Bitwage President: If Ethereum is stolen again, it will fork, leading to an increase in Bitcoin scammers

As a Manhattan court sentenced a bitcoin scammer to a year and a half in prison, experts said it was a development in the right direction that would instill a greater level of sanity into the digital currency ecosystem.

In the cryptocurrency space, there are a variety of methods that have been used to take advantage of the growing awareness of digital currencies to defraud unsuspecting people.

With so many purported investment opportunities spreading across the Internet, scams and Ponzi schemes have become common in recent years.

OneFxZone and HashOcean are two of the fraud schemes that have been reported. On Thursday, July 21, a Manhattan court appeared to take a step in the right direction in combating online fraud, especially as it affects digital currencies.

This verdict

Trendon Shavers, operator of Bitcoin Savings and Trust, was sentenced to one and a half years in prison and ordered to forfeit $1.23 million and pay the same amount in restitution. The sentence was handed down by U.S. District Judge Lewis Kaplan in a Manhattan court.

Speaking about the impact of the trial on the crypto space, George Basiladze, founder of UK payment portal Cryptopay, said it sets a precedent.

He said: "I think this case is very timely. There are hundreds of Bitcoin Ponzi schemes and investment traps in the market. Now, the official statement is made - scammers will be punished, even scammers in the Bitcoin community, pay attention!" Jurisdiction

Jonathan Chester, president of Bitwage, noted what stood out to him about the ruling.

Chester explained that by American standards, it was clear that Shavers was operating an illegal Ponzi scheme.

"It is clear that Trendon Shavers operated an illegal Ponzi scheme by US standards. Even though he used Bitcoin, his actions would still be illegal. In fact, he caused investors to lose $1.23 million. It is important to understand the legal jurisdiction in which you work, and it is even more important to put consumer protection first. Regardless of whether Shavers had bad intentions, he was clearly grossly negligent in both respects," Chester said.

Consumer Protection

Chester also pointed out that most governments are very friendly to innovation and are willing to promote an environment that fosters innovation. Therefore, the government has a responsibility to protect its citizens.

“In fact, I was sitting down to lunch with various members of the European Parliament who had visited Silicon Valley the other day to see how they could help spread the innovative thinking that’s come out of Silicon Valley across Europe,” Chester explained. “However, when it comes to consumer protection, governments, especially in developed countries, usually get involved, even in emerging industries. It’s important that governments take action against those who use new technologies to harm others for their own personal gain. After all, we pay taxes to protect us.” Systemic Vulnerability

According to Chester, it’s interesting to think that perhaps in Ethereum, it would be more difficult for a scammer or thief to pull off a major scam. Chester explained that this was demonstrated by the recent Ethereum hard fork, which recovered approximately $50 million worth of lost ether.

“Given that the Ethereum ecosystem is still small today, it’s not very difficult to change the state of the ledger,” he said. “In the event that scammers attempt another heist, another fork will likely be done to protect consumers.”

That could push more scammers toward Bitcoin. It could also mean Ethereum becomes more vulnerable to government regulators who want to take control of the payment system.