Trendon Shavers, a 33 year old Texas man, was sentenced by Manhattan federal court by Judge Lewis A. Kaplan for his “High Yield Investment Program” called Bitcoin Savings Trust. In addition to the prison sentence, the judge also ordered him to repay $1.23 million to 48 investors.
Judge Kaplan said Shavers, who went by Pirateat40 and advertised on the popular forum BitcoinTalk.org, committed a serious crime but earned leniency through honest work to rectify his wrongdoing since his 2014 arrest. Shavers faced 40 years in prison, due to one count of wire fraud, before a September 2015 plea deal lowered the maximum possible sentence to 41 months.
Shavers offered investors a 7 percent weekly return on their bitcoin deposits in his scheme initially dubbed First Pirate Savings Trust. Shavers disappeared in August 2012 after claiming the fund was too large for him to manage.
Authorities accused Shavers of receiving funds from new customers to pay out earlier customers, while sending funds to his personal bank, Dwolla, and Paypal accounts, as well as pre-paid credit cards.
Court documents demonstrate Shavers used $220,000 in bitcoins and money from investors to pay for his rent, car payments, groceries and