If you don’t follow the often-shady world of Bitcoin, you may not be familiar with 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 on Wednesday the Securities and Exchange Commission (SEC) formally charged its founder, Trendon Shavers, with running a Ponzi scheme.

In a statement, 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.”

The government's financial regulator alleges that Shavers violated a number of federal financial regulations. In court documents, the SEC wrote:

Shavers falsely promised investors up to 7 percent interest weekly based on BTCST’s purported BTC market arbitrage activity, including selling BTC to individuals who wished to buy BTC “off the radar,” quickly, or in large quantities. In reality, the BTCST offering was a sham and a Ponzi scheme whereby Shavers used new BTCST investors’ BTC to pay the promised returns on outstanding BTCST investments and misappropriated BTCST investors’ [bitcoins] for his personal use.

The Dallas Morning News said that it managed to reach Shavers, who declined to comment.

“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,” said Andrew M. Calamari, director of the SEC’s New York regional office, in the same SEC 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.”