In case you’re not following closely, pirateat40 (AKA Trendon Shavers) has been formally charged by the SEC, and a judge has given the case a green light. The filed a “show cause” that seized Shavers’ assets before trial, and this is his real, unedited response to this action:
Defendant’s preliminary response to show cause
The court does not have jurisdiction because it is not within the securities law.
1) freezing Defendants’ assets;
It’s ridiculous for the court to freeze my assets that are required to pay rent, utilities, food, etc and be able to pay for an attorney. My wife does not work and cares for our two children.
2) directing Defendants to provide verified accountings to the Commission;
The court has no authority to order this because it is not within the jurisdiction and does not show a need for it.
3) authorizing expedited discovery concerning the location and extent of Defendants’assets;
Three days is too short and there is no reason for it based on other orders. This should be revised based and agreed to.
Have we mentioned he is appearing pro se in court? This should be amazing.
In his ruling, judge Amos Mazzant made the mistake of saying “It is clear that Bitcoin can be used as money” and bitcoiners have taken this to mean that the US court system, along with the rest of the world governments, have declared Bitcoin to be a real currency that will soon destroy the US Dollar, Euro, various Pesos, and so on. Some have simplified it to the point that they are just shouting “Bitcoin is MONEY” at no one in particular.
Federal judge declares Bitcoin "realest money ever" & sets fire to a pile of cash & laughs at idiot hell fuckers who still use USD, dancing
— Butt Coin (@ButtCoin) August 7, 2013
Every bitcoiner’s favorite scam artist, the venerable pirateat40, has been formally charged with defrauding people with… a Ponzi scheme! Shocking news, bitcoins being involved with a Ponzi scheme, but here it is, laid out by the evil feds, who are OK this time since they’re punishing the wicked instead of holding down captains of industry.
Washington D.C., July 23, 2013 — The Securities and Exchange Commission today charged a Texas man and his company with defrauding investors in a Ponzi scheme involving Bitcoin, a virtual currency traded on online exchanges for conventional currencies like the U.S. dollar or used to purchase goods or services online.
The SEC alleges that 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.
The SEC issued an investor alert today warning investors about the dangers of potential investment scams involving virtual currencies promoted through the Internet.
“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.
The SEC alleges that Shavers, who lives in McKinney, Texas, paid 507,148 Bitcoin in investor withdrawals and purported interest payments. He transferred at least 150,649 Bitcoin to his personal account at an online Bitcoin currency exchange. Shavers suffered a net loss from his day trading, but realized net proceeds of $164,758 from his sales of 86,202 Bitcoin. Shavers transferred $147,102 from his personal account at the online Bitcoin currency exchange to accounts he controlled at an online payment processor as well as his personal checking account. He used this money to pay his rent, utilities, and car-related expenses as well as for food and retail purchases and gambling.
The SEC’s complaint charges Shavers and BTCST with offering and selling investments in violation of the anti-fraud and registration provisions of the securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC is seeking a court order to freeze the assets of Shavers and BTCST in addition to other relief, including permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
The SEC’s investor alert, prepared by the agency’s Office of Investor Education and Advocacy, recommends that investors be wary of so-called investment opportunities that promise high rates of return with little or no risk, especially when dealing with unregistered, Internet-based investments sold by unlicensed promoters.
“Ponzi scheme operators often claim to have a tie to a new and emerging technology as a lure to potential victims,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. “Investors should understand that regardless of the type of investment, a promise of high returns with little or no risk is a classic warning sign of fraud.”
I hate to say we told you so, but we told you so.
In case you haven’t heard the news,
German Polish buttcoin exchange Bitcoin24 is no longer operating, due to “The Polish authority” closing their bank account in Poland.
Before we proceed, let’s take a moment to look at Bitcoin24′s long and untarnished history. Founded in May of 2012, Bitcoin24 was allegedly the largest buttcoin exchange in Europe, with only the mighty Mt. Gox surpassing it in terms of volume and profit. Apparently they also surpass the Magic: the Gathering Online Exchange in terms of utter incompetence and hilarity. Recently, people found the admins asking questions on StackOverflow about how MySQL works and how to round numbers when working with financial data.
This was followed by the site’s trading engine shitting the bed and started to give people more money or bitcoins than they deserved, like a faulty ATM spitting torrents of cash into the street. It then broke down even further, with trades randomly appearing and disappearing before the site’s functionality went down entirely.
A few days ago, the site made the above announcement, in even more broken English. Today, we find this PDF, outlining the following (thanks to SA forums goon Greyhawk for the translation):
Oh, boy. So first thing this is a very, very bad translation from Polish into German. Very bad. Half of it doesn’t even make sense.
But the gist of it is:
- The German prosecution knows everything there is to know about bitcoin-24 right from when they began operating. And I do mean everything. Current bank accounts, old bank accounts. Who the money was coming from, who it was going to. Everything. In total over 500000 Euro were transferred via these accounts mostly from Germany towards Poland, Romania and Bulgaria
- German prosecution sees bitcoin-24 as a massive money laundering operation and are proceeding against the owner
- German prosecution has evidence that the owner is involved in phishing attacks and is proceeding against him about that too. Apparently the owner was retarded enough to send the “pure profit” of those attacks to the polish bitcoin24 bank account.
Furthermore, we find that his home was raided and he is no longer free.
Meanwhile, MtGOX is suffering from yet another “DDoS” and having a slew of issues with banks and Bitfloor is gone again. Just another day in the life of the currency of the future!
Known haven for pedophiles, racists, and misogynists now accepting Bitcoin as payment for subscriptions
Reddit, bastion of free speech (as long as it’s speech with which they agree,) is now accepting payment for their pointless “Reddit Gold” service through Bitcoin processor Coinbase.
Of course, reddit CEO Yishan Wong has clarified that they don’t really accept buttcoins, but instead rely on another company to convert them into real money that a major company can use and report on tax records.
Inquiries on when reddit will be accepting Monopoly bills, chocolate coins, and replica Confederate dollars have gone unanswered.
Last night Tom from bASIC, “Next generation Bitcoin mining hardware” built in his garage, blew a gasket:
these type of threads are BULLSHIT
we have always honored our refund requests but a thread like this basically just kills my business
Ask yourself this question:
Do you want a nice friendly refund as we have been giving or do you want to completely put me out of business?
because if you completely put me out of business than you are going to have to come to NY to take me to small claims court.
ask yourself this question, do you really want to come to NY to take me to small claims court? or do you just want to wait your turn and quietly get your requested refund as hundreds of people already have. Keep with the mob mentality its only going to keep you separated from your money longer.
this thread is bad for anyone seeking a refund, and the mods need to take notice and remove threads such as this.
this is not good for you. Please stop.
im reporting this to the mods myself – I encourage others to do the same.
This occurred throughout multiple threads on the Bitcointalk forums.
I lost a buttload on my fake money, can the US government bail me out with real tax dollars?
Oh, the irony.
Has Bruce Wagner pulled off the biggest financial scam on the bitcoin community? UPDATE2 (A long fucking post.)
Bruce Wagner is the host of OnlyOneTV and the organizer of the Bitcoin Conference, and he’s a bit of a character. He seems to hate women and blames them for being victims of rape. He had vehemently advocated moving the bitcoin conference to Pattaya, Thailand, which just so happens to be the underage prostitution capitol of the world. Hell, he’s even posted about tips on how to pickup boys for sex.
But Bruce is also a convicted scammer and con man. He’s even fled the state and still owes thousands of dollars in outstanding debts and restitution. He’s had a mortgage fraud scheme backfire on him and been estimated to have stolen over a million dollars from people losing their homes in foreclosure.
And he may have pulled off one of the most successful scams on the bitcoin community.
Uh-oh, looks like all the buttcoin miners with hundreds of bitcoins and thousands of dollars trapped in Mt. Gox aren’t happy with the endless delays and the murmurs of them waiting until the weekend to close up shop, take take the money and run.
At least one guy is being pro-active about the sitution.
Looks like someone’s gonna get got.
Forums member c-rock can read between the lines though.
This is going to get real ugly real fast folks.