Bloomberg Law
Sept. 22, 2015, 4:00 AM

Bitcoin Firm Chief Admits to First-of-Its-Kind Ponzi Scam

A Texas man pleaded guilty to defrauding people out of $4.5 million in what the U.S. said was a first-of-its-kind Ponzi scheme involving investments in the virtual currency bitcoin (United States v. Shavers, S.D.N.Y., 1:15-cr-00157, guilty plea 9/21/15).

Trendon Shavers, founder of Bitcoin Savings and Trust, raised at least 764,000 bitcoins by promising investors a return of as much as 3,641 percent, prosecutors said. Instead, he used bitcoins from new investors to cover payments owed to earlier clients, while also paying for his own Las Vegas gambling and spa treatments, they said.

At the peak of his ...