Bitcoin Ponzi Scheme Operator Pleads Not Guilty to Fraud
Bitcoin Savings & Trust operator Trendon Shavers has plead not guilty to fraud charges in a New York district court.
Bitcoin Savings & Trust (BS&T) operator Trendon Shavers has plead not guilty to fraud charges in a New York District court.
If convicted, Shavers faces up to 40 years in prison, as well as millions of dollars in potential fines and penalties. Shavers is charged with one count of securities fraud and one count of wire fraud.
The prosecution alleges that Shavers promised outsized returns to investors but in reality operated a Ponzi scheme by paying early investors with the proceeds from new ones. Shavers, who operated under the username pirateat40, solicited investors for BS&T during 2011 and 2012.
Shavers was found guilty of securities violations in September and was ordered to pay $40m in fines following the conclusion of a trial that began last July.
He was then arrested in November in connection with charges filed by the US Attorney’s Office in Manhattan. Shavers was taken into custody on 6th November and released on bail that same day.
The indictment stated that many of those who Shavers solicited ultimately lost their money, noting:
The court hearing, held 23rd March, was presided by District Judge Lewis Kaplan.
Ponzi scheme outlined
A court filing dated 15th March outlines the US Attorney’s Office case against Shavers, who raised more than 764,000 BTC ($188m at press time) from investors during the now-defunct BS&T operating period.
Shavers used both online mediums as well as in-person events to solicit investors. According to the indictment, Shaver misled investors by stating that hedge funds were involved with the company and that it was not a Ponzi scheme.
It was during this time that Shavers allegedly took client funds for personal use, including thousands of dollars worth of bitcoins to trade with on the Japan-based Mt Gox bitcoin exchange and later filter into a personal bank account and money account via the payment processor Dwolla.
The court filing reads:
According to the document, Shavers spent investor funds on gambling and travel expenses, as well as general living expenses.
The full indictment against Shavers can be found below:
Image via Shutterstock
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