A federal judge has ruled that Bitcoins (BTC) are a form of money and can be regulated by the authorities, while establishing whether Bitcoin Savings and Trust (BTCST), formerly known as First Pirate Savings and Trust, falls under the jurisdiction of the US Securities and Exchange Commission (SEC).
The SEC is accusing Trendon Shavers from McKinney, Texas, of running BTCST – a massive Ponzi scheme which defrauded investors of 263,104 BTC in 2011 and 2012, worth $1,834,303 at the time. Today, this amount of Bitcoins would be worth more than $23 million (£14.8m).
Federal investigators said this was the first Ponzi scheme they have uncovered that involves Bitcoins. Shavers previously claimed that BTC wasn’t a currency, meaning the case couldn’t be investigated by SEC.
Bitcoins are a digital currency based on an open-source, peer-to-peer Internet protocol, first introduced in 2009 by an anonymous developer known under the alias ‘Satoshi Nakamoto’. Bitcoins cannot be traced, and their ownership cannot be established. This has led to their popularity among certain Internet subcultures, anarchists and even real-world criminals. Recently, a number of major online businesses have started to accept BTC as a form of payment, improving its reputation.
SEC says that in a typical Ponzi scheme fashion, BTCST used Bitcoins contributed by new investors to make purported interest payments and cover withdrawals on outstanding investments. The service shut down in August 2012, with the founder subsequently arrested.
“Fraudsters are not beyond the reach of the SEC just because they use Bitcoins or another virtual currency to mislead investors and violate the federal securities laws,” Andrew Calamari, director of the SEC’s New York Regional Office, said in a statement last month.
In his defence, Shavers argued that BTCST investments weren’t securities as defined by the Federal Securities Laws because Bitcoin isn’t “money”, so it can’t be regulated by the authorities. SEC responded by saying that the BTCST investments fell under the definition of securities, and now this point of view has been confirmed by the court.
“It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the US dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money,” wrote Judge Amos Mazzant in a memorandum opinion.
Last month, Patrick Murk, general counsel at the Bitcoin Foundation, told the Bitcoin London conference that recent attention of US regulators had made BTC more “legitimate”, and called it a “watershed moment” for the industry. He also acknowledged that additional regulation would make running a BTC business that much harder.
What do you know about Bitcoin? Take our quiz!
Suspended prison sentence for Craig Wright for “flagrant breach” of court order, after his false…
Cash-strapped south American country agrees to sell or discontinue its national Bitcoin wallet after signing…
Google's change will allow advertisers to track customers' digital “fingerprints”, but UK data protection watchdog…
Welcome to Silicon In Focus Podcast: Tech in 2025! Join Steven Webb, UK Chief Technology…
European Commission publishes preliminary instructions to Apple on how to open up iOS to rivals,…
San Francisco jury finds Nima Momeni guilty of second-degree murder of Cash App founder Bob…
View Comments
The Botcoin Robot is the world’s very first and unique bitcoin robot that buys and sells bitcoins filling your pockets with money. This has nothing to do with forex, binary options or any form of been there, done that conventional trading.. it`s much superior and entirely new! You can be a true pioneer!
Whether you want it or not by you reading this post means you could be one of the first to make a lot of money on the people that come after you! The Bitcoin Robot is a unique concept that has very little to do with trading in the conventional way! It is based entirely on the "Human Greed" factor. Making You earn while 90% of the people that run towards bitcoin pay too much to own bitcoins while filling your pockets in the process!
Go get the full scoop here: http://ezhomefunds.com/btcsm