The Securities and Exchange Commission has charged Trendon T. Shavers as the leader of Ponzi scheme involving bitcoins. The suit filed by the SEC alleged that Shavers was running a fund that collected the controversial currency from investors promising a 7 percent return. When Shavers received these investments, the "money" went toward personal expenses. At the time, the actual worth of these coins was an estimated $4.5 million but could have skyrocketed up to $60 million in today's market.
Codenamed "pirateat40," Shavers raised suspicions when his company called Bitcoin Savings and Trust shut down.The SEC's report indicated that Shaver was able to obtain about 700,467 bitcoins from investors by posting on discussion forums seeking promising the best return on investment. His dealings ended up being with people who wanted "to be off the radar, buy large qualities and have it with instant availability." Ultimately, his downfall was that he was very sloppy in transferring his funds to his day-trading account.
The complaint the SEC filed, which can be seen below, also provided a final warning. The SEC is concerned that scams involving this digital currency are on the rise. The main reason for this being that there is barely any oversight over bitcoins so it might attract more scammers. Shavers has yet to comment and the SEC is reviewing the case. No trial date has been announced.