SEC Alleges 'Bitcoin Savings & Trust' Is a Ponzi Scheme

Posted by Soulskill on Wednesday July 24, 2013 @12:12AM from the new-currency-new-fraud dept.

New submitter craighansen writes "The U.S. Securities and Exchange Commission has filed a lawsuit against a man they allege ran a Ponzi scheme using Bitcoin. According to the complaint (PDF), during 2011-2012, Trendon Shavers, operating under the username pirateat40, collected investments of over 700,000 Bitcoins from at least 66 'investors' (a valuation of $4.5M) with the promise of as much as 7% weekly returns. These 'investors' received about 500,000 Bitcoins in returns, so on average, they're probably much better-off than investors in Madoff's scheme. Nevertheless, with the rising value of Bitcoins, the $4.5M investments would be worth $65M at recent pricing if they had actually been left in Bitcoins, which approximates the 1% per day returns that the scheme promised."

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Re:Covered before on slashdot, a year ago. by oodaloop · 2013-07-24 00:50 · Score: 5, Funny

So do I:

http://yro.slashdot.org/comments.pl?sid=4009033&cid=44369347

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Re:Legal by XenithOrb · 2013-07-24 00:53 · Score: 5, Insightful

This really has nothing to do with bitcoin itself, and is just someone trying to use them to scam people. Nothing new here.
Re:Legal by Archangel+Michael · 2013-07-24 01:16 · Score: 5, Insightful

Never underestimate the power of greed to suspend normal thinking processes.

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