US Secretary and Exchange Commission (SEC) discovers and sues Texan thought to be running Ponzi scheme using Bitcoin.
Texan man, Tendon T. Shavers, has been accused of running a Ponzi scheme in which he collected 700 000 Bitcoin from investors, starting from September 2011 through “Bitcoin Savings and Trust” (the company) and unlawfully used investment funds for investor withdrawals and for his own personal use. He also deceived investors into believing that they could expect 7% interest, weekly, on supposed trades, including selling Bitcoin to people who wanted to buy quickly or in large quantities “off the radar”.
The SEC said that the 700,000 Bitcoin was worth over $4.5 million, in 2011 and 2012, when the investments were sold. Today, the value of 700,000 Bitcoin is well over $60 million.
Because the virtual currency (with its lack of regulation and its anonymity) is growing in strength and usage, with investors such as the Winkelvoss brothers (who were involved in Facebook lawsuit with Mark Zuckerberg), investing in the well known digital currency, the question of Bitcoin and Fraud is a hot top. It is believed to be opening new and unknown criminal windows of opportunity.
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But the SEC are confident about weeding out the likes of Shavers: “Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws.” Andrew Calamari, director of the SEC’s New York office.
Let’s hope that the SEC and other related organizations are up to the challenge. In any event, end-users and merchants should stay alert when it comes to Bitcoin “investment opportunities” and other less than legitimate looking opportunities.