“Bitcoin Savings And Trust” Operator Pleads Guilty

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Last updated on May 15th, 2016 at 01:19 am

Trendon Shavers, a 33-year-old from McKinney, Texas, has pleaded guilty to the charge of running a massive Bitcoin-based Ponzi scheme.

If the name Trendon Shavers doesn’t sound familiar to you, you might remember him from his Bitcointalk postings around 2011-2012, where he went by the username “pirateat40”.

By the time Bitcoin Savings and Trust shut down operations, it had already raised over 764,000 Bitcoins during its lifetime. According to Reuters, that would work out to approximately $4,500,000 calculated using an average of the price of Bitcoin during that period.

At one point, Shavers was the sole owner of approximately 7% of the Bitcoins in circulation and he treated these “invested” coins as his personal slush fund, using them to pay for trips to Vegas, luxury cars and lavish dinners.

Pirateat40’s thread regarding his decision to close down Bitcoin Savings and Trust can still be found on BicoinTalk. The service was shut down on November 3, 2011, prompted by Shaver’s decision to decrease interest rates once his scheme became too big and thus, unsustainable.

After much consideration, I’ve decided to close down Bitcoin Savings & Trust.

Why?
The decision was based on the general size and overall time required to manage the transactions. As the fund grew there were larger and larger coin movements which put strain on my reserve accounts and ultimately caused delays on withdraws and the inability to fund orders within my system. On the 14th I made a final attempt to relieve pressure off the system by reducing the rates I offered for deposits. In a perfect world this would allow me to hold more coins in reserve outside the system, but instead it only exponentially increased the amount of withdrawals overnight causing mass panic from many of my lenders.

Thanks
I’d like to thank all of my lenders and PPT operators that were a key element in making Bitcoin Savings & Trust a success. Bitcoin has grown a lot since I started this and want you to know that you were a vital part in helping it grow.

The scheme promised investors a weekly 7% return on their deposits, a yearly interest rate of 3641% and set a high bar for future Bitcoin-related Ponzi schemes. Shavers claimed he was able to offer these rates thanks to arbitrage operations and needed the investments to increase his sale volume.

At the start of his trial in March of this year, Travers pled not guilty. He’s now made a plea deal under which he agrees not to appeal any sentence with under 41 months of prison time.

Coinbuzz

CoinBuzz provides news and analysis on Bitcoin and other digital currencies. Founded in 2014, the site has quickly become a leading source of information on digital currency technologies, businesses, markets, and regulation.

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