Another Bitcoin millionaire is captured as the SEC tightens their net further. Trendon Shavers of the Bitcoin Savings and Trust has been arrested in Texas and accused of running a Ponzi scheme by the Securities and Exchanges Commission.
Bitcoin Savings and Trust promised a weekly 7% return to investors willing to buy their options. Shavers is alleged to have sold the majority of his Bitcoin investment options via business drummed up on forums such as Bitcointalk where 100 whales decided that Bitcoin Savings and Trust was a good deal. This allowed him to collect a whopping 700,000 Bitcoins from the scheme, a sum that dwarfs even the Ethereum presale.
Shavers has been fined $40 million by a judge in Texas and in New York has had charges of one count of securities fraud and one of wire fraud brought against him. Each of these carries a potential penalty of 20 years in prison and fines of $5 million.
A fool and his money are easily parted
According to the US Attorney’s Office in New York, 48 of the 100 investors lost money. But this figure raises questions about the nature of SEC investigations. Cryptocurrency is a high risk fledgling investment industry; if Shavers managed to lose less than half of his clients’ money in such an environment then we might ask if he truly deserves to be hauled over the coals.
The Bitcoin whales must, or should have known what they were letting themselves in for. Perhaps it is the case that rich people like to play the cryptocurrency markets when everything is going well but want to run to the authorities when they make idiotic decisions about giving thousands of dollars to strangers on web forums. It is as if they believe the casino should always be stacked in their favour, basically like the way things are on Wall Street.
We also have to wonder if the SEC simply see Bitcoin ‘schemes’ as an easy target, but the justice of arresting such people seems questionable because of the uncertain nature of Bitcoin regulation particularly at the time when this crime was alleged to have taken place. It is not that genuine fraudsters should not be punished, they should. But why is FinCEN targeting Bitcoiners for MSB infractions, while the SEC is targeting Bitcoiners for Securities Fraud? Either something is a stock or a currency, or neither.
If Bitcoin is not a recognized currency or medium of exchange, how can someone be prosecuted for conning another person out of Bitcoins? In the interests of clarity and justice we must have some clear legal guidelines across the board. It is said that ignorance of the law is no defence, but in terms of cryptocurrency it often feels like everyone is ignorant of the law, including sections of the US justice system.
At today’s prices the value of Shavers’ Bitcoins would be worth almost $250 million, so perhaps he is not worried about paying his fines after all.