Bitcoin was created in an attempt to revolutionize the world of online payments. Although it has yet to take hold with the average consumer, the digital currency has become popular among some Internet users. A Texas man who is one of those users was recently arrested on securities fraud charges related to Bitcoin use.
The man accused cyberfraud and financial fraud in relation to the running of an online Bitcoin scheme was in a Texas federal court in early November to have the details of his criminal complaint outlined. He stands accused of using the digital currency to run a scheme that essentially tricked other users out of their money. Out of the 100 investors that he had on board, it is reported that nearly half lost a substantial amount of money.
Authorities believe that the accused told other Bitcoin users that he could offer them high interest rates in exchange for investing their Bitcoins with him. The promised interest rate was allegedly about 7 percent per week. Investors were also reportedly led to believe that they could withdraw their funds at any time.
Prior to the current criminal case, a Texas federal court mandated in a civil case that the man believed to be behind the alleged Bitcoin securities fraud scheme pay over $40 million and additional fines. If the man is convicted of the criminal charges he now faces, he could be sent to prison for up to 40 years. Due to the severity of the consequences, the accused will likely pursue a solid defense against the charges he faces.
Source: ABC News, “US Announces 1st Bitcoin Securities Fraud Case”, Larry Neumeister, Nov. 6, 2014
