A Texas man was arrested yesterday and charged with running a bitcoin Ponzi scheme that in its height accounted for about 7 percent of the virtual currency in public circulation, the Manhattan U.S. Attorney said, according to a Wall Street Journal report today. Trendon Shavers, under the alias pirateat40, raised more than 760,000 bitcoins in investments through his firm, Bitcoin Savings and Trust, from at least Sept. 2011 to Sept. 2012, according to court documents. The investments were valued at more than $4.5 million based on the price of a bitcoin during the scheme. Shavers has been charged with one count of securities fraud, carrying a maximum sentence of 20 years in prison and a fine of up to $5 million, and wire fraud, carrying a maximum penalty of 20 years in prison and a fine of up to $250,000. In September, Shavers was fined more than $40 million and ordered to pay a civil penalty of $150,000 in relation to a U.S. Securities and Exchange Commission civil suit. Shavers sold bitcoin-related securities from his home in McKinney, Tex., promising investors up to 7 percent in weekly interest. In the end, at least 48 of about 100 investors lost all or part of their investment, according to the U.S. Attorney’s office.
