BCS&T Bitcoin Ponzi Scheme Mastermind Who Defrauded 146,000 BTC Sentenced to 18 Months in Prison, Plus $2.4 Million in Fines and Restitution

The first federal securities fraud case involving a bitcoin investment scheme has concluded with suspect Trendon Shavers being sentenced to 18 months in prison.

In addition, Shavers was given other penalties, including three years of supervised release, a $100 special assessment, a $1.2 million fine and forfeiture, and $1.2 million in restitution.

The resolution brings to an end a case that began in July 2013, when Shavers was accused of defrauding investors through an investment service called Bitcoin Savings and Trust (BCS&T), which was later revealed to be a fraudulent Ponzi scheme.

Shavers was charged with one count of securities fraud and one count of wire fraud and faced up to 40 years in prison. He pleaded not guilty to the fraud charges in March 2015, then reversed his decision in September as part of a plea deal that reduced his maximum sentence to 41 months.

Preet Bharara, U.S. attorney for the Southern District of New York, said in a statement that the case is an example of how emerging technology can be used to engage in activities that are already illegal under existing laws.

"Applying a modern twist to an old fraud, Trendon Shavers used his Bitcoin business to execute a classic Ponzi scheme," Bharara said. "Shavers raised funds in the form of Bitcoin, promised outrageous returns and personal guarantees, and all he did was repay old investors with Bitcoin from new investors."

Shavers defended himself in court, saying he "completely screwed up," according to Reuters.

“I don’t think I’ll ever be able to get over this,” he said.

In September 2014, Shavers was fined $40.7 million in a related civil lawsuit. He was arrested in November 2014. The Ombudsman named 48 of the approximately 100 investors in the fraud scheme who lost all or part of their investments.

New York prosecutors reported that Shavers stole approximately 146,000 BTC in the scam, worth about $807,380 based on average prices at the time, or $9.7 million today.