An American was sentenced to 18 months in prison yesterday in the first federal securities fraud case involving a bitcoin Ponzi scheme.
Trendon Shavers, a 33-year-old Texan, raised more than 764,000 bitcoins through his Bitcoin Savings and Trust investment fund from 2011 to 2012, which he operated from home.
At the time, these were worth $4.5m (£3.4m).
It is the first conviction for a bitcoin-related Ponzi scheme, in which investors were promised huge returns and paid back with the bitcoins from new sign-ups.
Shavers fraudulently obtained around 146,000 bitcoins (around seven per cent of the total) through the scheme, according to New York prosecutors, which were worth more than $807,000 at the time, Reuters reported.
Out of 100 investors, prosecutors said at least 48 suffered losses, totalling $1.23m. As part of his sentence, Shavers was also ordered to forfeit $1.23m and pay restitution for the same amount.
He initially pleaded not guilty to the charges in March 2015, but reversed his position in September as part of a plea deal that lowered his possible sentence from 40 years to a maximum of 41 months.