For many, Bitcoin as an anonymous currency is a necessity for the future of free speech. For millions, dare I say billions, Bitcoin is a complete unknown and not something that they need concern themselves with any time soon. Additionally, there remain billions of people without computers. Billions without money. An online currency, anonymous currency will, I fear, forever be an unknown and a mystery for a large portion of the world’s population.
Today, however, may have marked the day when Bitcoin is known to millions more people with the ruling of United States District Judge Amos L. Mazzant in Texas today. Judge Mazzant, through his ruling, determined that the Securities and Exchange Commission could proceed with a lawsuit against a Texas man accused of operating a Ponzi scheme based on the popular virtual currency known as Bitcoin.
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The Commission brought civil charges against Trendon Shavers in late July, accusing the Texas man of raising nearly $5 million worth of Bitcoins from investors in his digital hedge fund. At today’s present exchange rate, that would amount to over $70 million. Mr. Shavers, prior to today’s ruling at argued that he should not be charged by the SEC, because, well quite simply, Bitcoin is not a currency. Consequently, Mr. Shavers argued that it was outside of the SEC’s jurisdiction as Bitcoin investments did not constitute “securities” under federal securities laws.
If the ruling is upheld, the SEC will in fact have jurisdiction. With the advent of Bitcoin and other non-traditional investment vehicles, fraud has popped up almost immediately and should be expected. I mean how many people fell for the “Nigerian Prince” once the internet met Western Union or the eased practice of wire transfers?
On a personal note, I can’t help but wonder how this will impact my long-standing real estate company that has been offering lots in the more pleasant levels of hell to those who have no question that that is indeed where they are headed when their lives are finished here. My virtual real estate company has been offering affordable options on cul-de-sacs and more temperate levels of hell, with less burning flesh smell, for years. Now I have to worry about the SEC?
I don’t have the space for a full explanation of the crimes Mr. Shavers has been accused of, but strongly suggest that you read this piece by Jordan Maglich of Forbes magazine. Mr. Maglich is an expert on white collar crime and specifically Ponzi schemes.