In the case of a Texas man accused of massive Bitcoin-based fraud, a federal judge has ruled that bitcoins are “a currency or form of money," and are therefore subject to relevant US laws.

The case revolves around Bitcoin Savings and Trust (BTCST), a virtual Bitcoin-based hedge fund that many suspected of being a scam. BTCST shut down in August 2012, and the Securities and Exchange Commission (SEC) last month formally charged founder Trendon Shavers with running a Ponzi scheme.

As we previously reported, the SEC has said Shavers “raised at least 700,000 bitcoins in BTCST investments, which amounted to more than $4.5 million based on the average price of bitcoins in 2011 and 2012 when the investments were offered and sold.”

Shavers did not immediately respond to our request for comment.

In a four-page memorandum opinion issued on Tuesday, Judge Amos Mazzant wrote (PDF) to determine whether his court has jurisdiction in the case.

However, the question currently before the Court is whether the BTCST investments in this case are securities as defined by Federal Securities Laws. Shavers argues that the BTCST investments are not securities because Bitcoin is not money, and is not part of anything regulated by the United States. Shavers also contends that his transactions were all Bitcoin transactions and that no money ever exchanged hands. The SEC argues that the BTCST investments are both investment contracts and notes, and, thus, are securities. . . . It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.

Earlier this year, a US federal agency, the Financial Crimes Enforcement Network (FinCEN), published new guidelines stipulating that Bitcoin-related businesses should be considered as Money Services Businesses under US law.