Tag Archives: SEC

Meet the Bernie Madoff of Bitcoin: SEC Probes Bitcoin Ponzi Scheme

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Bitcoin Ponzi Scheme

SEC Charges Texas Man in Bitcoin Ponzi Scheme

The SEC has alleged that Texas-based Trendon T. Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers “Pirate” and “pirateat40.”  Shavers raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments were offered and sold.  Today the value of 700,000 Bitcoin exceeds $60 million.

The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities.  In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments.  Shavers also diverted investors’ Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay his personal expenses.

“Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed.”

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of Texas, Shavers sold BTCST investments over the Internet to investors in such states as Connecticut, Hawaii, Illinois, Louisiana, Massachusetts, North Carolina, and Pennsylvania.  Shavers posted general solicitations on a website dedicated to Bitcoin discussions, and he misled investors with such false assurances about his investment opportunity as “It’s growing, it’s growing!” and “I have yet to come close to taking a loss on any deal,” and “risk is almost 0.”  Contrary to the representations made to investors, BTCST was not in the business of buying and selling Bitcoin at all.

Below is the SEC complaint filing.


CC image by Abode of Chaos.

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Cruise Ship Startup Community Blueseed Gets Bitcoin Funding

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Blueseed Bitcoin Funding

Blueseed Continues Full Steam Ahead with Bitcoin Funding

Blueseed is a live/work/play startup community for 1000 entrepreneurs, on a cruise ship to be stationed 30 minutes by ferry from the coast of Silicon Valley.

The location is in international waters, outside U.S. jurisdiction, and allows entrepreneurs from anywhere in the world to start or scale their companies without needing U.S. work visas. Instead, easier-to-obtain B1/B2 business/travel visas will be used to arrive on Blueseed and to visit the mainland in order to connect with the Silicon Valley ecosystem.

Blueseed creates a new class of real-estate – technology-enhanced and ocean-based – and differentiates from existing business accelerators by creating an entire ecosystem (mentors, talent pool, investors, service providers etc.), and enabling a very close-knit community, modelled after university campuses. So far, with no dollars spent on marketing, over 1300 entrepreneurs from 400 startups in 66 countries have expressed interest.

Blueseed Announces Funding from Bit Angels

In light of last week’s major developments within the U.S. House of Representatives and U.S. Securities and Exchange Commission, Blueseed is announcing reaching a new milestone towards launching its startup ship for entrepreneurs – receiving the first investment from the first group of angel investors focused on the digital currency Bitcoin.

Last week, the House Republican Conference strongly opposed the Comprehensive Immigration Reform bill passed by the Senate, which among its 1198 pages included a section for granting an “INVEST” visa to international startup entrepreneurs. This development is unfortunately detrimental to the chances of a startup visa being enacted. Blueseed represents a viable, entrepreneurial alternative to this political problem.

Last week as well, the SEC announced that it will be lifting the ban on general solicitation, an 80-year old measure that has been preventing startups from publicly disclosing their ongoing fundraising campaigns. Blueseed will be able to take advantage of the opportunity to publicly announce its next fundraising round once the new provision becomes effective, in order to raise the amounts needed to launch the community.

Blueseed is also proud to announce receiving the first investment from Bit Angels, the first Bitcoin angel investors group. The group’s goal is fostering the growth of startups that promote Bitcoin, the decentralized digital currency. The Bit Angels regard Blueseed as an upcoming Bitcoin-friendly jurisdiction, with a streamlined legal and regulatory system, accelerating the growth of the Bitcoin ecosystem. In another first, Blueseed has received one investor’s contribution directly in Bitcoins. Leading the Bitcoin round was Jered Kenna, co-founder of Tradehill, the largest Bitcoin exchange in the U.S.

Learn more at Blueseed.

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