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While Shrem, Ulbricht Enjoy Cults of Personality, Shavers Abandoned by Bitcoin Community

Last Updated March 4, 2021 4:50 PM
Justin OConnell
Last Updated March 4, 2021 4:50 PM

Trendon Shavers earned a lenient sentence through good faith efforts to right the wrongs he did while improperly managing the Bitcoin Savings & Trust, Bitcoin’s first federal securities case, according to his sentencing judge.

That’s news the Bitcoin Community, which has long viewed Shavers as a no more than a fraudster, likely won’t heed.

Bitcoin Savings & Trust, initially called First Pirate Savings & Trust, ultimately stripped investors of $4.5 million. Shavers faced 40 years in prison before a plea deal brought his maximum sentence to 41 months.

Shavers’ $4.5 million ponzi scheme netted him approximately $220,000 which he spent on groceries, rent and car payments, according to court documents. Much of his profit was lost due to trading losses.

“Applying a modern spin to an age-old fraud, Trendon Shavers used a bitcoin business to run a classic Ponzi scheme,” according to prosecutor, U.S. attorney Preet Bharara.

In reading his verdict, the judge noted that Shavers, while carrying out a “classic ponzi scheme,”  had tried to make things right,.

Shavers told Judge Kaplan he “royally messed up,” adding:: “I don’t think this is something I’ll ever fully be able to get over, but I’m going to try to make things right.”

In the first court action against Shavers, an SEC civil action, prosecutors  downplayed evidence demonstrating Shavers, whose alias had been Pirateat40, had tried to make things right by paying back many customers who had sent him bitcoin’s.

Nevertheless, the Bitcoin Community reviles Shavers, viewing him as one of the definitive con man in an industry wrought with fraud. When Shavers was arrested, the community celebrated, despite not knowing the full story.

The sentencing comes approximately one month after Charlie Shrem’s release from prison. Shrem, the founder of Bitcoin exchange BitInstant, was arrested and convicted in 2014 of money laundering through darknet marketplace Silk Road, as well as operating as an unlicensed money transmitter.

He served more than one year of a two-year sentence. Shrem wrote in a public blog post how he received books, letters and even money from bitcoiners who wished him well. Unlike Shaver’s lenient sentence or attempts to pay restitution, Shrem’s release from prison was celebrated by bitcoiners on Reddit and Bitcoin forums.

Leading cryptocurrency level Jason Seibert, the Bitcoin and securities lawyer who represented Shavers in the SEC civil action, quipped: “It is easy to idealize a guy that lived large, smoked large, and partied on the edge every night. We all love a rock star, right?”

That lifestyle, highlighted in a 2013 Vocativ  piece, involves Shrem not hiring someone unless he smoked or drank with them.

While in jail, Shrem also held an AMA wherein he discussed buying a black phone and expressed multiple times his desire to leave the US.

Similarly, Silk Road’s Ross Ulbricht – who still has one murder-for-hire charge for which he’s yet to be tried – also enjoys a cult of personality, whereas Shavers finds himself in ill repute no matter what he does to make things right.

Seibert explains: “Silk Road was dangerous, but because it fit the ideology of the most outspoken of the Bitcoin community (free markets), it, and he, was admired. Doesn’t anybody remember when Ross Ulbricht tried  to have  at least one person assassinated?”

Featured image from Shutterstock.