A Texas man was arrested Thursday and charged with running a Bitcoin Ponzi scheme that during its operation raked in over 700,000 bitcoins, what at the time accounted for nearly 7% of all bitcoins in circulation.
Trendon Shavers, using the online moniker PirateAt40, collected his crypto booty by soliciting investments in his firm, Bitcoin Savings and Trust. The scheme began in September 2011 and continued thru September 2012. Shavers used the popular forum Bitcointalk.org to lure his alleged victims. The investments were valued at more than $4.5 million based on the price of bitcoin at the time.
The digital bandit has already been fined $40 million by a federal judge in north Texas in a Securities and Exchange Commission (SEC) civil case. Today’s arrest is for criminal fraud charges brought by the US Attorney in Manhattan.
Mr. Shavers sold bitcoin-related securities from his home in McKinney, Texas, promising investors up to 7% a week in interest payments. In the end, at least 48 of the roughly 100 investors lost all or part of their investment, according to the U.S. Attorney’s office.
Shavers is charged with one count of securities fraud, carrying a maximum sentence of 20 years in prison, and a fine of up to $5 million, and wire fraud, carrying a maximum penalty of 20 years in prison, with a fine of up to $250,000.
Bitcoin (BTC) is a popular digital currency that allows consumers to make online purchases with little to no fee. Bitcoin is currently trading at just under $340 per coin with a market capitalization of $4,591,389,026 according to Coinmarketcap.com.
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