CNET

A Texas man is in trouble with the feds for allegedly ripping off investors via a Bitcoin-inspired Ponzi scheme.

The SEC announced on Tuesday that it has charged Trendon Shavers, the founder and operator of Bitcoin Savings and Trust, with several violations of federal law.

Shavers reportedly raised at least 700,000 Bitcoin in investments through his company in 2011 and 2012. At that time, his Bitcoin investments were worth $4.5 million. Today, they're worth more than $60 million.

The government accuses Shavers of generating all that money by promising investors 7 percent in interest each week for buying Bitcoin "off the radar" or in large amounts. But in actuality, says the SEC, Shaver was running a Ponzi scheme in which he used Bitcoin from his new investors to cover interest payments and withdrawals on outstanding investments. Further, Shavers allegedly used the Bitcoin from his investors to trade in his own personal account and to pay off his own personal expenses.

"Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws," Andrew Calamari, director of the SEC's New York Regional Office, said in a statement. "Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed."

The SEC is seeking a court order to freeze the assets of Shavers and his company. The agency is also looking for permanent injunctions, financial penalties, and the disgorgement of the ill-gotten gains with prejudgment interest, which means Shavers would have to return all the money he obtained along with interest should he be found guilty.