From the above complaint.
Quote
III. SHAVERS’ ADMISSIONS
In an October 3, 2012 interview with Commission staff, Shavers admitted, among other
things, that:
Case 4:13-cv-00416-RC-ALM Document 3 Filed 07/23/13 Page 6 of 18 PageID #: 22SEC v. Trendon T. Shavers, et al. 6
Plaintiff’s Emergency Motion for Order to Show Cause, Asset Freeze and Other Ancillary Relief
a. His Internet name was pirateat40; he posted the November 3, 2011 BTCST
solicitation on the Bitcoin Forum; all other statements attributable to
pirateat40 on the Bitcoin Forum were his own; and he, alone, was responsible
for creating and operating BTCST (Id. at ¶ 27);
b. He sold BTCST investments to 446 investors, but claimed that he produced
documents to staff for only 46 BTCST investor accounts because all records
for closed accounts had been deleted (Id.);
c. He used new BTCST investor BTC to pay the promised returns on
outstanding BTCST investments (Id.);
d. He comingled BTCST investor BTC with his personal BTC and BTC received
from customers of GPUMAX Technologies, LLC (“GPUMAX’), a BTC
mining company he co-founded with friends (Id.);1
e. He made preferential redemptions to friends and longtime BTCST investors,
in August 2012, as he closed BTCST (Id.); and
f. He was still in possession, at the time of the interview, of approximately
100,000 BTC (Id.).
In the same interview, Shavers claimed to generate BTCST investor returns by lending
BTCST investor BTC to anonymous borrowers he met online who wanted enough BTC to
manipulate or control the price of BTC on Mt. Gox, the leading BTC currency exchange
(headquartered in Tokyo, Japan), and other BTC currency exchanges. (Id. at ¶ 28.) Shavers
claimed these anonymous borrowers paid him at least 10% interest weekly on the BTC he lent to
them. (Id.) Shavers claimed to generate additional returns for BTCST investors, up to 4% daily,
by lending BTC to an online service which provided users with leverage for purposes of trading
BTC on BTC currency exchanges. (Id.)
In an October 3, 2012 interview with Commission staff, Shavers admitted, among other
things, that:
Case 4:13-cv-00416-RC-ALM Document 3 Filed 07/23/13 Page 6 of 18 PageID #: 22SEC v. Trendon T. Shavers, et al. 6
Plaintiff’s Emergency Motion for Order to Show Cause, Asset Freeze and Other Ancillary Relief
a. His Internet name was pirateat40; he posted the November 3, 2011 BTCST
solicitation on the Bitcoin Forum; all other statements attributable to
pirateat40 on the Bitcoin Forum were his own; and he, alone, was responsible
for creating and operating BTCST (Id. at ¶ 27);
b. He sold BTCST investments to 446 investors, but claimed that he produced
documents to staff for only 46 BTCST investor accounts because all records
for closed accounts had been deleted (Id.);
c. He used new BTCST investor BTC to pay the promised returns on
outstanding BTCST investments (Id.);
d. He comingled BTCST investor BTC with his personal BTC and BTC received
from customers of GPUMAX Technologies, LLC (“GPUMAX’), a BTC
mining company he co-founded with friends (Id.);1
e. He made preferential redemptions to friends and longtime BTCST investors,
in August 2012, as he closed BTCST (Id.); and
f. He was still in possession, at the time of the interview, of approximately
100,000 BTC (Id.).
In the same interview, Shavers claimed to generate BTCST investor returns by lending
BTCST investor BTC to anonymous borrowers he met online who wanted enough BTC to
manipulate or control the price of BTC on Mt. Gox, the leading BTC currency exchange
(headquartered in Tokyo, Japan), and other BTC currency exchanges. (Id. at ¶ 28.) Shavers
claimed these anonymous borrowers paid him at least 10% interest weekly on the BTC he lent to
them. (Id.) Shavers claimed to generate additional returns for BTCST investors, up to 4% daily,
by lending BTC to an online service which provided users with leverage for purposes of trading
BTC on BTC currency exchanges. (Id.)
All that will be used against him in any civil or criminal trial. Miranda doesn't apply if he wasn't a suspect of any criminal investigation at the time. His statements (assuming they are recorded) make any defense much harder (dare I say impossible). It now requires an affirmative defense. If he did run BTCST and it lost funds "legitimately" he can't just rely on a lack of evidence, he needs to prove that.
I also found e to be interesting. While I am not sure the SEC will seek it (given the relatively small scale), they can attempt to locate those who benefited from the ponzi and clawback any net gains. Also given how upstanding Shavers is, if pressed with even the possibility of jailtime I wonder who he will roll on and how much evidence he kept.
