Bitcoin

Last week, U.S. Magistrate Judge Amos Mazzant, a federal judge in Texas, ordered Bitcoin Savings and Trust and its owner, Trendon Shavers, to pay $40.7 million after the SEC proved that the company, which sold investments using bitcoins, was in reality a Ponzi scheme. According to Mazzant, Shavers "knowingly and intentionally" used the company "as a sham and a Ponzi scheme." Shavers mislead investors regarding the use of their bitcoins, the methods he would use to acquire promised returns, and the safety of their investments. According to the SEC, Shavers used the online name "pirateat40" to acquire more then 732,000 bitcoins between February 2011 and August 2012, guaranteeing investors up to seven percent weekly interest to be paid based on his ability to trade bitcoins. Shavers, however, actually used new bitcoins to pay back previous investors, moved some of the bitcoins to his personal accounts at the now-defunct Mt. Gox exchange among other places, and used the rest to pay [...]