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US judge rules bitcoin is real money

08 August 2013  |  10326 views  |  0 bitcoin

A US federal judge has ruled that bitcoin is a "form of money", paving the way for a legal case against a man accused of running a giant ponzi scheme using the virtual currency.

Last month the Securities and Exchange Commission charged Trendon Shavers with running a bitcoin Ponzi scheme through his Bitcoin Savings and Trust (BTCST), which raked in 700,000 bitcoins, worth $4.5 million, from unwary investors.

Shavers argued that the case should be ditched because the SEC has no jurisdiction because the bitcoin investments he was offering were not securities because the crypto-currency is not money or subject to any regulations.

However, US Magistrate Judge Amos Mazzant has rejected the claim, ruling that "it is clear that bitcoin can be used as money" and "is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money".

Therefore, the court ruled, "BTCST investments meet the definition of investment contract, and as such, are securities".

Regulators in the US and around the world are struggling to catch up with bitcoin and bring it under their supervision. The Department of Homeland Security has served payments start-up Dwolla with a court order telling it to stop processing transactions linked to bitcoin exchange MT. Gox. Last month confusion reigned in Thailand over whether the currency had been declared illegal.

Recently a collection of virtual currencies firms banded together in a bid to create a self-regulatory organisation covering the nascent industry in a bid to work with governments and help shape future rules.

KeywordsLEGAL

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