By Hal M. Bundrick NEW YORK ( MainStreet)--A high-tech currency was at the center of a low-tech fraud, according to the Securities and Exchange Commission. Trendon T. Shavers is said to have sold more than $4.5 million in bogus Bitcoin investments in 2011 and 2012 through his Texas-based company Bitcoin Savings and Trust (BTCST) in what amounted to little more than a Ponzi scheme. Bitcoin is a digital currency without a central authority, traded, as well as used for purchases online. The SEC alleges Shavers offered and sold 700,000 Bitcoin-denominated investments through the Internet using the handles "Pirate" and "pirateat40." The value of those investments would exceed $60 million at current Bitcoin exchange rates.
The SEC issued an investor alert regarding the risk of Bitcoin investments, as well as other investment opportunities that promise high rates of return with little or no risk. "Ponzi scheme operators often claim to have a tie to a new and emerging technology as a lure to potential victims," said Lori J. Schock, Director of the SEC's Office of Investor Education and Advocacy. "Investors should understand that regardless of the type of investment, a promise of high returns with little or no risk is a classic warning sign of fraud." --Written by Hal M. Bundrick