In a major victory for the Securities and Exchange Commission, a judge has ruled that a Bitcoin Ponzi was actually a securities fraud, and subject to challenge by federal regulators.
That ruling came by a judge, who fined a Texas man more than $30 million in the case. As part of the sentence, the man is also prevented from further dealing in the virtual currency. It was the first time that a court had to decide whether the Securities And Exchange Commission, which brought the lawsuit, has authority to regulate in matters related to the virtual currency.
In this case, the judge ruled that the investments that the man sold could be defined as investment contracts and securities, and therefore, the court did have jurisdiction over the case. In his defense, the man's defense lawyers had argued that the investment could not be regarded as equivalent to securities, because the concurrency is virtual currency and is not real money. Therefore, it is not subject to regulation by the United States. His lawyers claimed that the Bitcoin transactions were not subject to regulations, because there was no exchange of real money at any point in the transaction. The judge has rejected all of those arguments.
There have been several high-profile cases that have been pursued against Bitcoin schemes. One of them was filed against a former high-ranking Bitcoin executive who earlier this month pleaded guilty to related charges. In yet another case, a Florida man faced charges of using bitcoins for moneylending, and his defense attorneys argued that he did not do anything wrong because the digital currency was not real money. However, a judge rejected that argument.
Arizona white-collar criminal defense attorneys expect more similar cases involving the virtual currency in the months ahead.