Miami Investment & Fraud Attorneys
305.372.9700
1 SE 3rd Ave # 1200
SunTrust International Center
Miami, Florida 33131

Texas Man Charged in Bitcoin Securities Fraud Case

A Texas man has pled guilty to what federal authorities describe as the first bitcoin-related securities fraud case, according to a U.S. News report.  Bitcoin is a digital currency that operates independent from a central bank. Encryption techniques are used to regulate how many units are generated and verify the transfer of funds. The Texas man in this case founded and operated Bitcoin Savings and Trust.  He raised more than 764,000 bitcoins (about $188 million) from Investors.

On his 33rd birthday, Trendon Shavers, the Texas man mentioned above, pled guilty before a federal judge and admitted to making false statements to investors. These self-confessed accusations included promising investors as much as one percent daily gains in exchange for entrusting him with their bitcoins. Instead of investing the bitcoins, Shavers paid prior investors with the funds from new investors – a classic hallmark of a Ponzi scheme.  In a separate civil action filed by the SEC,  Shavers was ordered to pay more than $40 million in disgorgement and a penalty of $150,000.

If you or someone you know has lost substantial value of financial investments due to the negligence or fraud of another, contact an experienced investment fraud attorney right away.

Ponzi Schemes Explained

Ponzi schemes are fraudulent investments that often promise high returns to investors for little or no risk. In reality, however, those profits are simply unachievable and no investments are made. Instead money from new investors is used to pay the professed “dividends” to prior investors. Because of its type of financial structure, a Ponzi scheme requires a constant flow of new money from investors in order to sustain scheme. Ponzi schemes often collapse when the pool of new investors dries out.

Once a Ponzi scheme unravels, the results will likely trigger the attention of several state and federal agencies. With the authority to pursue legal action against the accused, these organizations include:

  • Financial Fraud Task Force – includes a coalition of 94 U.S. Attorneys and 20 federal agencies responsible for coordinating investigations and prosecutions of crimes;
  • Internal Revenue Service (IRS) –if the crime included tax fraud, this agency gets involved;
  • Securities & Exchange Commission (SEC) – conducts investigations of securities fraud;
  • Federal Trade Commission (FTC) – investigates consumer fraud cases; and
  • Financial Industry Regulatory Authority (FINRA) – brings disciplinary actions against registered individuals and firms, levies fines and orders restitution to harmed investors.

Individuals accused of conducting a Ponzi scheme may be subject to strict federal sentencing guidelines. Punishment includes substantial prison terms as well as restitution, which are based on the amount of money involved in the fraudulent scheme. Generally, the penalties incurred increase in proportion to the number of victims mislead as well as the amount of financial loss suffered.

Fighting to Recover Your Loss

The Miami legal professionals at Carlson & Associates, P.A. represent investors in all types of cases including investment fraud, unauthorized trading, and Ponzi schemes to name a few. Being a victim of fraudulent investment can be a difficult reality. Our knowledgeable and experienced investment fraud attorneys have handled cases for claimants from the trial through appellate levels in state and federal courts, as well as arbitration before FINRA. Each case is as different as the individuals involved. Do not wait to obtain competent legal advice on the options available to you. Call (305) 372-9700 today for your initial case evaluation.

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