Trendon Shavers Sent to Jail Over Bitcoin Savings and Trust Ponzi Scheme

 Trendon Shavers deceptively raised more than BTC 764,000, worth over half a billion USD at current Bitcoin exchange rates. 

  The first ever criminal fraud case in the U.S involving cryptocurrency has been finally closed with the sentencing of Texan Trendon Shavers. A Manhattan court sent him to sixteen  months in jail time as well as  $1.23 million in restitution to his  victims. The judge in the case did not accept the claim that Shavers  just “messed up”, called his behaviour a “class Ponzi scheme”, and told  him: “You defrauded innocent people. You did it, in the last analysis,  for personal gain.” 

 

Background

Between September 2011 and September  2012, Shavers’ Bitcoin Savings & Trust (BTCST) allegedly raised  764,000 bitcoins, worth roughly $4.5 million at the time (and over half a  billion USD at current Bitcoin exchange rates), from clients that  trusted him to invest the funds for them. Soliciting on Bitcoin Forum he  promised returns of 7% per week, or 3,641% per year, claiming to employ  market arbitrage strategies. However, according to the American  criminal authorities, he in fact used new investors’ money to pay back  prior investors. Some funds were allegedly invested on MtGox,  at one point the world’s largest bitcoin exchange, which collapsed in  February 2014. He also allegedly spent funds on lavish personal items  and expenses such as a BMW M5 and casino visits. At least 48 investors  reportedly suffered losses worth about $1.23 million at the time, but  considerably more than that as Bitcoin soared in value since 2012. Shavers was fined $40.7 million by the  US Securities and Exchange Commission (SEC) in September 2014, was  arrested in November 2014 and was forced to sign a plea deal with his prosecutors in September 2015 after originally pleading not guilty back in March 2015.  

financemagnates.com