First off, I will admit that there is a lot that I don’t get about Bitcoin. But I do at least vaguely understand that it’s a virtual currency that doesn’t have anything to do with any government issued specie, and it’s multi-national, or non-national, or non-denominational, or whatever. If you’re using bitcoins to buy something with, you purchase them in whatever currency you want, and stop worrying about exchange rates and multi-currency handling fees.
At least that’s how I think it works.
Anyway, since it’s money, honey, it was just a matter of time before someone started scamming with it.
That someone was Trendon T. Shavers, who:
… raised at least 700,000 Bitcoin starting no later than September 2011 through his firm Bitcoin Savings and Trust and improperly used currency from new investors to cover investor withdrawals, the SEC said in a complaint filed today in federal court in Texas. (Source: Bloomberg.)
First off, is it really possible that there’s someone whose real name is Trendon T. Shavers?
As in – according to that unimpeachable, peach of a source, Urban Dictionary, is:
A update to the word "trendy" so you don't have to sound like your dad.
Your shoes are fabulous, they're SO trendon.
I really like your haircut, its really trendon
Or, your name is so trendon. Not!
Then there’s Shavers, which brings to mind the charmingly old-fashioned Little Shaver. Or the 1950’s college basketball scandal Point Shavers. Trendon T. clearly conjures up more of the latter than the former.
There’s also “shave and and a hair cut, two bits” which can so easily be transmogrified to “shaver and a hair cut (to the investors), two bitcoins.” At least it can be thus transmogrified when I get my hands on it.
Not that Trendon T. Shavers was quite good enough. According to the SEC complaint, Trendon T.’s Internet handle was pirateat40. Not to mention that the bank was formerly known as First Pirate Savings & Trust.
Good rule to observe: never do financial business with someone or something named “pirate.”
Anyway, while we can make up names for ourselves (like pirateat40), we can’t help the names our parents choose to gift us with. (Just ask the Winklevoss twins, who, as it happens are Bitcoin investors – although not through the Trendon T. Shavers Ponzi scheme.)
Shavers falsely promised investors as much as 7 percent interest weekly on purported trades, including selling the online currency to individuals who wished to buy it “off the radar,” quickly or in large quantities, the SEC said. Shavers also misappropriated investors’ funds for his personal use, according to the complaint.
Part of me wants to say you don’t get what you don’t pay for. And that the credulous schnooks who think they’re going to get 7 percent interest weekly almost but not quite deserve what they get. After all, that interest rate may have been achievable in, say, Weimar Germany in the twenties, when you could do even better – maybe even get 7 percent by the minute, if not by the second. But, let’s face it, 7 percent annually would be excellent these days. So, while the fact that someone’s a fool – and a greedy one at that – doesn’t justify the Ponzi scheme, it’s still stunning that there are people out there just ripe to be scammed.
But, darned the luck for Trendon T. Shavers:
“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 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.”
Speaking of great names: Andrew Calamari! Which I think is Italian for Sponge Bob’s friend Squidward. An altogether excellent last name – even better than my mother’s, which was Wolf. (As in “who’s afraid of the big, bad”.
Meanwhile, before he set up Bitcoin Savings and [Who Do You] Trust, Trendon T. Shavers had a company called Business Cognition:
Business Cognition is a full service business efficiency and information technology consulting company. We provide expense analysis, technology, energy and telecommunications solutions for small to medium sized businesses. Located in McKinney, we serve clients in the North Dallas and surrounding areas.
I guess Ponzi Schemes are easier money and more lucrative than expense analysis and telecommunications solutions.
Still don’t quite get Bitcoin? Can’t blame you. Let The Economist explain it all to you.
And here’s a link to the SEC complaint.