On Tuesday, the Securities and Exchange Commission (SEC) charged Trendon Shavers, a.k.a. Pirateat40, with operating a 700,000 Bitcoin Ponzi scheme. At today’s prices that would represent more than $65 million, but the company that Shavers operated — Bitcoin Savings and Trust — went belly up a year ago. Back then, the Bitcoins would have been worth about $5 million.
But Shaver suffered losses in his day trading, and by August of last year, he shut down operations and promised to return Bitcoins to investors.
The SEC said that Shaver returned about 500,000 Bitcoins to investors, but made off with another 200,000. Shaver couldn’t be reached immediately for comment, and he did not respond to a message left with his father on Tuesday.
In retrospect, the tagline on his Bitcoin Forum profile should have been a giveaway: The icon was a peg-legged pirate skeleton with a parrot on its shoulder. The quote: “Yes I am a pirate, 200 years too late.”
In conjunction with the charges against Shaver, the SEC issued an alert about the dangers of virtual currency Ponzi schemes. “We are concerned that the rising use of virtual currencies in the global marketplace may entice fraudsters to lure investors into Ponzi and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions,” the SEC said in this alert.
Update: A reader points out that Shaver’s pirate references come from a Jimmy Buffett song.
Complaint by WiredEnterprise
According to the SEC, Shavers, 30, managed to get 700,467 Bitcoins from investors by posting on discussion forums and offering an astounding return on investment — 1 percent per day. He said that he grossed over 10 percent per week by trading Bitcoins with “groups of people that want to be off the radar, buy large quantities, and instant availability.”
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