A federal judge in Texas has found a local man civilly liable of conducting a massive Bitcoin-based Ponzi scheme, and ordered him to pay $40.4 million. The court found on Friday that Tendon Shavers had created a virtual bitcoin-based hedge fund that many suspected of being a scam—and it turned out they were right.

The Bitcoin Savings and Trust (BTCST) shut down in August 2012, and by June 2013 the Securities and Exchange Commission (SEC) filed charges against its founder. In a statement at the time, the SEC said Shavers "raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments were offered and sold."

Judge Amos Mazzant wrote:

During the relevant period, Shavers falsely represented to BTCST investors on the Bitcoin Forum and in online chat rooms dedicated to Bitcoin that BTCST traded bitcoin against the U.S. dollar, including selling bitcoins to individuals who wanted to buy them "off the radar," quickly, or in large quantities; that the promised returns would be generated by such bitcoin market arbitrage; and that he earned 10.65% each week on average for BTCST from these investment activities. In reality, Shavers, on the whole, either used new bitcoins received from BTCST investors to pay purported returns and withdrawals on outstanding BTCST investments, or diverted BTCST investors’ bitcoins for his personal use.

Earlier in the case, the same judge ruled that Bitcoin could be considered "a currency."

Judge Mazzant added in Friday’s decision that Shavers’ conduct was "egregious," and resulted in "illicit gains of 180,819 bitcoins, or more than $101 million based on currently available exchange rates." Investors collectively lost "265,678 bitcoins, or more than $149 million based on currently available exchange rates."