Trendon Shavers and Bitcoin Savings and Trust involved in first ever Bitcoin Ponzi

Trendon Shavers of McKinney, Tx., has been charged with what appears to be the first case of ponzi schemes that involves Bitcoins, otherwise known as digital currency.

Bitcoins are a form of crypto-currency that is not backed by any national government. The mechanics of Bitcoins, their valuation and exchange is not fully understood by laypersons.

Shavers is the founder and operator of Bitcoin Savings and Trust, the company is charged with orchestrating a Ponzi scheme. The case was filed in U.S. District Court for the Eastern District of Texas, although it is suspected that Shavers sold investments to investors in several states.

The Ponzi scheme involved more than 700,000 bitcoins. Shavers collected more than $4.6 million worth of bitcoin within a one year time period, promising them a 7 percent return. Shavers was promising interest rather than profit.

“In reality, Bitcoin Savings and Trust was a sham and a Ponzi scheme in which Shavers used bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding investments. Today’s value of 700,000 Bitcoin is estimated to be worth more than $60 million.” the SEC alleged.

“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,” Andrew Calamari, director of the SEC’s New York office, said in a statement.

An unnamed person, known only by the pseudonym Satoshi Nakamoto, launched the Bitcoin in 2009. At its inception, it was valued at $20. In February of this year, the Bitcoin hit its all-time high in the market, reaching $250. The coin’s value however, is drastically inconsistent.

An SEC spokesperson told CNN Money that the alleged Bitcoin ponzi scheme was the first of its kind. He warned that cases involving Bitcoins would not be treated any differently.

The Peiffer Wolf securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting investors with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Wolf, Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 585-310-5140.

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