In all things, Bitcoin Trendon Shavers, the man behind Bitcoin Savings and Trust, a proven Ponzi Scheme, has pleaded guilty. The Texas resident will spend 18 months in prison for defrauding people into investing over 764,000 Bitcoins or the equivalent of 4.5 million United States Dollars at the time of investment
Judge Lewis A Kaplan also ordered Shavers to pay back 1.23 million United States Dollars to 48 of his investors who lost money in what can be described as a ‘Classic Ponzi Scheme’ between 2011 and 2012.
Bitcoin Savings & Trust
Launched in November of 2011 as First Pirate Savings & Trust shavers who went by the alias, ‘Pirate,’ claimed to be selling Bitcoin to local buyers in his area. He started Bitcoin Savings & Trust to sell more Bitcoin to these unknown wealthy buyers. Or so he claimed. By selling the invested Bitcoins at a high rate and then rebuying them at the market price, Shavers promised his investors a high-yield interest rate of 7% per week on their investment. The high-yield interest rate alone attracted many investors. Over 500,000 bitcoins were invested into Bitcoin Savings & Trust according to Shavers.
After receiving the large amount of Bitcoins, he found his transactions to be challenging and expensive. Shavers attempted to lower his interest rate to handle the demand. However, this caused a lot of his investors to pull their investments. Unable to pay Shavers proceeded to close Bitcoin Savings & Trust. On August 28, 2012, he announced that he had defaulted on the investments.
Shavers reportedly used the Bitcoin funds he received to pay off early investors and on his leisurely activities. It has been documented that the money from his scheme was used for his online gambling entertainment and expensive spa sessions.
The Moral of the Story
When it comes to handling your Bitcoins or engaging in any financial investment, you must consider all possibilities. Chances are if something seems far too good to be true, the chances are that it is.