Bitcoin Ponzi Schemer Duped Investors: ‘It’s Growing, It’s Growing!’S

The Securities and Exchange Commission has charged a man in Texas named Trendon T. Shavers with "defrauding investors in a Ponzi scheme involving Bitcoin," to the tune more than $4.5 million.

Investors were apparently unperturbed by the fact that Shaver's company, Bitcoin Savings and Trust, offered and sold Bitcoin-denominated investments online under the monikers “Pirate” and “pirateat40.” Perhaps because Shavers adamantly insisted that buying and selling Bitcoin was booming opportunity that posed no risk at all:

Shavers posted general solicitations on a website dedicated to Bitcoin discussions, and he misled investors with such false assurances about his investment opportunity as “It’s growing, it’s growing!” and “I have yet to come close to taking a loss on any deal,” and “risk is almost 0.”

Contrary to what he told investors, however, Shavers wasn't actually trading the virtual currency, as much as he was running a regular 'ole U.S. dollar-based Ponzi scheme, only with Bitcoin:

The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities. In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments. Shavers also diverted investors’ Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay his personal expenses.

The value of Bitcoin has dropped considerably since the fervor in April, when it skyrocketed to more than $237. (It's currently trading at around $93.) However, Shaver's investments were bought and sold between 2011 and 2012.

Bitcoin Ponzi Schemer Duped Investors: ‘It’s Growing, It’s Growing!’S

So just imagine what shenanigans will come to light when the feds catch up to 2013.

To contact the author of this post, please email nitasha@gawker.com.

[Image via Getty]