Trendon Shavers from Texas was arrested for running a $4.5 million Ponzi Scam.

While most people are convinced that Bitcoin will make it in the long run, some sincerely believe that the crypto currency’s days are numbered.

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One of the main reasons behind this is how the technology makes it very easy for scam artists to run Ponzi scams.

A Bitcoin user from Texas named Trendon T. Shavers was arrested this week for fraudulent activities.

He was charged with multiple counts of fraud for operating a Bitcoin Ponzi scheme. According to report, the schemes earned him $4 million.

Trendon is facing maximum prison sentence of 20 years for each of the count of securities fraud and one count of wire fraud.

He also has civil charges from the Securities and Exchange Commission back in 2013. The charges made led him to pay fired worth $40 million.

The technology promises a level of anonymity and security, which cannot be attained with existing internet and traditional methods of cash transactions.

The digital hedge fund that Shavers operated was called Bitcoin Savings and Trust.

This was a Ponzi scheme which attracted naive users and convinced them to deposit their Bitcoin holdings with them. They did this by offering a very highly weekly return rate of up to 7%.

As the high return rate was too good to be true, many investors raised questions. However, Shavers had an answer for all their queries.

When the operation was questioned, he said that he was purchasing and selling Bitcoins continuously and that sometimes he was also working as the intermediary for individuals who wanted to buy large amounts anonymously.

He announced to the users that this way he was earning a weekly gross return of about 11%. He even claimed once that his business was as legal as any that trades coins in exchange for cash.

He struggled with the scheme in 2012, when it started becoming too large to handle. This led to a drop in interest rates to 3.9% in August and Shavers declaring default later.

It was revealed later after SEC investigations, Bitcoin Savings and Trust earned more than 700,000 BTC from their investors. This amount was almost 7% of the total Bitcoins in circulation at that time.

A sum of 500,000 BTC were returned under the pretext of interest payments and Shavers deposited 150,000 BTC in his own account.

The amount he deposited was worth $1 million at the time. It was found that almost 48% of the investors complained about losing partial or all of their Bitcoin investments given to scammer Trendon Shavers.

It is not surprising that scam artists like Shavers would use Bitcoins as the scam’s base. While this is predictable, it is sad that the Bitcoin industry is still falling prey to scams like this.

Trendon Shavers will be punished but it is up to the investors to put their hard-earned money in the right place.