If anything good has come out of the Ponzi scheme set up by Trendon Shavers – more known in the cryptocurrency world as ‘pirateat40’ – is the decision of a Texas judge, who has recently ruled that “Bitcoin is a currency or form of money”, meaning that the Securities and Exchange Commission (SEC) can go ahead and sue the suspect.
You can check the document signed by the North-American magistrate here. In this memorandum, judge Amos L. Mazzant makes an analysis of the case regarding the Bitcoin Savings and Trust (BTCST), a “business” founded and operated by Shavers.
The suspect offered and sold Bitcoin-denominated investments through the platform, managing to gather at least 700,000 BTC, a value that is equivalent to almost $63 million at today’s prices. The suspicions were obvious, but the SEC was waiting for a judicial opinion on the matter. Finally, the judge released the following opinion:
It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.
Bitcoin Examiner spoke with Marco Santori, chairman of the Regulatory Affairs Committee at the Bitcoin Foundation, about this issue. “It is important to distinguish between the statement ‘Bitcoin is money’ and ‘Bitcoin can be used as money’. I don’t think it is controversial to say that ‘Bitcoin can be used as money’. People use Bitcoins in place of money all the time. I think that this limited, functional statement is obvious”, the attorney said.
However, “the controversial statement is whether Bitcoin is money. When all is said and done, Bitcoin is all and only what it is. How we choose to explain it to people will depend on the metaphor we choose: money, currency, shared ledger, commodity, peer-to-peer cash, electronic gold – pick your abstraction”.
But what does this decision means for the future of cryptocurrency? According to the expert, this must be seen as an isolated decision. “The Court was determining a very narrow, preliminary issue: whether Bitcoin-denominated investments are ‘securities’ so as to come under the jurisdiction of the federal courts of the United States. To be a ‘security’, the product must be ‘an investment of money’. The Court found that, for this purpose, ‘Bitcoin is a currency or form of money’. Technically, this is a very limited holding that ought to apply only to a narrow set of securities cases“, Marco Santori explains.
Nevertheless, judge Mazzant’s opinion might open the way for a change in the world of cryptocurrency. “Practically, though, lawyers, judges, policy makers and regulators can be expected to use it as a very broad precedent. For example, a financial regulator may use it to support their position that Bitcoin exchanging should require a money transmission license. A lawyer might use it in to convince a judge in a different state that his client’s stolen Bitcoins had real-world value, which would support a claim for damages. The implications are far-reaching”, he adds.
The main question is how will the North-American legal system look at a case like this? According to Marco Santori, “six months ago, ‘Bitcoins are unregulated’ might have been a fair statement. Today, it just isn’t true in the United States”.
The chairman of the Regulatory Affairs Committee says that “many non-US jurisdictions have decided not to regulate transfers of Bitcoin for the time being. That may (and is likely to) change as Bitcoin gains more mainstream acceptance. England and Germany, for example, have adopted a ‘wait and see’ approach. Here and now, in the United States, though, the Bitcoin industry is explicitly regulated by more than one government agency. Months ago, we knew that the Department of the Treasury chose to regulate it. Now we know that the Securities and Exchange Commission will regulate it as well”.