Bitcoin Ponzi scheme operator pleads guilty to fraud

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Bitcoin Ponzi scheme operator pleads guilty to fraud

Digital currencies like bitcoin are still marking many firsts, and that unfortunately includes the first crimes. Case in point: Trendon Shavers has pleaded guilty to the first-ever US securities fraud charges involving bitcoin. The Texan was accused of operating a Ponzi scheme that swiped more than $4.5 million from investors. He promised enormous returns on investment (a whopping 3,641 percent per year) to those who helped fund a stock market campaign, but was really using the money from newer customers to pay existing ones. To no one's surprise, this deception didn't last long. Nearly half (48) of the 100 investors suffered losses, and Shavers even used $147,000 of their funds to buy himself luxuries like a BMW M5 sedan.

The outcome is small potatoes next to that of many conventional fraud cases, and it's ending with a whimper -- Shavers originally pleaded not guilty half a year ago. Nonetheless, the trial could have a significant influence on future fraud cases. Besides establishing some legal precedents, it may send a message to other would-be fraudsters hoping that virtual schemes are relatively safe from prosecution. Shavers was originally fined $40.7 million for his actions, and it's doubtful that his confession will get him off the hook for most (if any) of that amount.

[Image credit: Thomas Trutschel/Photothek via Getty Images]

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