SEC has power to regulate Bitcoin investments, federal judge rules
Posted Aug 7, 2013 4:45 PM CDT
By Martha Neil
Rejecting an argument by a Texas defendant that Bitcoin investments are not within the regulatory purview of the U.S. Securities Securities and Exchange Commission, a federal magistrate judge has given a green light to a SEC civil suit against Trendon Shavers.
The Bitcoin Savings & Trust operator had contended that the virtual currency is not money and that Bitcoin investments don't fall within the definition of securities. However, Judge Amos L. Mazzant of the Eastern District of Texas ruled against him on both fronts on Tuesday.
Bitcoins, which are created by open-source software and can be purchased with online real money through exchanges, are used as money to purchase goods and services and can be bought in transactions that "meet the definition of investment contract, and as such, are securities," according to Bloomberg, Forbes and Reuters.
In its suit, which was filed last month, the SEC accused Shavers of running his $4.5 million Bitcoin investment program as a Ponzi scheme.
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