Bitcoin gained a little more legitimacy this week. A judge ruled Bitcoin should be considered actual “money” and that a case involving a Bitcoin Ponzi scheme should be taken seriously.
Bitcoin has been criticized by many who believe the currency is unstable following a number of outages and that it aids people in seedy behaviors such as tax evasion. But there are many ways Bitcoin has been adopted into “real life,” which U.S. District Court Judge Amos L. Mazzant called out in his ruling against Trendon T. Shavers.
Shavers was charged last month with running a Ponzi scheme and argued that the case should be dismissed because Bitcoin shouldn’t be considered a real currency. He promised a 7 percent weekly interest rate, but he used incoming money to pay out profits to older investors (making it a classic Ponzi scheme). Shavers collected up to 700,000 Bitcoin, according to the SEC, over the course of the scheme. Today, that would be worth over $60 million.
Mazzant wrote in his opinion:
“First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to puchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.”
Some naysayers might agree with Shavers, however. The California Department of Financial Institutions sent The Bitcoin Foundation a cease-and-desist letter in June, saying Bitcoin did not have the proper license to engage in the business of money transmission.
Despite this, however, we have yet to see a real spike in Bitcoin trading.
hat tip GigaOm