Other Ancillary Relief
investments. Moreover, no risk-reducing factors existed to militate against a finding that the
BTCST investments were securities. No other regulatory agency oversees the BTCST
investments, and BTC itself is a virtual currency, with no single administrator, or central
authority or repository

The portion about "Courts are not bound by legal formalism, but instead take account of the economics of the transaction to determine whether a security exists." is rather important as it shows the SEC intent when it comes to virtual currency transactions. 

If a hypothetical "asset exchange" were hiding behind the paper thin defense that it's assets are just "play money" and don't represent real investment then it might be a good idea to get competent legal counsel to look at the cites the SEC provided.  Simply calling something a pretend asset on a pretend exchange for fun doesn't make it so.  What matters is the intent.  If investors are expecting real world profits, and issuers attract investors advising real world profits then it isn't "play money".

[halfawake]

I read an article about this today where the headline was "Bitcoin ponzi" and it just made me wonder.  Would they really be making the same headline if it was using USD?  It seemed almost like they were implying that bitcoin is a ponzi too.

[DeathAndTaxes]

Oh and last thing looks like SEC is seeking $100,000 civil penalty on top of forfeiture of proceeds.

[DeathAndTaxes]

I read an article about this today where the headline was "Bitcoin ponzi" and it just made me wonder.  Would they really be making the same headline if it was using USD?  It seemed almost like they were implying that bitcoin is a ponzi too.

That is intentional and reporting bias.  The reality is the SEC doesn't see Bitcoin as a ponzi they see ponzi involving Bitcoin to be equal to ponzi involving other "real" currencies (USD, EUR, etc).

[halfawake]

I read an article about this today where the headline was "Bitcoin ponzi" and it just made me wonder.  Would they really be making the same headline if it was using USD?  It seemed almost like they were implying that bitcoin is a ponzi too.

That is intentional and reporting bias.  The reality is the SEC doesn't see Bitcoin as a ponzi they see ponzi involving Bitcoin to be equal to ponzi involving other "real" currencies (USD, EUR, etc).

I'd call that a good thing - personally, I care a lot more about the SEC's opinion of Bitcoin than the opinion of reporters.

[Kluge]

Hey, D&T - you see what the SEC is using to base its claim on Pirate's offer being a regulated security - specifically, rather than a loan?

ETA: Don't bother typing up a response just yet. Looking at the block of text, again, and definitions on "common enterprise." (3) with the expectation that profits will be derived from the efforts of the promoter or a third party." seems iffy to me, too...

ETA2: SEC apparently operates on the "horizontal approach."
"The horizontal approach to common enterprise focuses on the relationship among investors in an economic venture." Integral to this approach is the pooling of investors' money in a common venture. The Eleventh Circuit correctly noted that "[m]ost circuits that have considered the issue [of what is a common enterprise] find it satisfied where a movant shows 'horizontal commonality,' that is the 'pooling' of investors' funds as a result of which the individual investors share all the risks and benefits of the business enterprise." http://blj.ucdavis.edu/archives/vol-5-no-2/Why-the-Common-Enterprise-Test.html#_ftn30

-But, because BTS&T didn't really modify ongoing contracts (which were on a weekly basis), how was pooling related to returns seen by lenders/investors when there was a set rate of return? Pooling (rather, continued and increasing investment) was required to keep the ponzi going, but the SEC makes a pretty strong case that BTS&T was a sham, not a legitimate business venture, where pooling would be more sensible. The SEC's own evidence shows Pirate claiming 0 or "almost 0" risk, where lenders/investors' money wouldn't be playing an integral role to the success or continuance of the venture. Is a ponzi with set weekly rates actually a "common enterprise" under that definition? Would their case fall apart if Pirate were just Pirate instead of "BTS&T"?

"For the common enterprise prong to be satisfied, horizontal commonality requires that an investor's assets be joined with another investor's assets into a joint venture where each investor shares the risk of profit and loss according to their individual investment."

ETA3: From SEC:
... The factors used to determine whether a note
sufficiently resembles these “non-securities” and, thus, is not a security under the federal
securities laws are: (1) the motivations that would prompt a reasonable buyer and seller to enter
into the transaction; (2) the plan of distribution of the instrument; (3) the reasonable expectations
of the investing public; and (4) whether some factor, such as the existence of another regulatory
scheme, significantly reduces the risk of the instrument, thereby rendering application of the
securities laws unnecessary. Id. at 65-67. Here, the transaction between Defendants and the
BTCST investors had all the earmarks of an investment, suggesting a security, and no
commercial or consumer aspect, as with the judicially-enumerated instruments that are not
securities. The BTCST investments were offered and sold to a broad segment of the public as
Plaintiff’s Emergency Motion for Order to Show Cause, Asset Freeze and Other Ancillary Relief
investments. Moreover, no risk-reducing factors existed to militate against a finding that the
BTCST investments were securities. No other regulatory agency oversees the BTCST
investments, and BTC itself is a virtual currency, with no single administrator, or central
authority or repository ....

So 1) the buyer/lender expects interest (and that was the term used)... 2) evidence needs to be given that Pirate claimed BTS&T was a program/investment (exists - see ETA4, but he does also call it a loan, and the weekly payments interest) 3) I definitely thought of it as a loan contract, not a security.... 4) no-brainer in favor of SEC's claims

ETA4: From complaint...
1*SEC calls gains from BS&T interest. "4. Shavers falsely promised investors up to 7% interest weekly based on BTCST’s
purported BTC market arbitrage activity, including selling BTC to individuals who wished to
buy BTC “off the radar,” quickly, or in large quantities."
2*SEC notes Pirate's thread was titled “Looking for Lenders,” (SEC notes it was on a subforum where investments were, but so what?)
1$ Quoted from Pirate: "I just wanted to thank all of my investors as I’m able to fulfill them without the risk of them going elsewhere." (in the next sentence, though, he uses the word "lenders" again)
3* Quoted from Pirate: "I take the risk personally." That indicates a loan, not a security. Even though we know that wasn't true, I'm not sure Pirate was representing a security rather than a loan. (if it were a loan, though, would any bureaucracies even have jurisdiction?)

The SEC, throughout the complaint, calls it an investment, but I wonder if Pirate's attorney will contest that. "et al" is pretty interesting, too. I wonder if they'll be bringing on more people...

ETA5: Final edit. $1m might be some type of magic line where a loan necessarily turns into a regulated security, but I can't find good verification, and my brain's shutting off. Time for some wine and relaxation.

[riX]

If anyone wants more details then the press release additional docs are available (found via links from techdirt article).
http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.docket.html

...

And if you look directly in the directory, there's even a torrent. This should be seeded I think.
http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/

Also, the blacked out info in the 5.1 file can be recovered with a good pdf editor.

[CoinEntropy]

Was this a ponzi scheme aimed at luring in investors or lenders for a real or fake mining company, or something else? I don't know what his 'company' is.

[danieldaniel]

So now we know he stole >250K BTC and had 100k BTC left when he was interviews. We also know the SEC has proof there are people who were net winners (it's in the document he claims to be true).

I guess claw-backs will be hard however because there were so many pass through. It's tough to prove that any single individual really has net gains.

Theymos posted on the forum he had a net gain but yes, it will be very hard to figure out. Also I doubt there were that many who did gain and even if there was claw back would it be USD at the time or BTC?   If BTC and they sold, that would hurt.

Hm.  I might have had a net gain with one of the PPT's, but I never really calculated it... So unless they subpoena paybt.c, that would be really hard to figure out.

Also, I guess they were allowed to use the information I gave them over the phone (even though I'm <18)!  They posted my state on the complaint.

[Fuyuki_Wataru]

Don't understand why you would start such a thing, neither did he have any experience whatsoever in hiding his true identity. Which is the funniest part.

It's karma, and it has been served, so far...

However though, I do have to give the guy some sort of credit for making it this 'far'. I guess this points out as well how easily the bitcoin community can be fooled.

[n8rwJeTt8TrrLKPa55eU]

Also looks like Mr. Moustakis asked the Eastern Texas courts for the right to appear "Pro Hac Vice".  Simple version Pro Hac Vice is a request for an attorney to practice in a specific case outside of their jurasdiction.  Rather than have the plantiff (SEC) be represented by a TX based attorney they petition the courts to allow Mr. M (who has license to practice law in NY) the right to appear in the TX court.  It would appear the request has been granted.

People in this forum living in Eastern Texas who did not "invest" with Pirate, go register for jury duty, you might get lucky and be assigned to this case, that's a courtroom session I'd pay to watch...

[ajk]

Don't understand why you would start such a thing, neither did he have any experience whatsoever in hiding his true identity. Which is the funniest part.

It's karma, and it has been served, so far...

However though, I do have to give the guy some sort of credit for making it this 'far'. I guess this points out as well how easily the bitcoin community can be fooled.

The thing is with ponzi schemes or other scams it is more or less a crime of opportunity and probably not a long con, we have no idea if Mr.Shavers started the company with good intention and just decided half way through that it is more money to ponzi(which will always be true), its simply easier to steal than to actually work and its takes a person with serious discipline to not do the wrong thing especially with people throwing money at your face

Its pretty crazy how they work but its not like this is a brand new thing so many ponzis have been done and so many people have been left in financial wake

it all boils down to not investing more than what your willing to lose because more times than not simple minded investors or those who do not do it professionally are willing to bet the house on schemes like this

[jackjack]

And record it if you're chosen

[exahash]

Also looks like Mr. Moustakis asked the Eastern Texas courts for the right to appear "Pro Hac Vice".  Simple version Pro Hac Vice is a request for an attorney to practice in a specific case outside of their jurasdiction.  Rather than have the plantiff (SEC) be represented by a TX based attorney they petition the courts to allow Mr. M (who has license to practice law in NY) the right to appear in the TX court.  It would appear the request has been granted.

People in this forum living in Eastern Texas who did not "invest" with Pirate, go register for jury duty, you might get lucky and be assigned to this case, that's a courtroom session I'd pay to watch...

Shavers already cooperated and gave the SEC tons of info...

My guess: there will be no trial, he will settle.

And investors will get nothing.

[ranlo]

Also looks like Mr. Moustakis asked the Eastern Texas courts for the right to appear "Pro Hac Vice".  Simple version Pro Hac Vice is a request for an attorney to practice in a specific case outside of their jurasdiction.  Rather than have the plantiff (SEC) be represented by a TX based attorney they petition the courts to allow Mr. M (who has license to practice law in NY) the right to appear in the TX court.  It would appear the request has been granted.

People in this forum living in Eastern Texas who did not "invest" with Pirate, go register for jury duty, you might get lucky and be assigned to this case, that's a courtroom session I'd pay to watch...

Uhm, you don't "register for jury duty." As a person aged 18 or older you're automatically enrolled without a choice in the matter.

Based on the location info he's only 10m away from me but we're in different counties so I wouldn't be called regardless. Ironically I did get called to one from my county just last week!

[DeathAndTaxes]

Based on the location info he's only 10m away from me but we're in different counties so I wouldn't be called regardless. Ironically I did get called to one from my county just last week!

It is federal court, the district is half* the size of Texas so you might get to "attend".  

Ok so not half but maybe a quarter.

[QuestionAuthority]

Also looks like Mr. Moustakis asked the Eastern Texas courts for the right to appear "Pro Hac Vice".  Simple version Pro Hac Vice is a request for an attorney to practice in a specific case outside of their jurasdiction.  Rather than have the plantiff (SEC) be represented by a TX based attorney they petition the courts to allow Mr. M (who has license to practice law in NY) the right to appear in the TX court.  It would appear the request has been granted.

People in this forum living in Eastern Texas who did not "invest" with Pirate, go register for jury duty, you might get lucky and be assigned to this case, that's a courtroom session I'd pay to watch...

Shavers already cooperated and gave the SEC tons of info...

My guess: there will be no trial, he will settle.

And investors will get nothing.

This, they have too much info for him not to have cooperated.

Absolutely right. It looks as if he is the one that gave them btc amounts they used. They researched the $ bank amounts to verify those amounts. If he was bright enough to fool that many people out of their btc why wouldn't he have been bright enough to just short the amount he told the SEC by 20k btc? Even if he only sits on a wallet with 1000 btc for 5 years he could still be sitting on a fortune that will let him settle out of court and retire. The investors get nothing - he's still rich.

[becoin]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

I really hope they go after BFL too.

[nimda]

Was this a ponzi scheme aimed at luring in investors or lenders for a real or fake mining company, or something else? I don't know what his 'company' is.

Grab a beer and start here.

[QuestionAuthority]

Was this a ponzi scheme aimed at luring in investors or lenders for a real or fake mining company, or something else? I don't know what his 'company' is.

Grab a beer and start here.

Based on that thread, he sucked in a lot of people that I wouldn't have thought would fall for his BS. But then again, when I first came to this forum theymos had an ad for a Ponzi in his sig line.

[ranlo]

Based on the location info he's only 10m away from me but we're in different counties so I wouldn't be called regardless. Ironically I did get called to one from my county just last week!

It is federal court, the district is half* the size of Texas so you might get to "attend". 

Ok so not half but maybe a quarter.

Whoa, wasn't aware there was a difference, lol. Anyways, I never get lucky... I've been called to jury duty 5x so far... all 5x I got sent home... always depresses me... if I'm stuck there for 6+ hours they could at least let it be for something, =S.

[deltanine]

Also looks like Mr. Moustakis asked the Eastern Texas courts for the right to appear "Pro Hac Vice".  Simple version Pro Hac Vice is a request for an attorney to practice in a specific case outside of their jurasdiction.  Rather than have the plantiff (SEC) be represented by a TX based attorney they petition the courts to allow Mr. M (who has license to practice law in NY) the right to appear in the TX court.  It would appear the request has been granted.

People in this forum living in Eastern Texas who did not "invest" with Pirate, go register for jury duty, you might get lucky and be assigned to this case, that's a courtroom session I'd pay to watch...

Uhm, you don't "register for jury duty." As a person aged 18 or older you're automatically enrolled without a choice in the matter.

Based on the location info he's only 10m away from me but we're in different counties so I wouldn't be called regardless. Ironically I did get called to one from my county just last week!

I live in the same county and have been summoned for jury duty in August.

Keep you fingers crossed everyone!

[nimda]

Was this a ponzi scheme aimed at luring in investors or lenders for a real or fake mining company, or something else? I don't know what his 'company' is.

Grab a beer and start here.

Based on that thread, he sucked in a lot of people that I wouldn't have thought would fall for his BS. But then again, when I first came to this forum theymos had an ad for a Ponzi in his sig line.

Hindsight is 20/20, but I think some people forget how much of a well-orchestrated long con BS&T was. Pirate was one of the top-rated OTC members of all time. Also, look at the start date of that thread—he managed to run it for a long time.

Another thing: if you look at the threads in the lending forum of last year, people were taking out loans denominated in BTC with higher interest than credit card rates. The fact that many loans were made at 2% weekly made 7% weekly seem less crazy (to some) (I think).

[WikileaksDude]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

I really hope they go after BFL too.

I second this.

[QuestionAuthority]

Was this a ponzi scheme aimed at luring in investors or lenders for a real or fake mining company, or something else? I don't know what his 'company' is.

Grab a beer and start here.

Based on that thread, he sucked in a lot of people that I wouldn't have thought would fall for his BS. But then again, when I first came to this forum theymos had an ad for a Ponzi in his sig line.

Hindsight is 20/20, but I think some people forget how much of a well-orchestrated long con BS&T was. Pirate was one of the top-rated OTC members of all time. Also, look at the start date of that thread—he managed to run it for a long time.

Another thing: if you look at the threads in the lending forum of last year, people were taking out loans denominated in BTC with higher interest than credit card rates. The fact that many loans were made at 2% weekly made 7% weekly seem less crazy (to some) (I think).

There's no hindsight necessary. As user CornedBeefHash, before I deleted all my posts and started over, I had a thread calling out Pirateat40, Clipse and Goat. I wanted them to explain how they could offer such great returns without it being a scam or somehow criminal. No one but Holiday (who has now deleted all of his posts and disappeared) agreed with me. Goat was the only one of the three that actually responsibly answered questions in that thread. The shithead Pirate just made snide comments like he always did and became his typical angry asshole self (the reason I think Josh is the same as Pirate because they act the same when questioned). Gmaxwell also appeared in that thread and accused them of illegal activity. Gmaxwell was all over IRC at the time telling everyone that it was a scam or some sort of illegal activity and NO ONE listened. I'm sorry but I don't feel the least bit sorry for the "investors" here. Stupid people will always be parted from their money. If not Pirate and Clipse then someone else will do it.

BTW Goat: Aren't you at least a little bit nervous over what's happening? You were one of the Pirate pass-throughs and had your own offerings on GLBScamE at the time. If I were you I be shitting a brick of worry about now.

[greyhawk]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

I really hope they go after BFL too.

SEC? Why would they? I don't like BFL as much as the next guy, but SEC has nothing it wants from BFL.

[nimda]

Oh, I agree with everything you said. 7% weekly was obviously unsustainable. However, I'd like to quote you here:

I'm sorry but I don't feel the least bit sorry

 

[Scott J]

Can anyone work out the number of coins in 1DkyBEKt5S2GDtv7aQw6rQepAvnsRyHoYM when he stopped paying out?

I think it was a lot more than the 193,319 BTC he apparently didn't return to investors.

[becoin]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

I really hope they go after BFL too.

SEC? Why would they? I don't like BFL as much as the next guy, but SEC has nothing it wants from BFL.

It will. BFL is the biggest operating bitcoin scam treating their customers as investors but without the corresponding investor rights. On several occasions BFL confirmed that they have converted their customer BTC into USD. However, they don't have currency exchange license and are not allowed to do currency conversions on behalf of their customers. As you see, a lot of SEC related issues.

[dree12]

Can anyone work out the number of coins in 1DkyBEKt5S2GDtv7aQw6rQepAvnsRyHoYM when he stopped paying out?

I think it was a lot more than the 193,319 XBT he apparently didn't return to investors.

1) 700000 is not exact, it's a lower bound. He likely didn't return more than 200000 BTC.
2) 1Dky is more likely to be Silk Road's than Pirate's.

[QuestionAuthority]

Oh, I agree with everything you said. 7% weekly was obviously unsustainable. However, I'd like to quote you here:

I'm sorry but I don't feel the least bit sorry

 

Should have said I apologize for not feeling sorry for them but it was their fault for not listening. lol

[BadBear]

Stop with the BFL stuff, take it to another thread.

[BCB]

This is my favorite:





http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.4.5.pdf

[threeip]

It's called 'cashing out' not 'debit-card-at-walmarting-out'.

[LightRider]

And yet nobody charged with anything related to the financial crash.

[BCB]

 
   

[illpoet]

man the day pirate sold off all that bitcoin was a lucky day for me, My deposit had just cleared and i was gonna buy some btc @ 14 but he crashed it down to 8.  its nice to see one of bitcoin's early villains get some!

[QuestionAuthority]

*snip*

Is this your personal collection of white dildos?

[leopard2]

*snip*

Is this your personal collection of white dildos?

Nah, planet earth's worst Ponzi scheme operators

[zebedee]

A nifty visual representation:

One can't help but laugh at the people who thought he was the market god.  If they'd known his average selling price at Gox was $2 when the market was between $5 and $15 they'd have....lost faith?  Talk about shitty day-trading.

Always in control of the market...my ass.

[crumbs]

A nifty visual representation:

One can't help but laugh at the people who thought he was the market god.  If they'd known his average selling price at Gox was $2 when the market was between $5 and $15 they'd have....lost faith?  Talk about shitty day-trading.

Always in control of the market...my ass.

Making money while dumping bitcoin @below market value is but a single adorable aspect of His Godliness.  
Pirate never concealed the unlawfulness of his operation, he simply allowed his marks to assume that they weren't the intended marks.  

[crazy_rabbit]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

Ugh, I'd hate to see otherwise 'good guys' go down with the ship. But I suspect the SEC will be going through all of this through a fine toothed comb. If anything, this will be teaching the government law enforcement quite a large amount about bitcoin. I wouldn't be surprised if the people working on this investigation turn out to be the real bitcoin/blockchain experts.

[Entropy-uc]

Next up: Hashking aka Sam Theofanopoulos, 7262 W Benton Dr Frankfort, IL 60423

I really hope they go after all the PPTs and the Starfish too.

Ugh, I'd hate to see otherwise 'good guys' go down with the ship. But I suspect the SEC will be going through all of this through a fine toothed comb. If anything, this will be teaching the government law enforcement quite a large amount about bitcoin. I wouldn't be surprised if the people working on this investigation turn out to be the real bitcoin/blockchain experts.

The PPTs and Patrick are good guys?  I'd like to see you explain in what fashion any of those assholes are good guys.  All of them rapidly defended an obvious ponzi scheme.  Many of the passthroughs didn't pass through and did they own default under the cover of Pirate's.  And the PPT.div was the biggest ripoff of all, devised to fail and lose massive amounts of money for investors even if Pirate had paid off.

[nrd525]

From the complaint:

"BTCST’s securities were not traded on any exchange"

The SEC is wrong about this one.  See PPT.

[nrd525]

He didn't list them, but they were passthroughs to his "security" and they did trade on an exchange. 

Probably a lot of the key posts are now deleted.

PPT-A
https://bitcointalk.org/index.php?topic=76594.0

[crumbs]

"I think many people forget that PPT is issued by some of the most respected people in the lending forum.  It wouldn't be just a matter of 1 person not honoring the agreement, but all six.  How many other issuers have that?" -imsaguy

[greyhawk]

From the complaint:

"BTCST’s securities were not traded on any exchange"

The SEC is wrong about this one.  See PPT.

GLBSE wasn't a real exchange, it was an illegal unlicensed "get into jail free" card. Just like all other Bitcoin "security exchanges".

[QuestionAuthority]

From the complaint:

"BTCST’s securities were not traded on any exchange"

The SEC is wrong about this one.  See PPT.

GLBSE wasn't a real exchange, it was an illegal unlicensed "get into jail free" card. Just like all other Bitcoin "security exchanges".

Yeah, I bet Nerfario is glad he's a Brit right now. This would be a bad time for him to plan another trip to the US with only Bitcoins in his pocket. He might get stopped at the airport again but not for the same reason. lol

[BadBitcoin (James Sutton)]

From the complaint:

"BTCST’s securities were not traded on any exchange"

The SEC is wrong about this one.  See PPT.

GLBSE wasn't a real exchange, it was an illegal unlicensed "get into jail free" card. Just like all other Bitcoin "security exchanges".

There is currently no regulated bitcoin "securities exchange", unless you like to gamble a bit, avoid them.

[CoinEntropy]

This idiot sent coins directly from his ponzi to his personal, verified MtGox which sent USD to his bank accounts. This retard was asking to get caught. Probably tried to run from the mistakes by losing himself in casino gambling

[DannyHamilton]

If anyone duped by pirate40 gets caught up in this, I know a good SEC defense lawyer.  I can get you in touch with them and make sure that they are well versed in all the technical aspects of bitcoin for the defense.  Just send me a PM.

[wopwop]

pirateat40 is the bawss to people here unconsiously

he did what all those pathetic people here that are buying bitcoins right now at 100$ are dreaming about

U1A

[User705]

He didn't list them, but they were passthroughs to his "security" and they did trade on an exchange. 

Probably a lot of the key posts are now deleted.

PPT-A
https://bitcointalk.org/index.php?topic=76594.0

Well I bet the SEC knows what they are doing. Also it seems the SEC might have to go after others if they want to go after the PPTs and the exchange that took the money.

SEC knows what they are doing?  ROFL  I'm surprised they wanted to open this can of worms.  It doesn't matter if they convict him or not. The precedents the judges rulings on various factual motions will be a crazy mess for the government.  1st two major issues, BTC addresses and BTC in them can't be owned and if they can be and are payment methods then BTC itself is an illegal security.  I'm sure there are plenty other issues to come.  Fun times here we go.

[QuestionAuthority]

He didn't list them, but they were passthroughs to his "security" and they did trade on an exchange. 

Probably a lot of the key posts are now deleted.

PPT-A
https://bitcointalk.org/index.php?topic=76594.0

Well I bet the SEC knows what they are doing. Also it seems the SEC might have to go after others if they want to go after the PPTs and the exchange that took the money.

SEC knows what they are doing?  ROFL  I'm surprised they wanted to open this can of worms.  It doesn't matter if they convict him or not. The precedents the judges rulings on various factual motions will be a crazy mess for the government.  1st two major issues, BTC addresses and BTC in them can't be owned and if they can be and are payment methods then BTC itself is an illegal security.  I'm sure there are plenty other issues to come.  Fun times here we go.

http://www.reuters.com/article/2013/08/06/us-court-sec-bitcoin-idUSBRE97517G20130806

First of many.

[User705]

He didn't list them, but they were passthroughs to his "security" and they did trade on an exchange. 

Probably a lot of the key posts are now deleted.

PPT-A
https://bitcointalk.org/index.php?topic=76594.0

Well I bet the SEC knows what they are doing. Also it seems the SEC might have to go after others if they want to go after the PPTs and the exchange that took the money.

SEC knows what they are doing?  ROFL  I'm surprised they wanted to open this can of worms.  It doesn't matter if they convict him or not. The precedents the judges rulings on various factual motions will be a crazy mess for the government.  1st two major issues, BTC addresses and BTC in them can't be owned and if they can be and are payment methods then BTC itself is an illegal security.  I'm sure there are plenty other issues to come.  Fun times here we go.

http://www.reuters.com/article/2013/08/06/us-court-sec-bitcoin-idUSBRE97517G20130806

First of many.

Wow.  Here is the actual ruling
https://www.courthousenews.com/2013/08/06/Bitcoin.pdf
Check this quote out "Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money."  The other takeaway is that a judge just declared all unregistered (which probably is 100%) BTC exchanges, companies listed on exchanges and probably even side loans illegal since he called them securities.

[QuestionAuthority]

He didn't list them, but they were passthroughs to his "security" and they did trade on an exchange. 

Probably a lot of the key posts are now deleted.

PPT-A
https://bitcointalk.org/index.php?topic=76594.0

Well I bet the SEC knows what they are doing. Also it seems the SEC might have to go after others if they want to go after the PPTs and the exchange that took the money.

SEC knows what they are doing?  ROFL  I'm surprised they wanted to open this can of worms.  It doesn't matter if they convict him or not. The precedents the judges rulings on various factual motions will be a crazy mess for the government.  1st two major issues, BTC addresses and BTC in them can't be owned and if they can be and are payment methods then BTC itself is an illegal security.  I'm sure there are plenty other issues to come.  Fun times here we go.

http://www.reuters.com/article/2013/08/06/us-court-sec-bitcoin-idUSBRE97517G20130806

First of many.

Wow.  Here is the actual ruling
https://www.courthousenews.com/2013/08/06/Bitcoin.pdf
Check this quote out "Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money."  The other takeaway is that a judge just declared all unregistered (which probably is 100%) BTC exchanges, companies listed on exchanges and probably even side loans illegal since he called them securities.

Erik Voorhees big scramble to buy back SatoshiDice becomes a little clearer now doesn't it? lol

[jubalix]

courts love to find they have jurisdiction, it gives them more power. It takes legislation to cut back the courts power, which now only happens when the court trammel rich corporate interests that can lobby for the legislation.

[Bitcoinpro]

his name was pirate 

[User705]

Keep in mind the court was in TEXAS.  Surely they love the federal government.  I wonder if the judge was smiling that you can substitute any fiat currency for "bitcoin" in his following sentence l "Bitcoin is an electronic form of currency unbacked by any real asset and without specie, such as coin or precious metal."

[threeip]

Keep in mind the court was in TEXAS.  Surely they love the federal government.

I'm not sure if you are familiar with Texas?

[QuestionAuthority]

Keep in mind the court was in TEXAS.  Surely they love the federal government.

I'm not sure if you are familiar with Texas?

Given half a chance, those heavily armed rednecks would probably secede from the union.

[pisces1999]

The guy behind it ripped off people for around $5 million. The SEC has charged him with a crime, which is what they're supposed do. It was a classic Ponzi scheme

[notme]

Keep in mind the court was in TEXAS.  Surely they love the federal government.

I'm not sure if you are familiar with Texas?

I'm not sure if you are familiar with sarcasm?

[threeip]

Keep in mind the court was in TEXAS.  Surely they love the federal government.

I'm not sure if you are familiar with Texas?

I'm not sure if you are familiar with sarcasm?

If it was sarcasm I'm obviously expecting too much.

[Tomatocage]

So is he in custody yet? Does he even have a warrant?

[threeip]

So is he in custody yet? Does he even have a warrant?

Is this him?

Name:   Trendon T Shavers
Arrest Date:   2013-08-11
Charges:    ASSAULT CAUSES BODILY INJURY FAMILY VIOLENCE

[DeathAndTaxes]

So is he in custody yet? Does he even have a warrant?

It is a civil lawsuit not a criminal proceedings.  There was a warrant to seize his accounts but even if he loses this lawsuit all that can happen is financial penalties.  It is possible the DOJ will prosecute him criminally but that would be a separate action and no criminal charges (much less warrants, arrests, pre-trial confinement, etc) have happened yet (and may never happen).

[00null]

So is he in custody yet? Does he even have a warrant?

Is this him?

Name:   Trendon T Shavers
Arrest Date:   2013-08-11
Charges:    ASSAULT CAUSES BODILY INJURY FAMILY VIOLENCE

Yep, seems to be him:
http://www.justmugshots.com/texas/collin-county/18816833

[TheKoziTwo]

So is he in custody yet? Does he even have a warrant?

Is this him?

Name:   Trendon T Shavers
Arrest Date:   2013-08-11
Charges:    ASSAULT CAUSES BODILY INJURY FAMILY VIOLENCE

Yes.



Compare with the other pictures:



more pictures here

[User705]

Keep in mind the court was in TEXAS.  Surely they love the federal government.

I'm not sure if you are familiar with Texas?

I'm not sure if you are familiar with sarcasm?

i wasn't going to say anything but thank you

[mrdavis]

http://apps.collincountytx.gov/cccasesearch/Search.aspx
Case No. 01-JM-13-2967

Statute 17.292
http://codes.lp.findlaw.com/txstatutes/CR/1/17/17.292

EDIT:
http://cijspub.co.collin.tx.us/CaseDetail.aspx?CaseID=1238324

[BCB]

WOW. Pressure must be getting to him. Now he is beating the wife. Life sucks when the tables turn.

[DeathAndTaxes]

WOW. Pressure must be getting to him. Now he is beating the wife. Life sucks when the tables turn.

It doesn't suck, it is karma.  Well it does suck for his wife but hopefully she either leaves him or buys a gun.  One can only hope the DOJ takes an interest in his case.

[MrHempstock]

Thanks bro for allowing mainstream media to leave Average Joe with the impression that BTC as a whole is, in fact, a ponzi scheme.

Fox News will not have to work near as hard now. Awesome. If only you had a donate address. 

[QuestionAuthority]

He's a Texas heavily armed redneck and a wife beater. rofl  Could the stereotype get any better. Please God someone find a photo of him holding a shotgun, wearing one of these t-shirts, in front of Walmart and make the stereotype complete. lol

[threeip]

What's funny is that in Australia that shirt is called a wife-beater.

[QuestionAuthority]

What's funny is that in Australia that shirt is called a wife-beater.

It's called that here too.

What's really funny is all of the supposedly intellectual young college entrepreneur Bitcoiners that were sucked in and conned by some dumbass wife-beating Texas hillbilly. lol

[Darktongue]

 Him being arrested for beating the shit out of his old lady.That has nothing to do with karma.  This just seals the deal for me that this man doesn't have an out of morals or respect for anyone.  I tried hard for a long time to follow the idea he was in over his head.  Got scared and bounced.  Yeah no longer.

His life is over, this will snowball out til he ether kills himself or gets locked up for a good number of years

[franky1]

looks like the week before slapping his wife about and after getting dealt with by the SEC, he was having a house party..

9 people like this.

Trendon Shavers
 That house will never be the same... Who would of thought 100+ people could party at a vacant house in McKinney.
August 6 at 1:33am

.. i guess he dont care much about anything

(quote can be verified from his wifes FB)

[FullLife]

Unbelievable how stupid this guy is. Ripping off that much bitcoin and ending up with so little $, moving it all into the exchange at once, putting his name out there and thinking he can get away with it.

A guy told me one time, "Don't let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner"

That's a Robert De Niro line from a great movie called Heat.

[Wipeout2097]

Damn, how did you guys here fall for this crap?

I actually know someone that knows what he is doing and plays with those programs into his advantage, but there's no higher risk than HYIP or pyramid schemes...

[nimda]

Damn, how did you guys here fall for this crap?

I actually know someone that knows what he is doing and plays with those programs into his advantage, but there's no higher risk than HYIP or pyramid schemes...

I've recommended this before: grab a beer and look at some posts from August 2012. Mobs do interesting things.

[Scott J]

I fell for this, sadly.

The mob mentality definitely was part of it.

My belief that bitcoin is revolutionary also played a part - I thought it not impossible that it could be used for some function that normal currency couldn't, producing such profits. 

Of course with hindsight I was awfully stupid.

You live you learn.

[True___Blue]

Damn, how did you guys here fall for this crap?

I actually know someone that knows what he is doing and plays with those programs into his advantage, but there's no higher risk than HYIP or pyramid schemes...

I've recommended this before: grab a beer and look at some posts from August 2012. Mobs do interesting things.

Before I go digging around, any threads or links that you would recommend?

[BCB]

G R E E D

It will get you every time.

[nimda]

Damn, how did you guys here fall for this crap?

I actually know someone that knows what he is doing and plays with those programs into his advantage, but there's no higher risk than HYIP or pyramid schemes...

I've recommended this before: grab a beer and look at some posts from August 2012. Mobs do interesting things.

Before I go digging around, any threads or links that you would recommend?

Oh, certainly. Maybe you should grab multiple beers and a page-joiner extension so you don't need to keep clicking "next."

The beginning of it all: https://bitcointalk.org/index.php?topic=50822.0

Here is the best one. "Choose: Walk The Plank or Keelhaul"
https://bitcointalk.org/index.php?topic=95008.0

Note he says, "chance the outcome of August 14." August 14 was not the end of the bet. This was a nice signal to get out for those of us who were gambling with pocket change on getting out before the implosion.


BitcoinMax - contains lots of taunting by Pirate's customers e.g. "I love how jealous they are that we're getting 7% weekly": https://bitcointalk.org/index.php?topic=83904.0
The MNW bet: https://bitcointalk.org/index.php?topic=101751.msg1113117#msg1113117
Gamma Insured Pirate Pass-through - actually paid after default, though it took a while: https://bitcointalk.org/index.php?topic=96793.0
Goat's insured ppt - actually paid out: https://bitcointalk.org/index.php?topic=98420.0
Usagi tries to sell YARR - https://bitcointalk.org/index.php?topic=96221.msg1062097#msg1062097
5000 BTC bet between Pirate and Vandroiy - https://bitcointalk.org/index.php?topic=91661.0
How much BTC have you lost out on because you listened to Vandroiy? - https://bitcointalk.org/index.php?topic=92581.0
(Vandroiy was very vocally anti-Pirate. He was right, but it got kind of annoying.)
Also everything on this page: https://bitcointalk.org/index.php?board=78.960
- Including "I know what Pirate's doing" https://bitcointalk.org/index.php?topic=91670.0

And some of mine:
My mathematical analysis of all the "insured" bonds - contains a funny argument between me and usagi, except usagi deleted all his posts: https://bitcointalk.org/index.php?topic=96092.0
^serious
not serious:

Me trying to sell a bridge: https://bitcointalk.org/index.php?topic=96481.msg1063444#msg1063444
Global warming: https://bitcointalk.org/index.php?topic=50822.msg992872#msg992872

[marcotheminer]

AH, now I finally know who pirateat40 is...

Some low life who made money ripping people off.

[QuestionAuthority]

AH, now I finally know who pirateat40 is...

Some low life who made money ripping people off.

That describes about 10% of the Bitcoin user base, 15% of the mining pools and 25% of the businesses. lol

[Kluge]

AH, now I finally know who pirateat40 is...

Some low life who made money ripping people off.

That describes about 10% of the Bitcoin user base, 15% of the mining pools and 25% of the businesses. lol

And about 12% of regular folks, 75% of auto repair shops, 55% of building contractors, 68% of computer repair shops, 48% of fast food establishments, 93% of foot ware makers, 36% of B&M stores, 100% of Apple and the Government.

So, the Bitcoin community is doing well! Yay!

Speaking of auto shops... Have a car firing on 4-5 of 6 cylinders. Took it into shop I usually get tires replaced at. I said it was fine to replace whatever's wrong without calling if under $250, or to call if it's a more expensive problem. I was figuring spark plugs or solenoid. They didn't check, instead just doing a tune-up. Still the same problem, no notes left, and they charged me $238. 

I can't really imagine taking a PC in, saying the same thing, and have them come back saying they did a tune-up for $238, replacing the RAM and dusting everything off, but not fixing the problem.

[franky1]

getting back on topic..

it seems trendon is still home Facebooking family and friends.. any update on whats happening in his court case?

[wasserman99]

WOW, I never thought the SEC would pay any attention to anything bitcoin. wonder how I missed this story. thanks for sharing! pretty phenomenal stuff that they are paying this much attention. bullish, i think!!! 

[TheButterZone]

Arrest Time: 20130811.23

http://mugshots.com/US-Counties/Texas/Collin-County-TX/Trendon-Shavers.66013789/details/

[Gimmelfarb]

Arrest Time: 20130811.23

http://mugshots.com/US-Counties/Texas/Collin-County-TX/Trendon-Shavers.66013789/details/

hehe, thanks for posting. 

[Kluge]

Arrest Time: 20130811.23

http://mugshots.com/US-Counties/Texas/Collin-County-TX/Trendon-Shavers.66013789/details/

That is just for him beating his wife. Unrelated to the sec case.

I doubt it's unrelated.   

[QuestionAuthority]

AH, now I finally know who pirateat40 is...

Some low life who made money ripping people off.

That describes about 10% of the Bitcoin user base, 15% of the mining pools and 25% of the businesses. lol

And about 12% of regular folks, 75% of auto repair shops, 55% of building contractors, 68% of computer repair shops, 48% of fast food establishments, 93% of foot ware makers, 36% of B&M stores, 100% of Apple and the Government.

So, the Bitcoin community is doing well! Yay!

Yep, it's right on par with the world. Just like the criminal activities of auto repair shops/contractors are dealt with by the government when a victim complains, the the victims in Bitcoinland asked the government to step in and deal with Pirate. Yep, it's right on track.

[QuestionAuthority]

Arrest Time: 20130811.23

http://mugshots.com/US-Counties/Texas/Collin-County-TX/Trendon-Shavers.66013789/details/

That is just for him beating his wife. Unrelated to the sec case.

I doubt it's unrelated.   

You're right. It's related to the mentality of a stupid asshole. The same mindset that makes him think it's ok to steal from people makes him think it's ok to beat his wife.

[Argwai96]

i seem to have missed this story when it happened. does anyone think this has implications for how the us government generally views / legitimizes bitcoin as currency, or at least something of value, like gold?

[nimda]

i seem to have missed this story when it happened. does anyone think this has implications for how the us government generally views / legitimizes bitcoin as currency, or at least something of value, like gold?

Did you see the FinCEN guidelines?

[saddambitcoin]

i started buying btc right after the pirate scandal

always thought "trendon shavers" was a fake name, color me impressed. 

[franky1]

hmm. news has gone quiet on this.. but lets atleast look at what trendon is doing in real life right now

trendon and his wife hired out a stretched limo for the evening, for the kids to go on a 'haunted house' fun day
https://scontent-b-lhr.xx.fbcdn.net/hphotos-ash4/1378326_10201734790629787_1728646743_n.jpg

they stopped at a fast food place
https://scontent-a-lhr.xx.fbcdn.net/hphotos-prn2/1390482_10201735090957295_180389736_n.jpg

notice trendon and his wife at the cashiers desk in the background. and the old guy .. he is the limo driver.

long story short, it seems the fraud arrest and other matters hasn't phased them.

Edit: to anyone complaining that this breaches some privacy laws or someones right to a private life. my response: photos publicly available on facebook.. the end.

EDIT i have taken off the pictures from being instantly viewable due to complaints from posts below, but because the photos are direct links to the open and publicly accessable FB page i cant just black them out..

if i were to take the photo's and edit them and then upload them from tinypic or imgur. then its no longer part of the publicly released photo and i have not been given consent to edit their photo.. thus just linking a publicly accessable original photo without editing or moving to tinypic is the safest bet...

now this post has bumped. anyone with any legal updates?

[BCB]

Franky

Her kids have nothing to do with this. Please take their photos down.

[gweedo]

Franky

Her kids have nothing to do with this. Please take their photos down.

No I like seeing who getting limo rides off my money.

[BorderBits]

They associate with him (and take advantage of his crimes in the process). To me, they aren't that "innocent" no matter their age.

But your opinion is more prevalent I assume. Many people seem to have an urge to protect random children they don't know

Holy shit, you're a creepy fucking moron. 

[revans]

Technically this would be a meta ponzi scheme, transacted as it was via PonziCoin.

[notme]

Technically this would be a meta ponzi scheme, transacted as it was via PonziCoin.

WTF are you talking about?

[surebet]

They associate with him (and take advantage of his crimes in the process). To me, they aren't that "innocent" no matter their age.

But your opinion is more prevalent I assume. Many people seem to have an urge to protect random children they don't know

What's the alternative, run away?

[Phinnaeus Gage]

hmm. news has gone quiet on this.. but lets atleast look at what trendon is doing in real life right now

trendon and his wife hired out a stretched limo for the evening, for the kids to go on a 'haunted house' fun day
https://scontent-b-lhr.xx.fbcdn.net/hphotos-ash4/1378326_10201734790629787_1728646743_n.jpg

they stopped at a fast food place
https://scontent-a-lhr.xx.fbcdn.net/hphotos-prn2/1390482_10201735090957295_180389736_n.jpg

notice trendon and his wife at the cashiers desk in the background. and the old guy .. he is the limo driver.

long story short, it seems the fraud arrest and other matters hasn't phased them.

Edit: to anyone complaining that this breaches some privacy laws or someones right to a private life. my response: photos publicly available on facebook.. the end.

EDIT i have taken off the pictures from being instantly viewable due to complaints from posts below, but because the photos are direct links to the open and publicly accessable FB page i cant just black them out..

if i were to take the photo's and edit them and then upload them from tinypic or imgur. then its no longer part of the publicly released photo and i have not been given consent to edit their photo.. thus just linking a publicly accessable original photo without editing or moving to tinypic is the safest bet...

now this post has bumped. anyone with any legal updates?

http://regex.info/exif.cgi?imgurl=https%3A%2F%2Fscontent-a-lhr.xx.fbcdn.net%2Fhphotos-prn2%2F1390482_10201735090957295_180389736_n.jpg

AND

http://regex.info/exif.cgi?imgurl=https%3A%2F%2Fscontent-b-lhr.xx.fbcdn.net%2Fhphotos-ash4%2F1378326_10201734790629787_1728646743_n.jpg

Profile Date Time   2012:01:25 03:41:57
1 year, 9 months, 2 days, 20 hours, 46 minutes, 46 seconds ago

See how warm everybody is dressed, thus possibly proving the date's correct?

[b!z]

Technically this would be a meta ponzi scheme, transacted as it was via PonziCoin.

1) Do you know what Bitcoin is?
2) Do you know what a ponzi scheme is?
3a) Do you know what a comparison is?
3b) Do you know that two things must have at least one similarity to be compared?

[crazy_rabbit]

Franky

Her kids have nothing to do with this. Please take their photos down.

No I like seeing who getting limo rides off my money.

you could still go to the facebook page.

So, what is the use of blurring them? No, Trendon deserves no form of courtesy.

no, he does not, but these kids, who have nothing to do with this, might. im not god or any judge on morality but it seems to me erroring on the side of protecting inocent kids might be the best thing to do here.

They associate with him (and take advantage of his crimes in the process). To me, they aren't that "innocent" no matter their age.

But your opinion is more prevalent I assume. Many people seem to have an urge to protect random children they don't know

its not like the kids are at fualt for having to be around him, its not like they can just leave (once they are 18 i say go for it)

Guilty by association comes to mind

Hey I can see you point, but to me, showing any form of courtesy to Trendon outweighs this by a lot. He stole so much, and I'm not a very forgiving person. (For his sake he better never depend on me for survival. I won't lift a finger.).

Leave the children out of it. Are you going to hold the cashier in the photo responsible for saying, "Have a nice day!" after he pays the bill with your stolen money? You want some crazy person to snatch his kids and then somehow punish them for being legally obliged to be in his care? You logic can lead people to dark places that are far worse then stealing people's money.

[greyhawk]

You logic can lead people to dark places that are far worse then stealing people's money.

He might be there already.

This:

Many people seem to have an urge to protect random children they don't know

certainly reeks of antisocial personality disorder.

[Birdy]

Guilty by association comes to mind

This is one of the worst ideas in human history ever.
Sure they are probably heavily influenced by having a bad father.
But you are denying them any chance of being good (-> being born guilty).
If everyone judges them for something they didn't do, why should they even try to do good?
It's like throwing you into prison, because your grand-grand-grand-father murdered somebody.

You logic can lead people to dark places that are far worse then stealing people's money.

Indeed.

[piotr_n]

I don't think you guys understand what has actually happened here.

Today it is pretty clear what pirate's business was about. IMO, it was not a ponzi scheme.
He was borrowing coins and lending them to other people, though keeping their USD as a collateral - probably with ~10%/week interests, maybe more.
The idea was that in case if they would not return him then coins, he would just buy them on the maker, using the dollars.
What has happened though is that at the very moment when he was trying to do so, his customers informed SEC and SEC has blocked the funds on his bank account - thus he was not able to buy back the coins and return them. And considering the price raise, he never will anymore, even if they will eventually release his funds.

You need to understand that this was probably someone's insidious plan to acquire hundreds of thousands of bitcoins, without moving the market, at a discounted price, and pirateat40 was probably just an unconscious sucker.

Which does not mean that he has not made lots of money on this, assuring people that his business model was safe, while in fact it wasn't - the pirate was just too stupid to see it.

So most important question we should be asking here is: who were his customers - who got the coins?
For me, whoever they were, it seems that like they had some good inside in either US gov of financial institutions (likely both).
It's a shame though that the sucker does not want to blow a whistle, since this is the least he could have done after doing this to people who had trusted him.

[greyhawk]

Lemme tell you how this criminal was not a criminal

Thanks for playing.



You lost. Do you want to try again? (Y/N)

[piotr_n]

If he was a criminal shouldn't he be in a jail?

Obviously they have nothing on him - just like they have nothing on MtGox, but the US authorities still froze 5mln USD on their account and do not want to give it back.

Btc24 - the Polish authorities froze 1mln EUR on their bank account and also do not want to give it back.

If you are saying that pirateat40 was a criminal, then by the same logic, you should be saying that MtGox and Btc24 are criminals, because they also got their funds frozen by authorities.
MtGox had enough money to compensate their customers, but bct24 customers are still suffering - it's not much different than the pirate's case.

[greyhawk]

If you are saying that pirateat40 was a criminal, then by the same logic, you should be saying that MtGox and Btc24 are criminals,

I've been saying that for months. Years even.

[piotr_n]

If you are saying that pirateat40 was a criminal, then by the same logic, you should be saying that MtGox and Btc24 are criminals,

I've been saying that for months. Years even.

Right.
Then you probably work for the authorities

How was he supposed to give back the money if you froze his funds?

[piotr_n]

If you are saying that pirateat40 was a criminal, then by the same logic, you should be saying that MtGox and Btc24 are criminals,

I've been saying that for months. Years even.

To me the only black and white case is gox being thr criminals.

And for me the only black and white case is that you Goat are a mean and cheeky crook, who was selling counterfeited bonds, profiting on the collapse of the pirate's business.
While Nefario was helping you with it.

[piotr_n]

You are the only one who connects nefario to this and i give you credit for that. However you were wrong about the bonds and it was more than clear in that thread.

Technically I only connect Nefario to your scam, and your scam to this...

It is still in that threat.
https://bitcointalk.org/index.php?topic=82573.msg1126157#msg1126157

Anyone can go and see how you were selling more and more PPT bonds, while it was already clear that pirate would not accept any more deposits.
And I also know for a fact that Nefario was your lying bitch, since (unlike you) I do not need to write down a 5 digit number to remember it the next day.

BTW, I remember very clearly how you did not like my comments back then - so much that you went to theymos asking him to remove my posts from your topic.
Which he did... which was weird for me... until I found out that our great admin had a secret share in GLBSE.
But at least he had a dignity to put my comments back, into a different thread - so he wasn't as much of a crook as the two of you, but just a secret investor with a conflict of interest

[piotr_n]

Okay ill let people go back and read that thread to see your umm so called evidence.

OK, just let me help them a bit, so they would not need to wast their time digging through your bullshit.

People, I suggest you to see this post, that should give you a clue about the relations between Goat and Nefario:
https://bitcointalk.org/index.php?topic=82573.msg1143404#msg1143404

And here is the final chart showing the volume of Goat's PPT bonds in circulation at GLBSE (that's the same bonds about which Nefraio said that "The Goat has done nothing wrong", denying the fact that Goat was letting new bonds on the the market, while not being able to deposit the relevant amount at the pirate's bank anymore).



Also here:
https://bitcointalk.org/index.php?topic=82573.msg1161899#msg1161899
https://bitcointalk.org/index.php?topic=82573.msg1173216#msg1173216

[drawingthesun]

What the trial is over and its a ponzi? Link?

Is this true? He is free and out? (With a giant Bitcoin stash hidden away of course)

[franky1]

my main aim was to ask what is the update on the whole case, is it truly already over, is there an upcoming visit to court coming soon, ??

meandering off topic slightly
i used the photo's as they were taken directly from ashley shavers public FB profile with FB dating them this month. showing trendon out and about, which got me wondering what was the latest in the case?

Profile Date Time   2012:01:25 03:41:57
1 year, 9 months, 2 days, 20 hours, 46 minutes, 46 seconds ago

See how warm everybody is dressed, thus possibly proving the date's correct?

no one uses the hidden metadata of files as gospel.. my phone still says its 1997 due to my battery going flat before i get to recharge it and/or having to swap simcards which requires removing the battery entirely. and that meta data if beleived places them in a fastfood venue at 3 in the morning... hmmm maybe not.

but anyways lets not investigate the picture as thats just meandering off topic.. what is the update on the whole case?

[piotr_n]

What the trial is over and its a ponzi? Link?

Is this true? He is free and out? (With a giant Bitcoin stash hidden away of course)

I am telling you: he does not have that stash.
All he might have are his personal coins, maybe a few tens of thousands, which today should be enough for a preposterous life.

But the stash itself was hold by his customers - and he was holding the customers' dollars, as a collateral.
The idea seemed safe, but when it came to then point the customers did not give him back the coins, and pulled the strings making the dollar funds frozen, making him unable to exchange the collateral into bitcoins. And let me remind you that it was with your applause guys, since you were all so happy that SEC froze his bank account.

It was somebody's brilliant plan to purchase hundreds of thousands of coins, without moving the price.
Buying tons of bitcoins with a huge discount by pretending borrowing them with a huge interest.
And I doubt that the somebody was the pirate himself - it had to be someone with good connections in US authorities.
So IMHO the party most responsible for stealing your money is the US government itself - just like in the case of MtGox and Btc24 frozen funds.

[crumbs]

What the trial is over and its a ponzi? Link?

Is this true? He is free and out? (With a giant Bitcoin stash hidden away of course)

I am telling you: he does not have that stash.
All he might have are his personal coins, maybe a few tens of thousands, which today should be enough for a preposterous life.

But the stash itself was hold by his customers - and he was holding the customers' dollars, as a collateral.
The idea seemed safe, but when it came to then point the customers did not give him back the coins, and pulled the strings making the dollar funds frozen, making him unable to exchange the collateral into bitcoins. And let me remind you that it was with your applause guys, since you were all so happy that SEC froze his bank account.

It was somebody's brilliant plan to purchase hundreds of thousands of coins, without moving the price.
Buying tons of bitcoins with a huge discount by pretending borrowing them with a huge interest.
And I doubt that the somebody was the pirate himself - it had to be someone with good connections in US authorities.
So IMHO the party most responsible for stealing your money is the US government itself - just like in the case of MtGox and Btc24 frozen funds.

  U rule!

[piotr_n]

well, laught as much as you want, but try to buy bitcoins to repay your lenders, having the collateral funds frozen, mr smart ass
and who froze the collateral funds? your nazi government - who else?

[crumbs]

well, laught as much as you want, but try to buy bitcoins to repay your lenders, having the collateral funds frozen, mr smart ass
and who froze the collateral funds? your nazi government - who else?

Pwnage!

[piotr_n]

Right. Bring more nazi symbols, to prove that pirateat40 was a scammer and a pure criminal, while US gov had completely nothing to do with stealing your money.

Still, according to my definition to be a scammer one needs to have an intent to scam - and IMHO pirateat40 had no such intent. He was just an idiot and a total tool.

[surebet]

If he was a criminal shouldn't he be in a jail?

http://www.justmugshots.com/texas/collin-county/18816833

[BCB]

piotr_n and goat can you take your pissing match elsewhere.

Frankie,

There is a pending civil case for the Trendon Shavers Ponzi scheme.

[Raize]

It was somebody's brilliant plan to purchase hundreds of thousands of coins, without moving the price.

I'm not sure I'd call pirate's scheme from the beginning a "plan", but it was definitely someone taking advantage of an opportunity he was creating.

pirateat40 deleted most of his posts on here, but you may remember he was asking either bitlane or smoothie (or both?) who they were, over and over again. Not sure if it was here or in IRC, but if here, he's since deleted those posts and they both appear to have selectively edited a few parts of their own. I'm not sure why I can't find this info again, but I know I saw something along these lines in August of last year, shortly after the run up to $15 and crash back down to $8. I checked a few of the threads where I was certain it was posted and its not there anymore.

Also, don't forget the Vandroiy bet (though I honestly think that was less opportunistic and more a warning).

I can think of a number of different ways you could game pirate's moneyPak to BTC (or vice-versa) operation if you knew exactly how it worked (and especially if you thought it was also a Ponzi):
Step #1: Become his best anonymous customer.
Step #2: Become his best anonymous investor.
Step #3: Make promises from both.
Step #4: Abuse trust.
Step #5: Profit.

Glad I never really got involved, this post was about the extent of my contribution:
https://bitcointalk.org/index.php?topic=92556.msg1024661#msg1024661

I feel bad for those that lost money, but keep in mind there's a few folks in that thread, brunic & usagi, notably, that even wanted to ban dissenting speak or wanted people to flat out "shut up". This forum, at the time of BS&T, was actually quite hostile to folks even suggesting it was a Ponzi or moneylaundering scheme, under the impression that if it wasn't, it'd be destroying a legitimate business.

I don't believe pirate actually thought that he was going to run a Ponzi or was planning on it. I think he had a solid but small moneyPak-for-BTC business model that worked on the scale of thousands of dollars, worked less reliably at tens of thousands, and utterly failed at hundreds of thousands. I also think his willingness to work with anonymous individuals probably sealed BS&T's fate.

[greyhawk]

Also why cant the sec get anything on him if it really was a ponzi?

Actually if you read the court documents what's happened so far is that first Shavers tried the Sovereign citizen route claiming the court has no jurisdiction over him, which was promptly laughed out of court, then he was adviced to prepare an accounting of his finances which he promptly neglected to do then had a date to appear in court, which he promptly neglected to do and by now the court has frozen all of his personal accounts in response. The actual trial is gonna take some time (years).

[greyhawk]

Also why cant the sec get anything on him if it really was a ponzi?

Actually if you read the court documents what's happened so far is that first Shavers tried the Sovereign citizen route claiming the court has no jurisdiction over him, which was promptly laughed out of court, then he was adviced to prepare an accounting of his finances which he promptly neglected to do then had a date to appear in court, which he promptly neglected to do and by now the court has frozen all of his personal accounts in response. The actual trial is gonna take some time (years).

So how does he buy food and hire a limo without funds?

Sometimes people upload things that happened a long time ago to their facebooks

[franky1]

So how does he buy food and hire a limo without funds?

his FIAT bank account is frozen, but that doesnt stop him selling hidden bitcoins at localbitcoin places

[Bitsky]

Not to forget that some proxy services such as Paybtc's BitcoinMax most likely also scammed investors.

[malevolent]

Still, according to my definition to be a scammer one needs to have an intent to scam - and IMHO pirateat40 had no such intent. He was just an idiot and a total tool.

I disagree with the "no such intent" part; he already was a con man before getting involved with Bitcoin:
https://bitcointalk.org/index.php?topic=119590.msg1289098#msg1289098

[Kluge]

Whoa, whoa, whoa. He beat his wife after being charged, and now she's in a limo going to a haunted hay ride with him and the kids?

Well, hey - if you want to damage the man, fix the battered wife syndrome and have her leave him.