14 DAY TRIAL // Trendon T. Shavers, the founder and operator of Bitcoin Savings and Trust (BTCST), has been charged by the US Securities and Exchange Commission (SEC) with running a Ponzi scheme.
The SEC alleges that Shavers used his company to defraud investors of at least 700,000 Bitcoin, which is currently valued at over $60 million (€45 million).
According to the complaint filed by the SEC, Shavers sold BTCST investments online to people from Pennsylvania, North Carolina, Massachusetts, Illinois, Hawaii, Connecticut and Louisiana.
The man is believed to have used online monikers such as “Pirate” and “pirateat40” to advertise his scheme on websites dedicated to Bitcoin discussions. He tricked investors into thinking BTCST is a huge investment opportunity that was “growing and growing” with close to 0 risks.
Authorities say that, in reality, BTCST wasn’t in the business of buying or selling Bitcoin.
Shavers, a Texas resident, used the money he illicitly gained to pay his rent, car-related expenses, utilities, and gambling.
“Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws,” comments Andrew M. Calamari, Director of the SEC’s New York Regional Office.
“Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed.”
The SEC released an advisory to warn potential investors of scams that involve virtual currencies.
“Ponzi scheme operators often claim to have a tie to a new and emerging technology as a lure to potential victims,” says Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy.
“Investors should understand that regardless of the type of investment, a promise of high returns with little or no risk is a classic warning sign of fraud.”