Texas man accused of Ponzi scheme in first reported case of Bitcoin fraud

A New York prosecutor says the federal government has brought its first bitcoin securities fraud case, accusing a 32-year-old Texas man of engineering a bitcoin Ponzi scheme.

U.S. Attorney Preet Bharara announced the arrest Thursday of Trendon Shavers.

He is awaiting a court appearance in Texas on charges of securities fraud and wire fraud. Authorities say Shavers has already been ordered by a federal court in Texas to give up more than $40 million and pay a $150,000 penalty in a related civil case. Bharara says Shavers caused about half of 100 investors to lose all or part of their bitcoin investment in 2011 and 2012.

It isn’t clear who will represent Shavers in court. Shavers did not immediately respond to a message for comment.

Earlier reports had suggested that New York’s Department of Financial Services (DFS) was considering to create a special type of bitcoin license called a “Transitional BitLicense,” which would let certain small businesses and start-ups operate within a more flexible framework, according to the department’s Superintendent, Benjamin Lawsky.

Lawsky made the announcement at the Money 20/20 conference in Las Vegas. The initial comment period for the proposed BitLicense framework ended on Oct 21, 2014.

With inputs from Associated Press