Texas Man Admits to Bitcoin Ponzi Scheme

22 Sep 2015 | Author: | No comments yet »

Texan Man Pleads Guilty In NY Bitcoin Securities Fraud Case.

A Texas man pleaded guilty to defrauding people out of $4.5 million in what the U.S. said was a first-of-its-kind Ponzi scheme involving investments in the virtual currency bitcoin. Trendon Shavers, 33, founder of Bitcoin Savings and Trust, raised at least 764,000 bitcoins by promising investors a return of as much as 3,641 percent, prosecutors said.

Instead, he used bitcoins from new investors to cover payments owed to earlier clients, while also paying for his own Las Vegas gambling and spa treatments, according to the U.S. “I know what I did was wrong and am very sorry,” Shavers said at a court hearing before U.S. Prosecutors also won the conviction of Ross William Ulbricht for running Silk Road, an online bazaar where people anonymously used the digital currency to buy heroin, phony passports and hacking services. Shavers, who ran the scheme for about a year through September 2012, personally guaranteed to cover any losses in the event of a market change, according to court documents. Meanwhile, the authorities said, he siphoned at least 146,000 bitcoin, or more than $33 million based on current exchange rates, to pay for personal expenses, including spa treatments and casino expenses, rent and groceries.

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