Bitcoin Ponzi Scheme Ruled Securities Fraud in SEC Win
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A Bitcoin Ponzi scheme amounted to securities fraud that can be challenged by federal regulators, a judge ruled as he fined a Texas man $40.6 million and blocked him from further illegal trading of the virtual currency.
The case was the first to determine whether the U.S. Securities and Exchange Commission, which filed the lawsuit, has the authority to regulate transactions in virtual currency, according to a lawyer for the defendant, Trendon Shavers. U.S. Magistrate Judge Amos L. Mazzant in Sherman, Texas, agreed with the SEC that Bitcoin Savings and Trust, operated by Shavers from his home in McKinney, Texas, was a Ponzi scheme.