The Securities and Exchange Commission has filed its first fraud lawsuit involving the virtual currency, claiming it was used in a Ponzi scheme. The SEC filed suit against Trendon T. Shavers, founder and owner of Bitcoin Savings and Trust, saying he raised more than 700,000 BTC from 66 investors. According to the SEC’s suit, that amounted to $4.5 million in cash based on the daily Bitcoin price at the time, according to the SEC.
SEC Cracks Down on Bitcoin Ponzi Scheme
One of the most common and likely ill-informed criticisms of Bitcoin is that the virtual currency is nothing more than a Ponzi scheme. A minimal amount of research into what Bitcoin is and how it functions should, however, dispel any reasonable doubt that Bitcoin itself is a scam. Yet that does not mean that Bitcoin cannot be used to construct traditional scams like the Ponzi scheme. The SEC has filed a suit against one such scammer who operated an enterprise called the Bitcoin Savings and Trust. From Entrepreneur: