Bitcoin Savings & Trust (BS&T) operator Trendon Shavers, who has allegedly been operating a bitcoin scam and Ponzi scheme, has plead not guilty during his fraud trial in a New York District court. He is charged with one count of securities fraud and one count of wire fraud.
Shavers could pay millions of dollars in fines and penalties, along with facing up to 40 years in prison if convicted. This marks Shavers’ second trial in securities fraud, as he was previously found guilty of securities violations in September last year when he was ordered to pay 40 million dollars in fines.
Bitcoin Scam Operations
According to the indictment, Shavers solicited investments for BS&T, which he marketed as a hedge fund and promised outsized returns to investors. He has allegedly paid earlier investors with proceeds from newer ones, creating a Ponzi scheme operation for his bitcoin scam.
In November, he was arrested in connection with charges filed by the US Attorney’s Office in Manhattan but was released on bail soon after. His court hearing is scheduled this week.
According to the court filing, Shavers solicited more than 764,000 BTC from investors through online mediums as well as in-person events. Reports indicate that Shavers used these funds from this bitcoin scam for personal use to fund his travel and gambling expenses.
In addition, Shavers traded some of the funds through the Japan-based Mt. Gox bitcoin exchange then transfer the funds to a personal bank account through the third-party payment processor Dwolla. The court filing indicated that Shavers lost roughly $434,000 in dollar equivalent to his bitcoin trading funds on Mt. Gox and misappropriated around $147,000 in bitcoin for personal use.
During the peak of his bitcoin scam operation under BS&T, Shavers was able to hold approximately 7% of all the bitcoin in circulation at that point in time.