The federal government on Thursday announced its first bitcoin securities fraud case, accusing a Texas man of engineering a Ponzi scheme by getting people to turn over their bitcoins in return for promises of high interest rates and the ability to recoup their investment at any time.
Trendon Shavers, of McKinney, awaited an initial court appearance in Texas on securities fraud and wire fraud charges that were outlined in a criminal complaint unsealed in U.S. District Court in Manhattan.
"This case, the first of its kind, should serve as a warning to those looking to make a quick buck with unsecured currency," U.S. Attorney Preet Bharara said in a news release.
Bharara said the 32-year-old Shavers combined financial fraud and cyberfraud into a bitcoin Ponzi scheme offering "absurdly high interest payments, and ultimately cheated his investors out of their bitcoin investments."
At the peak of the scheme, Shavers possessed about 7 percent of all bitcoin in public circulation, prosecutors said.
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