Bitcoin’s First Ponzi Scheme Noted for $16 Billion Worth Today
Trendon Shavers, known as Pirateat40, launched a Ponzi scheme called Bitcoin Savings & Trust in November 2011, shortly after Bitcoin's price surged. Key points include:
- Shavers initially cultivated an image as an over-the-counter Bitcoin trader.
- He offered two investment tiers: a 3.5% fee for on-demand buy orders and a storage tier with 1% daily returns.
- Initial investments totaled $60,000, but after rebranding to Bitcoin Savings & Trust in 2012, daily inflows reached similar amounts despite community warnings.
- Shavers siphoned off approximately 193,000 BTC, valued at $1.5 million then and $16 billion today.
- He was fined $40 million and served 18 months in prison.
- Shavers’ scheme reflects classic Ponzi characteristics: inflows from new investors paid returns to earlier ones.
The total flow through Shavers’ wallets accounted for about 10% of Bitcoin's circulating supply at the time. This case marks Bitcoin's first major Ponzi scheme, contrasting with the historical Ponzi scheme by Charles Ponzi.