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Bitcoin Ponzi scheme operator ordered to pay over $40 million

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The operator of a Bitcoin Ponzi scheme has been ordered to pay back over $40 million in profits and interest gained from investors' money. The operator, Trendon Shavers, ran the scheme through his company Bitcoin Savings & Trust for at least a year and a half between 2011 and 2012. In 2012, when he shut down the company, investors began to revolt, and about a year later he was charged by the SEC with having taken bitcoins that were worth $4.5 million at the time of investment. The court's says that the total loss to investors was, at yesterday's exchange rate, closer to $149 million; the total that he's ordered to repay is based on an averaging of bitcoin's volatile exchange rate since the scheme collapsed.

Shavers, who had been operating under the unfortunately ironic pseudonym "pirateat40," had promised to pay investors one percent interest on their investment every three days, or seven percent a week. In a judgement, a Texas magistrate judge called Shavers' operation "a sham," saying that he made a "blatant misuse and misappropriation" of the company's funds for his own purposes and that he intended to "deceive, manipulate, and defraud" investors. Though Shavers admits to many of his actions, he also claims to have repaid investors — and the court says there's no evidence of that. It's unclear if he and his company will be able to return the more than $40 million that they've been ordered to pay.