Standard News

Hide Advertisement
  • Business
  • Culture
  • News
  • Technology
  • Trending
Site logo
ADVERTISEMENT
ADVERTISEMENT

Texan gets one-and-a-half years in prison for running bitcoin Ponzi scheme

By Reuters 2 min read
Advertisement - Continue reading below
Trendon Shavers exits U.S. District Court for the Southern District of New York in Lower Manhattan

By Nate Raymond

NEW YORK (Reuters) – A Texas man was sentenced to one-and-a-half years in prison on Thursday for operating a bitcoin-related Ponzi scheme that prosecutors say resulted in the first U.S. criminal securities fraud case related to the digital currency.

Advertisement

Trendon Shavers, who operated Bitcoin Savings and Trust, was also ordered by U.S. District Judge Lewis Kaplan in Manhattan to forfeit $1.23 million and pay restitution in the same amount for operating what the judge called a “class Ponzi scheme.”

“You defrauded innocent people,” he said. “You did it, in the last analysis, for personal gain.”

Shavers, who pleaded guilty in September 2015 to one count of securities fraud and who now supports himself as a cook, said in court he had “royally messed up,” and had lost friends and embarrassed his family as a result of his fraud.

“I don’t think this is something I’m ever going to get over,” he said.

Shavers, a Prosper, Texas, resident who went by “pirateat40” online, was arrested in November 2014, two months after a federal judge in Texas ordered him to pay $40.7 million in a related U.S. Securities and Exchange Commission civil lawsuit.

Prosecutors said from 2011 to 2012, Shavers, 33, raised at least 764,000 bitcoins, which at the time were worth more than $4.5 million, for his Bitcoin Savings and Trust. He operated the business from his home, offering bitcoin-related investments through the internet.

Prosecutors said Shavers solicited the investments on the website Bitcoin Forum, and promised interest rates of 7 percent per week to investors who loaned bitcoins to Bitcoin Savings and Trust while he pursued a market arbitrage strategy.

While Shavers invested some of the bitcoins with Mt. Gox, the now-defunct Tokyo-based bitcoin exchange, he largely in typical Ponzi scheme fashion used new investors’ bitcoins to pay back prior investors, prosecutors said.

At the peak of the scheme, Shavers controlled about 7 percent of bitcoins in public circulation, prosecutors said.

In total, out of 100 investors, at least 48 suffered losses, prosecutors said. His lawyers said the losses equaled $1.23 million.

Prosecutors said Shavers also misappropriated bitcoins to purchase a used BMW M5 sedan, to buy have a $1,000 steakhouse dinner in Las Vegas and to go to spas and casinos.

The case is U.S. v. Shavers, U.S. District Court, Southern District of New York, No. 15-cr-00157.

(Reporting by Nate Raymond in New York; Editing by David Gregorio)

tagreuters.com2016binary_LYNXNPEC6K1MA-VIEWIMAGE

Advertisement - Continue reading below

Politics today is like Medieval War of the Roses, says actor Ralph Fiennes
Entertainment
Reuters 2 min read

Politics today is like Medieval War of the Roses, says actor Ralph Fiennes

Alabama city abandons law targeting transgender bathroom use
News
Reuters 2 min read

Alabama city abandons law targeting transgender bathroom use

Thousands of structures at risk in northern California wildfire
News
Reuters 2 min read

Thousands of structures at risk in northern California wildfire

Actor Mark Rylance puts rights of tribal people center-stage in new film
Entertainment
Reuters 2 min read

Actor Mark Rylance puts rights of tribal people center-stage in new film

Obama awards Medal of Honor to U.S. veteran of Vietnam War
News
Reuters 2 min read

Obama awards Medal of Honor to U.S. veteran of Vietnam War

Florida officer who killed retiree accused of prior excessive force
News
Reuters 2 min read

Florida officer who killed retiree accused of prior excessive force

Man who scaled Trump Tower in New York facing criminal charges
News
Reuters 2 min read

Man who scaled Trump Tower in New York facing criminal charges

Miranda Castle, The Most Beautiful Fairy Tale Castle In The World Is On The Verge Of Being Destroyed
Trending
Danielle 2 min read

Miranda Castle, The Most Beautiful Fairy Tale Castle In The World Is On The Verge Of Being Destroyed

Too old to rap, Bow Wow announces retirement at age 29
Entertainment
Reuters 1 min read

Too old to rap, Bow Wow announces retirement at age 29

Chicago to pay $3.2 million to settle two fatal police shooting cases
News
Reuters 2 min read

Chicago to pay $3.2 million to settle two fatal police shooting cases

load more Loading posts...

sidebar

ADVERTISEMENT
ADVERTISEMENT

sidebar-alt

  • About Us
  • Imprint
  • Contact Us
  • Terms of Service
  • Privacy Policy
  • For Advertisers