A man who promised a 1 percent return per day to lure investors into a Bitcoin-linked Ponzi scheme pleaded guilty on Monday in Manhattan in a case officials said was the first federal securities fraud case involving the digital currency.
Trendon Shavers, 32, of McKinney, Texas, was accused of fraudulently raising 764,000 Bitcoin -- the equivalent of $4.5 million -- in 2011 and 2012 for his Bitcoin Savings & Trust scheme, and using the money to pay back earlier investors, invest himself and pay personal expenses.
"I made false statements to get people to invest Bitcoin," Shavers told U.S. Magistrate Sarah Netburn in Manhattan federal court. Prosecutors said at one time he controlled 7 percent of all Bitcoin in circulation, but in the end 48 of 100 investors lost money.
Shavers faces up to 20 years in prison, and federal guidelines call for him to serve 33 to 41 months. His sentencing was scheduled for Feb. 3.