Bitcoin a legitimate form of currency, US Judge rules

By Thursday, August 8, 2013 0 , , Permalink 0

A US federal judge overseeing a case wherein a man is accused of running a Bitcoin-inspired Ponzi scheme has ruled that the virtual currency is indeed a ‘form of money’ which needs to be regulated and subjected to US laws.

Case against Trendon T. Shavers has been filed with the US district court by SEC (Securities and Exchange Commission, US) accusing him of running a Ponzi scheme inspired from Bitcoin. The accused is the founder and operator of the Bitcoin Saving and Trust and managed to raise over 700,000 in Bitcoin investments while promising 7 per cent weekly interest in the year 2011 and 2012.

The SEC is of the opinion that Shavers used Bitcoin from new investors to cover interest payouts as well as withdrawals on outstanding payments. He also used the virtual currency for trade on this own personal account as well as to pay off his own personal expenses.

The judge, in a four page opinion, ruled that Bitcoin was indeed a valid currency because of the fact that it can be both traded against other currencies like US Dollars, Euro, Yen and can be used to buy goods and services.

Bitcoin has been having a lot trouble lately with the US authorities with California recently serving a Cease and Desist order against the Bitcoin Foundation. The Thailand government declared Bitcoin as illegal and suspended trading of the cryptocurrency indefinitely just last week. However, the currency has found some form of legitimacy with the French government after Bitcoin-Central received an approval to operate as a bank last year.

Apart from the regulatory hurdles, Bitcoin is suffering from security lapses as well. Mt. Gox, the largest Bitcoin exchange in the world, has been subjected to numerous DDoS attacks, which has led to huge ups and downs in the trading prices of the currency.