A Texas federal judge has ordered Bitcoin operator Trendon Shavers to pay a $40 million dollar fine after the Securities and Exchange Commission established that his company, Bitcoin Savings & Trust, was nothing more than a Ponzi scheme.
In yesterday’s decision, US magistrate Judge Amos Mazzant said Shavers “knowingly and intentionally” operated his business “as a sham and a Ponzi scheme”, by misleading investors and promising them impossible returns on their investments.
Trendon Shavers, of McKinney, Texas, ran the Ponzi scheme through his company Bitcoin Savings & Trust for at least a year and a half, between 2011 and 2012. When he shut the business down in 2012, angry investors started complaining to the SEC.
The judge ruled that the total loss to investors was around $149 million. The fine was adjusted based on bitcoin’s average rate since the business collapsed. His ability to pay the judgment is unclear.
Bitcoin is a software-based online payment system described by Satoshi Nakamoto in 2008 and introduced as open-source software in 2009. Payments are recorded in a public ledger using its own unit of account, which is also called bitcoin.
Nakamoto disappeared in early 2010 with over 1 million bitcoins that he had mined while maintaining the lion’s share of the network hashrate.
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