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SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

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Re: SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

#3

Post by sehrope »

> The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities

Anybody that is not skeptical about 7% weekly returns on anything is just asking for it. That's 33x your money in 1 year. How can that sound legit to anybody?

> In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments.

Since the bitcoin ledger itself is public record anybody could analyze the addresses associated with the fund and see the inflows and outflows[1]. Even if new addresses are generated for each transaction at some point the fund manager would need to roll them up and combine them. It would be possible to see the ponzi flows in the ledger itself.

[1]: Assuming the fund manager isn't using some kind of bitcoin mixer. If he is then that's probably a sign that something bad is going on. https://en.bitcoin.it/wiki/Mixing_service

Re: SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

#4

Post by marshray »

sehrope wrote: post #3

> The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities Anybody that is not skeptical about 7% weekly returns on anything is just asking for it. That's 33x your money in 1 year. How can that sound legit to anybody?…

Because if you anonymize your currency (e.g., use cash) you've got something to hide?

Re: SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

#5

Post by makomk »

sehrope wrote: post #3

> The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities Anybody that is not skeptical about 7% weekly returns on anything is just asking for it. That's 33x your money in 1 year. How can that sound legit to anybody?…

> Anybody that is not skeptical about 7% weekly returns on anything is just asking for it. That's 33x your money in 1 year. How can that sound legit to anybody?

If you were following the Bitcoin forums at the height of the Ponzi, anyone who suggested it was a Ponzi was called a troll who was libelling pirateat40 by what felt like half the forum. Everyone insisted that unless they had actual proof it wasn't a genuine investment, they should shut up, and that the only reason for them to make a big fuss about it was to . This comment was about par for the course, and bear in mind this was after the scheme imploded: https://bitcointalk.org/index.php?topic=101377.0

A number of widely-respected members of the Bitcoin community supported the Ponzi and even ran pass-through schemes for it.

Re: SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

#6

Post by [deleted] »

marshray wrote: post #4
sehrope wrote: post #3

> The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities Anybody that is not skeptical about 7% weekly returns on anything is just asking for it. That's 33x your money in 1 year. How can that sound legit to anybody?…

Because if you anonymize your currency (e.g., use cash) you've got something to hide?

[deleted]

Re: SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

#7

Post by sehrope »

marshray wrote: post #4
sehrope wrote: post #3

> The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities Anybody that is not skeptical about 7% weekly returns on anything is just asking for it. That's 33x your money in 1 year. How can that sound legit to anybody?…

Because if you anonymize your currency (e.g., use cash) you've got something to hide?

If you're the one holding it behalf of someone else then yes. If you want it to be anonymous as the consumer of the service then it's fine to anonymize your deposit. If you're going out of your way to anonymize what I've given you (to prevent me from tracking it) then that would seem shady to me.

Re: SEC Charges Texas Man With Running Bitcoin-Denominated Ponzi Scheme

#10

Post by dobbsbob »

mtgx wrote: post #8

I'm not arguing over what they're doing, the guy was asking for it, but it seems someone at a high level asked for more regulation and attention on the Bitcoin ecosystem.

what happened was his forum passthru cheerleaders that got scammed when his ponzi popped ran screaming to every authority they could and finally somebody at the SEC noticed. Note these same people all trollish extreme libertarians that denounced all regulation until it affected them and they immediately deferred to authority
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