One of the most famous cases in the short history of Bitcoin has finally been decided in court. An American judge sentenced Trendon Shavers – best known as ‘pirateat40’ -, to pay a combined $40.7 million for running a Ponzi scheme.
Shavers was the owner of Bitcoin Savings and Trust, a company that sold investments using BTC and was investigated by the Securities and Exchange Commission in 2013. According to the SEC, the firm was a Ponzi scheme that raised more than 732,000 BTC between February 2011 and August 2012, while promising investors up to seven percent in weekly interest.
Magistrate Judge Amos Mazzant, a Texas-based federal judge, announced the penalty this Thursday (18th). Mazzant decided Trendon Shavers is far from innocent. According to the judge, the online suspect known as ‘pirateat40’ “knowingly and ntentionally” operated his company “as a sham and a Ponzi scheme” and misleaded investors regarding the use of their cryptocurrency, CNBC reports.
The SEC investigation shows Shavers used new Bitcoin to repay the first investors, while diverting some of the old cryptocurrency to personal accounts stored at the defunct exchange Mt. Gox and using some of the funds to pay for rent, food and other personal expenses.
For that reason, Mazzant considers that Shavers and his Bitcoin Savings and Trust are liable to give up $38.6 million of illegal profits, along with $1.8 million in interest. “The collective loss to BTCST investors who suffered net losses (there were also net winners) was 265,678 BTC, or more than $149 million at current exchange rates“, added the judge.
Shavers, who lives in the state of Texas, guaranteed the safety of their investments and promised the clients he would generate revenue, which he never did. However now is not clear if he is going to be able to pay the amount defined in court.
In the meantime, it was also announced that Shavers’ lawyer withdrew from the civil case.