First Ever Bitcoin Ponzi Scheme Lands Texas Resident with Federal Charges

On Thursday, November 6th, a Texas man was charged for a Bitcoin Ponzi scheme created to defraud his investors in the First Pirate Savings and Trust.

This will be the first federal criminal securities fraud involving Bitcoin, a completely internet-based currency with no central governing body.

Trendon Shavers, 32, faces federal charges including misappropriating 146,000 of the 764,000 bitcoin, which was worth $4.5 million between September 2011 and September 2012, when Shavers allegedly promised “absurdly high” interest rates for the digital currency.

Shavers, who went by the alias “pirateat40,” allegedly gained control of close to 7% of the bitcoin market by promising investors in his bank 7% weekly interest, which amounted to 3,641% annualized, with the promise that the investors’ money could be withdrawn at any time.

Instead, Shavers used new investor money to repay old investors, which is a classic Ponzi scheme move. He also used much of the investor money on personal expenses such as a BMW M5 sedan, spa treatments, casino visits, and $1,000 dinner at Gallagher’s Steakhouse in Las Vegas.

“Trendon Shavers managed to combine financial and cyber fraud into a bitcoin Ponzi scheme that offered absurdly high interest payments, and ultimately cheated his investors out of their bitcoin investments,” U.S. Attorney Preet Bharara said in a statement. “This case, the first of its kind, should serve as a warning to those looking to make a quick buck with unsecured currency.”

Shavers had around 100 investors in his Bitcoin Ponzi scheme.

“Shavers used a new currency, but the same old reprehensible tricks,” FBI Assistant Director in Charge George Venizelos said.

The federal charges for the Bitcoin Ponzi scheme stem from a civil case brought by the Securities and Exchange Commission.

The Strom Law Firm Can Help With South Carolina Federal Criminal Charges, Including Indictments for Ponzi Schemes

The South Carolina federal criminal defense attorneys at the Strom Law Firm, LLC will fight to protect your rights and your personal and professional future.

Whether you are charged with:

• a computer crime
• mail fraud, wire fraud, or bank fraud,
• a RICO violation
• a drug crime,
• tax fraud
• making a false statement to a federal agent,

or any other South Carolina Federal criminal charges, you are likely facing a personal, family, social, business, and/or financial crisis unlike any you have ever faced before.

It is also important that you speak with a competent federal criminal defense attorney before discussing anything with a Federal agent, as you may be prosecuted for any false statements made to a Federal agent. Remember, Martha Stewart did not go to prison for insider trading; she was convicted of making a false statement to a Federal agent. This is known as a 1001 violation.

For experienced Columbia, South Carolina criminal defense attorneys who will fight for your rights and work to have your charges reduced or even dismissed, contact the federal charges attorneys at the Strom Law Firm, today. We offer a no-cost, confidential consultation to discuss our experience and knowledge of the system can help you. 803.252.4800