United States’ first federal securities fraud case involving digital currency has ended with an 18-month jail sentence.
Trendon Shavers, founder of Bitcoin Savings & Trust, was sentenced in Manhattan federal court on Thursday, several news outlets reported. He was also ordered to forfeit $1.23 million—the amount lost by his 48 investors—and pay an equal amount in restitution for operating what the federal judge called a “classic Ponzi scheme.”
“You defrauded innocent people. You did it, in the last analysis, for personal gain,” Judge Lewis A. Kaplan said, according to Reuters.
Prosecutors said the 33-year-old Texan raised at least 764,000 bitcoins from 2011 to 2012 after promising investors an interest rate of 7 percent a week. But it was discovered later on that Shavers used about 146,000 of the bitcoins he raised to pay his earlier investors in addition to paying for his own gambling and spa treatments in Las Vegas.