Trendon Shavers, a 33 year old Texas man, was sentenced by Manhattan federal court by Judge Lewis A. Kaplan for his “High Yield Investment Program” called Bitcoin Savings & Trust. In addition to the prison sentence, the judge also ordered him to repay $1.23 million to 48 investors.
Judge Kaplan said Shavers, who went by Pirateat40 and advertised on the popular forum BitcoinTalk.org , committed a serious crime but earned leniency through honest work to rectify his wrongdoing since his 2014 arrest. Shavers faced 40 years in prison, due to one count of wire fraud, before a September 2015 plea deal lowered the maximum possible sentence to 41 months.
Shavers offered investors a 7 percent weekly return on their bitcoin deposits in his scheme initially dubbed First Pirate Savings & Trust. Shavers disappeared in August 2012 after claiming the fund was too large for him to manage.
Authorities accused Shavers of receiving funds from new customers to pay out earlier customers, while sending funds to his personal bank, Dwolla, and Paypal accounts, as well as pre-paid credit cards.
Court documents demonstrate Shavers used $220,000 in bitcoins and money from investors to pay for his rent, car payments, groceries and family expenses.
“Applying a modern spin to an age-old fraud, Trendon Shavers used a bitcoin business to run a classic Ponzi scheme,” said the prosecutor, U.S. attorney Preet Bharara.
Judge Kaplan said Shavers carried out a “classic Ponzi scheme” by offering potential investors high returns to turn over their bitcoins, the cryptocurrency designed by Satoshi Nakamoto and released in 2008. According to authorities, Shavers possessed about 7 percent of all bitcoins in public circulation at the peak of the scheme.
According to Reuters , Shavers lamented to Judge Kaplan how he “royally messed up.”He added: “I don’t think this is something I’ll ever fully be able to […]
