Trendon Shavers pleaded guilty to defrauding investors out of millions of dollars in what U.S. officials are calling a first-of-its-kind Ponzi scheme involving the bitcoin virtual currency.
Shavers, 33, was accused of raising 764,000 bitcoins by promising returns as high as 3,641 percent through his Bitcoin Savings and Trust company. He instead allegedly used the money to make payments to previous investors while also funding his personal lifestyle, including spa treatments and gambling in Las Vegas. Shavers’ victims lost $4.5 million in the scheme.
Assistant U.S. Attorney Michael Ferrara said Monday the government’s evidence against Shavers included electronic messages as well as bank records. Federal investigators determined Shavers invested some of his victims’ funds with Mt. Gox, a digital currency exchange based in Japan, according to Ferrara.
Mt. Gox filed for bankruptcy in Japan in February 2014 after disclosing it couldn’t account for about 850,000 units of the virtual currency
Shavers faced as long as 20 years in prison on the securities fraud charge. He’s scheduled to be sentenced by U.S. District Judge Lewis Kaplan on Feb. 3. Under a deal struck with the U.S., Shavers agreed not to challenge any sentence from 33 months to 41 months. He also agreed to pay a $5 million fine.
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