Embattled Bitcoin Dealer Can’t Deny It Is Currency

     SHERMAN, Texas (CN) – A Texas man accused of running a bitcoin Ponzi scheme cannot dodge securities fraud claims by denying that the virtual currency is money, a federal judge ruled Tuesday.
     Two weeks ago, the Securities and Exchange Commission sued 30-year-old Trendon Shavers of McKinney, Texas, and his company Bitcoin Savings and Trust (BTCST). Shavers allegedly raised over $4.5 million worth of bitcoin from online investors over the course of a year.
     “Bitcoin (‘BTC’) is a virtual currency that may be traded on online exchanges for conventional currencies, including the U.S. dollar, or used to purchase goods and services online,” the complaint stated. “BTC has no single administrator, or central authority or repository.”
     Securities regulators say Shavers drew new investors in with promises of a significant interest rate, and then passed bitcoin on to his earlier investors, friends and himself.
     U.S. Magistrate Judge Amos Mazzant presided over a hearing on Monday, during which Shavers questioned whether the court had subject matter jurisdiction.
     “Shavers argues that the BTCST investments are not securities because Bitcoin is not money, and is not part of anything regulated by the United States,” according to the ruling. “Shavers also contends that his transactions were all Bitcoin transactions and that no money ever exchanged hands.”
     In a four-page order Tuesday, Mazzant found that federal securities law gives the court subject matter jurisdiction over the case.
     “It is clear that Bitcoin can be used as money,” Mazzant wrote. “It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.”
     Mazzant added in support of his finding that investors expected a profit and that a common enterprise existed.

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