Bitcoin Ponzi Scheme
A Texas man pleaded guilty to defrauding people out of $4.5 million in what the U.S. said was a first-of-its-kind Ponzi scheme involving investments in the virtual currency bitcoin.Shavers is scheduled to be sentenced in February.
Trendon Shavers, 33, founder of Bitcoin Savings and Trust, raised at least 764,000 bitcoins by promising investors a return of as much as 3,641 percent, prosecutors said. Instead, he used bitcoins from new investors to cover payments owed to earlier clients, while also paying for his own Las Vegas gambling and spa treatments, according to the U.S.
At the peak of his scheme in 2011 and 2012, Shavers held about 7 percent of all bitcoins in circulation, prosecutors said.
“I know what I did was wrong and am very sorry,” Shavers said at a court hearing before U.S. Magistrate Judge Sarah Netburn in Manhattan Monday.