NEW YORK Trendon Shavers, founder of Bitcoin Savings and Trust, has been charged with fraud and accused of masterminding a $4.5 million Ponzi scheme, according to federal prosecutors in Manhattan who said it was the first U.S. securities-fraud prosecution tied to the electronic currency. <\/p>\n
Shavers, 32, who operated the firm that made virtual currency-based investments through the Internet, raised at least 764,000 bitcoins through his business, Manhattan U.S. Attorney Preet Bharara said in a statement. <\/p>\n
At the peak of the scheme, Shavers raised and had in his possession about 7 percent of all the bitcoins in public circulation, Bharara said. <\/p>\n
From September 2011 through September 2012, Shavers, using the name pirateat40, solicited investments in Bitcoin Savings on Bitcoin Forum, an Internet site where investment opportunities are posted, the U.S. alleged. <\/p>\n
Shavers allegedly offered investors who lent bitcoins to Bitcoin Savings as much as 7 percent interest weekly an annualized interest rate of 3,641 percent and investors were told they could withdraw their investments at any time, according to the statement. <\/p>\n
Shavers also claimed the investment by Bitcoin Trust would be used to support a market-arbitrage strategy that included lending bitcoins, trading bitcoins using online exchanges and selling bitcoins locally via private off-markets transactions, according to the U.S. <\/p>\n
Shavers in truth largely failed to execute the claimed market arbitrage strategy and failed to deliver the agreed upon rates of interest, according to prosecutors. <\/p>\n
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Bitcoin head charged in US securities case<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" NEW YORK Trendon Shavers, founder of Bitcoin Savings and Trust, has been charged with fraud and accused of masterminding a $4.5 million Ponzi scheme, according to federal prosecutors in Manhattan who said it was the first U.S. Continue reading