SEC v. Trendon T. Shavers; and Bitcoin Savings and Trust, Eastern District of Texas (July 23, 2013) — Complaint

 
 
 
 
 
 
 
 
 
  
 
 
 
IN THE UNITED STATES DISTRICT COURT
 
EASTERN DISTRICT OF TEXAS
 
SHERMAN DIVISION 

SECURITIES AND EXCHANGE COMMISSION, 
Plaintiff, CIVIL ACTION NO.: 
-- against – JURY TRIAL  
DEMANDED 
TRENDON T. SHAVERS AND BITCOIN 
SAVINGS AND TRUST, 
Defendants. 
COMPLAINT 
Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 
defendants Trendon T. Shavers (“Shavers”) and Bitcoin Savings and Trust (“BTCST,” and 
together with Shavers, “Defendants”) alleges as follows: 
SUMMARY 
1. This case involves fraudulent offers and sales of securities by Shavers and 
BTCST, a Bitcoin-denominated Ponzi scheme founded and operated by Shavers.   
2. Bitcoin (“BTC”) is a virtual currency that may be traded on online exchanges for 
conventional currencies, including the U.S. dollar, or used to purchase goods and services online.  
BTC has no single administrator, or central authority or repository.   
3. From at least September 2011 to September 2012 (“relevant period”), Shavers, 
operating under the Internet name “pirateat40,” offered and sold BTCST investments over the 
Internet, raising more than 700,000 BTC in principal investments from BTCST investors, or 
more than $4.5 million based on the daily average price of BTC when the BTCST investors 
purchased their BTCST investments. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. Shavers falsely promised investors up to 7% interest weekly based on BTCST’s 
purported BTC market arbitrage activity, including selling BTC to individuals who wished to 
buy BTC “off the radar,” quickly, or in large quantities.   
5. In reality, the BTCST offering was a sham and a Ponzi scheme whereby Shavers 
used new BTCST investors’ BTC to pay the promised returns on outstanding BTCST 
investments and misappropriated BTCST investors’ BTC for his personal use.     
JURISDICTION AND VENUE 
6. This Court has jurisdiction over this action pursuant to Sections 20 and 22 of the 
Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21and 27 of 
the Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u and 78aa]. 
7. Venue is proper in this district under Section 22(a) of the Securities Act and 
Section 27 of the Exchange Act [15 U.S.C. §§ 77v(a) and 78aa] because Defendants may be 
found in and are inhabitants of McKinney, Texas; and because certain of the acts, practices, 
transactions and courses of business alleged herein occurred within the Eastern District of Texas. 
DEFENDANTS 
8. Trendon T. Shavers, age 30, who resides in McKinney, Texas, is the founder 
and operator of BTCST. 
9. BTCST, formerly known as First Pirate Savings & Trust, is an unincorporated 
entity with no brick and mortar presence.  The BTCST investments Defendants offered and sold 
to the investing public as alleged herein constitute “securities” as defined by Section 2(a)(1) of 
the Securities Act [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 
SEC v. Trendon T. Shavers, et al 2 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
77c(a)(10)].  BTCST’s securities were not traded on any exchange and BTCST has not filed any 
registration statements as to its securities with the Commission.  
FACTS 
Defendants’ BTCST Offering and Misrepresentations to Investors 
10. On or about November 3, 2011, Shavers, under the Internet name pirateat40, 
posted a general solicitation for BTCST, entitled “Looking for Lenders,” on the Bitcoin Forum, 
an online forum dedicated to BTC where, among other things, numerous BTC-denominated 
investment opportunities were posted.  The solicitation stated that a minimum of 50 BTC was 
required to invest. 
11. In the November 3, 2011 solicitation on the Bitcoin Forum, Shavers wrote that he 
was in the business of “selling BTC to a group of local people” and offered investors up to 1% 
interest daily “until either you withdraw the funds or my local dealings dry up and I can no 
longer be profitable.” 
12. On or about November 11, 2011, when asked by another participant on the 
Bitcoin Forum how he was able to make such high profits, Shavers replied:  “Groups of people 
that want to be off the radar, buy large quantities, and instant availability.  I would say it’s the 
Hard Money sector of Bitcoin.” 
13. On or about November 13, 2011, in a post on the Bitcoin Forum, Shavers wrote:  
“Hey all, I have some big orders coming in this week.  I just wanted to thank all of my investors 
as I’m able to fulfill them without the risk of them going elsewhere.  Still looking for about 1,000 
SEC v. Trendon T. Shavers, et al 3 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
BTC total in lenders based on negotiations with my buyers in the coming weeks.  It’s growing, 
it’s growing!” 
14. On or about November 22, 2011, in a post on the Bitcoin Forum, Shavers wrote:  
“As with any movements in the market up or down I have enough order activity going on that 
my risk is very limited.  In most cases the coins go uncovered less than a few hours, I have yet to 
come close to taking a loss on any deal.  With that said, in the event there was a huge change in 
the market and I needed to personally cover the difference I am more than willing to do so.” 
15. On or about December 19, 2011, in a post on the Bitcoin Forum, Shavers wrote:  
“My clients deal in cash only and I don’t move a single coin until the cash is in hand and I’m out 
of harms [sic] way (just in case :) ).  So risk is almost 0.”  On the same day, in a subsequent post 
on the Bitcoin Forum, Shavers wrote:  “The prices for picking up coins from my clients selling 
coins is set prior to the purchases most of the time.  Anything not covered is hedged or I take the 
risk personally.” 
16. On or about January 19, 2012, in a post on the Bitcoin Forum, Shavers wrote:  “If 
my business is illegal then anyone trading coins for cash and back to coins is doing something 
illegal. :)” 
17. On or about February 9, 2012, in a post on the Bitcoin Forum, Shavers announced 
that the required minimum to open a new BTCST account was being raised to 100 BTC. 
18. On or about February 10, 2012, in response to a question by another participant 
on the Bitcoin Forum, Shavers wrote that BTCST investors could have their BTCST account set 
up to automatically reinvest rather than pay out earnings.   
SEC v. Trendon T. Shavers, et al 4 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
19. On or about February 12, 2012, in a post on the Bitcoin Forum, Shavers wrote 
that anyone wishing to open a new BTCST account needed a referral, although he did not 
indicate whether the referral had to be from an existing BTCST investor or someone else.    
20. On or about April 10, 2012, Shavers launched a website for BTCST that allowed 
investors to track their BTCST investments online and changed the name from First Pirate 
Savings & Trust to BTCTS.   
21. On or about May 21, 2012, in a post on the Bitcoin Forum, Shavers wrote that 
BTCST was not a Ponzi scheme.  Later the same day, in response to the question by another 
Bitcoin Forum participant, “Would you be willing to disclose anything about your actual profit 
margins over the 7% weekly you pay for use of the funds?,” Shavers wrote:  “I net gross 10.65% 
per week and payout 5.98% on average and it really depends on how much I want to work.” 
22. In or about early July 2012, in a post on the Bitcoin Forum, Shavers wrote that, 
beginning August 1, 2012, interest payments on BTCST investments would be lowered to 3.9% 
weekly. 
23. On or about July 23, 2012, in a post on the Bitcoin Forum, Shavers announced 
that he was eliminating the referral requirement to open a new BTCST account. 
24. In August 2012, as the scheme collapsed, Shavers made preferential redemptions 
to friends and longtime BTCST investors.   
25. During the relevant period, Shavers conducted BTCST business under the Internet 
name pirateat40 and all statements made on the Bitcoin Forum by pirateat40 were made by 
Shavers. 
SEC v. Trendon T. Shavers, et al 5 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
26. Shavers began selling BTCST investments at least as early as September 2011. 
27. During the relevant period, directly or indirectly, Shavers sold BTCST 
investments over the Internet to at least 66 investors, including investors residing in Connecticut, 
Hawaii, Illinois, Louisiana, Massachusetts, North Carolina, and Pennsylvania. 
28. Contrary to representations made to BTCST investors and potential investors, 
BTCST was a sham and a Ponzi scheme, and Shavers misappropriated BTCST investors’ BTC, 
among other things, for his personal use. 
29. At the time Shavers offered and sold the BTCST securities, Shavers knew, or was 
reckless in not knowing, that BTCST did not sell BTC to individuals who wanted to buy BTC off 
the radar, quickly or in large quantities; BTCST was not in the business of buying and selling 
BTC; and BTCST did not generate returns for its investors through such BTC market arbitrage. 
30. At the time Shavers offered and sold the BTCST securities, Shavers knowingly or 
recklessly used new BTCST investor BTC to pay withdrawals and purported interest payments 
on outstanding BTCST investments; used BTCST investors’ BTC for, among other things, his 
personal use; and made preferential redemptions to friends and longtime BTCST investors. 
Misappropriation of Investor Funds 
31. During the relevant period, Shavers obtained at least 700,467 BTC in principal 
investments from BTCST investors, or $4,592,806 when converted to U.S. dollars based on the 
daily average price of BTC when the BTCST investors purchased their BTCST investments. 
32. During the relevant period, Shavers returned at least 507,148 BTC to BTCST 
investors as withdrawals or purported interest payments. 
SEC v. Trendon T. Shavers, et al 6 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
33. During the relevant period, Shavers transferred at least 150,649 BTC to his 
personal account at an online BTC currency exchange which, among other things, he then sold or 
used to day-trade (converting BTC to U.S. dollars and vice versa).  As a result of this activity, 
Shavers suffered a net loss from his day-trading, but realized net proceeds of $164,758 from his 
net sales of 86,202 BTC. 
34. During the relevant period, Shavers transferred $147,102 from his personal 
account at the online BTC currency exchange to accounts he controlled at an online payment 
processor and his personal checking account, which he then used for, among other things, his 
personal expenses, including rent, car-related expenses, utilities, retail purchases, casinos, and 
meals. 
FIRST CLAIM FOR RELIEF
 
Violations of Section 17(a) of the Securities Act 

35. The Commission re-alleges and incorporates paragraphs 1 through 34 by 
reference as if fully set forth herein. 
36. Defendants, directly or indirectly, singly or in concert, in the offer and sale of 
securities, by the use of the means or instruments of transportation or communication in 
interstate commerce, or by use of the mails, have (a) employed devices, schemes, or artifices to 
defraud; (b) made untrue statements of material fact, or omitted to state material facts necessary 
in order to make statements made, in light of the circumstances under which they were made, not 
misleading; and/or (c) engaged in transactions, practices, or courses of business which operate or 
would operate as a fraud or deceit upon the purchasers of securities. 
SEC v. Trendon T. Shavers, et al 7 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37. By reason of the foregoing, Defendants, singly or in concert, directly or indirectly, 
have violated and, unless enjoined, will again violate Section 17(a) of the Securities Act [15 
U.S.C. § 77q(a)]. 
SECOND CLAIM FOR RELIEF
 
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder 

38. The Commission re-alleges and incorporates paragraphs 1 through 34 by 
reference as if fully set forth herein. 
39. Defendants directly or indirectly, singly or in concert, in connection with the 
purchase and sale of securities, by use of the means or instrumentalities of interstate commerce, 
or of the mails, or of the facilities of a national securities exchange, have: (a) employed devices, 
schemes, or artifices to defraud; (b) made untrue statements of material fact, or omitted to state 
material facts necessary in order to make statements made, in light of the circumstances under 
which they were made, not misleading; and/or (c) engaged in acts, practices, or courses of 
business which operate or would operate as a fraud or deceit upon other persons. 
40. By reason of the foregoing, Defendants, singly or in concert, directly or indirectly, 
have violated and, unless enjoined, will again violate Section 10(b) of the Exchange Act [15 
U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §240.10b-5]. 
THIRD CLAIM FOR RELIEF
 
Violations of Section 5(a) and 5(c) of the Securities Act 

41. The Commission re-alleges and incorporates paragraphs 1 through 34 by 
reference as if fully set forth herein. 
SEC v. Trendon T. Shavers, et al 8 
COMPLAINT 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
42. Defendants, directly or indirectly, singly or in concert, have made use of the 
means or instruments of transportation or communication in interstate commerce, or the mails, to 
offer and sell securities when no registration statements was filed or in effect as to such securities 
and when no exemption from registration was applicable. 
43. By reason of the foregoing, Defendants have violated and, unless enjoined, will 
again violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c).]    
PRAYER FOR RELIEF 
WHEREFORE, the Commission respectfully requests that the Court enter a Final 
Judgment: 
(a)	 Finding that Defendants each violated the securities laws as alleged 
herein; 
(b)	 Permanently restraining and enjoining Defendants, and their officers, 
agents, servants, employees, attorneys, and all other persons in active 
concert or participation with them, who receive actual notice of the Final 
Judgment, by personal service or otherwise, and each of them, from 
violating Sections 5 and 17(a) of the Securities Act [15 U.S.C. §§ 77e and  
77q(a)], and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and 
Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; 
(c)	 Ordering Defendants to disgorge their ill-gotten gains received as a result 
of their violations of the federal securities laws and to pay pre-judgment 
interest thereon; 
SEC v. Trendon T. Shavers, et al 9 
COMPLAINT 

 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
(d) Ordering Defendants to pay civil money penalties pursuant to Section 
20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the 
Exchange Act [15 U.S.C. § 78u(d)(3)]; and 
(e) Granting such other and further relief to the Commission as this Court 
may deem just and proper. 
Dated:  July 23, 2013 By: /s/ Jessica B. Magee 
JESSICA B. MAGEE 
Lead Attorney 
Texas Bar No. 24037757 
Matthew J. Gulde 
Illinois Bar No. 6272325 
SECURITIES AND EXCHANGE COMMISSION 
Burnett Plaza, Suite 1900 
801 Cherry Street, Unit 18 
Fort Worth, TX  76102 
(817) 978-6465 
(817) 978-4927 (fax) 
[email protected] 
ATTORNEYS FOR PLAINTIFF 
SECURITIES AND EXCHANGE COMMISSION 
Of Counsel: 
Andrew M. Calamari* ([email protected]) 
Valerie A. Szczepanik* ([email protected]) 
Philip Moustakis* ([email protected]) 
SECURITIES AND EXCHANGE COMMISSION 
NEW YORK REGONAL OFFICE 
3 World Financial Center 
New York, NY 10281-1022 
Ph:  (212) 336-0542 
*not admitted in the E.D. Tex. 
SEC v. Trendon T. Shavers, et al 
COMPLAINT 
10 

IN THE UNITED STATES DISTRICT COURT
 
EASTERN DISTRICT OF TEXAS
 

SHERMAN DIVISION 


SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, CIVIL ACTION NO.: 

-- against – JURY TRIAL  
DEMANDED 

TRENDON T. SHAVERS AND BITCOIN 
SAVINGS AND TRUST, 

Defendants. 

COMPLAINT 

Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 

defendants Trendon T. Shavers (“Shavers”) and Bitcoin Savings and Trust (“BTCST,” and 

together with Shavers, “Defendants”) alleges as follows: 

SUMMARY 

1. This case involves fraudulent offers and sales of securities by Shavers and 

BTCST, a Bitcoin-denominated Ponzi scheme founded and operated by Shavers.   

2. Bitcoin (“BTC”) is a virtual currency that may be traded on online exchanges for 

conventional currencies, including the U.S. dollar, or used to purchase goods and services online.  

BTC has no single administrator, or central authority or repository.   

3. From at least September 2011 to September 2012 (“relevant period”), Shavers, 

operating under the Internet name “pirateat40,” offered and sold BTCST investments over the 

Internet, raising more than 700,000 BTC in principal investments from BTCST investors, or 

more than $4.5 million based on the daily average price of BTC when the BTCST investors 

purchased their BTCST investments. 



 

 

 

 

 

  

 

 

 

 

 

 

 

4. Shavers falsely promised investors up to 7% interest weekly based on BTCST’s 

purported BTC market arbitrage activity, including selling BTC to individuals who wished to 

buy BTC “off the radar,” quickly, or in large quantities.   

5. In reality, the BTCST offering was a sham and a Ponzi scheme whereby Shavers 

used new BTCST investors’ BTC to pay the promised returns on outstanding BTCST 

investments and misappropriated BTCST investors’ BTC for his personal use.     

JURISDICTION AND VENUE 

6. This Court has jurisdiction over this action pursuant to Sections 20 and 22 of the 

Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21and 27 of 

the Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u and 78aa]. 

7. Venue is proper in this district under Section 22(a) of the Securities Act and 

Section 27 of the Exchange Act [15 U.S.C. §§ 77v(a) and 78aa] because Defendants may be 

found in and are inhabitants of McKinney, Texas; and because certain of the acts, practices, 

transactions and courses of business alleged herein occurred within the Eastern District of Texas. 

DEFENDANTS 

8. Trendon T. Shavers, age 30, who resides in McKinney, Texas, is the founder 

and operator of BTCST. 

9. BTCST, formerly known as First Pirate Savings & Trust, is an unincorporated 

entity with no brick and mortar presence. The BTCST investments Defendants offered and sold 

to the investing public as alleged herein constitute “securities” as defined by Section 2(a)(1) of 

the Securities Act [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 

SEC v. Trendon T. Shavers, et al 2 
COMPLAINT 



 

 

 

 

 

 

 

 

 

 

 

 

 

77c(a)(10)]. BTCST’s securities were not traded on any exchange and BTCST has not filed any 

registration statements as to its securities with the Commission.  

FACTS 

Defendants’ BTCST Offering and Misrepresentations to Investors 

10. On or about November 3, 2011, Shavers, under the Internet name pirateat40, 

posted a general solicitation for BTCST, entitled “Looking for Lenders,” on the Bitcoin Forum, 

an online forum dedicated to BTC where, among other things, numerous BTC-denominated 

investment opportunities were posted.  The solicitation stated that a minimum of 50 BTC was 

required to invest. 

11. In the November 3, 2011 solicitation on the Bitcoin Forum, Shavers wrote that he 

was in the business of “selling BTC to a group of local people” and offered investors up to 1% 

interest daily “until either you withdraw the funds or my local dealings dry up and I can no 

longer be profitable.” 

12. On or about November 11, 2011, when asked by another participant on the 

Bitcoin Forum how he was able to make such high profits, Shavers replied:  “Groups of people 

that want to be off the radar, buy large quantities, and instant availability.  I would say it’s the 

Hard Money sector of Bitcoin.” 

13. On or about November 13, 2011, in a post on the Bitcoin Forum, Shavers wrote:  

“Hey all, I have some big orders coming in this week.  I just wanted to thank all of my investors 

as I’m able to fulfill them without the risk of them going elsewhere.  Still looking for about 1,000 

SEC v. Trendon T. Shavers, et al 3 
COMPLAINT 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

BTC total in lenders based on negotiations with my buyers in the coming weeks.  It’s growing, 

it’s growing!” 

14. On or about November 22, 2011, in a post on the Bitcoin Forum, Shavers wrote:  

“As with any movements in the market up or down I have enough order activity going on that 

my risk is very limited.  In most cases the coins go uncovered less than a few hours, I have yet to 

come close to taking a loss on any deal.  With that said, in the event there was a huge change in 

the market and I needed to personally cover the difference I am more than willing to do so.” 

15. On or about December 19, 2011, in a post on the Bitcoin Forum, Shavers wrote:  

“My clients deal in cash only and I don’t move a single coin until the cash is in hand and I’m out 

of harms [sic] way (just in case :) ).  So risk is almost 0.” On the same day, in a subsequent post 

on the Bitcoin Forum, Shavers wrote:  “The prices for picking up coins from my clients selling 

coins is set prior to the purchases most of the time.  Anything not covered is hedged or I take the 

risk personally.” 

16. On or about January 19, 2012, in a post on the Bitcoin Forum, Shavers wrote:  “If 

my business is illegal then anyone trading coins for cash and back to coins is doing something 

illegal. :)” 

17. On or about February 9, 2012, in a post on the Bitcoin Forum, Shavers announced 

that the required minimum to open a new BTCST account was being raised to 100 BTC. 

18. On or about February 10, 2012, in response to a question by another participant 

on the Bitcoin Forum, Shavers wrote that BTCST investors could have their BTCST account set 

up to automatically reinvest rather than pay out earnings.   

SEC v. Trendon T. Shavers, et al 4 
COMPLAINT 



 

 

 

 

 

  

 

 

 

 

 

 

 

19. On or about February 12, 2012, in a post on the Bitcoin Forum, Shavers wrote 

that anyone wishing to open a new BTCST account needed a referral, although he did not 

indicate whether the referral had to be from an existing BTCST investor or someone else.    

20. On or about April 10, 2012, Shavers launched a website for BTCST that allowed 

investors to track their BTCST investments online and changed the name from First Pirate 

Savings & Trust to BTCTS.   

21. On or about May 21, 2012, in a post on the Bitcoin Forum, Shavers wrote that 

BTCST was not a Ponzi scheme.  Later the same day, in response to the question by another 

Bitcoin Forum participant, “Would you be willing to disclose anything about your actual profit 

margins over the 7% weekly you pay for use of the funds?,” Shavers wrote:  “I net gross 10.65% 

per week and payout 5.98% on average and it really depends on how much I want to work.” 

22. In or about early July 2012, in a post on the Bitcoin Forum, Shavers wrote that, 

beginning August 1, 2012, interest payments on BTCST investments would be lowered to 3.9% 

weekly. 

23. On or about July 23, 2012, in a post on the Bitcoin Forum, Shavers announced 

that he was eliminating the referral requirement to open a new BTCST account. 

24. In August 2012, as the scheme collapsed, Shavers made preferential redemptions 

to friends and longtime BTCST investors.   

25. During the relevant period, Shavers conducted BTCST business under the Internet 

name pirateat40 and all statements made on the Bitcoin Forum by pirateat40 were made by 

Shavers. 

SEC v. Trendon T. Shavers, et al 5 
COMPLAINT 



 

 

 

 

 

  

 

 

 

 

 

 

26. Shavers began selling BTCST investments at least as early as September 2011. 

27. During the relevant period, directly or indirectly, Shavers sold BTCST 

investments over the Internet to at least 66 investors, including investors residing in Connecticut, 

Hawaii, Illinois, Louisiana, Massachusetts, North Carolina, and Pennsylvania. 

28. Contrary to representations made to BTCST investors and potential investors, 

BTCST was a sham and a Ponzi scheme, and Shavers misappropriated BTCST investors’ BTC, 

among other things, for his personal use. 

29. At the time Shavers offered and sold the BTCST securities, Shavers knew, or was 

reckless in not knowing, that BTCST did not sell BTC to individuals who wanted to buy BTC off 

the radar, quickly or in large quantities; BTCST was not in the business of buying and selling 

BTC; and BTCST did not generate returns for its investors through such BTC market arbitrage. 

30. At the time Shavers offered and sold the BTCST securities, Shavers knowingly or 

recklessly used new BTCST investor BTC to pay withdrawals and purported interest payments 

on outstanding BTCST investments; used BTCST investors’ BTC for, among other things, his 

personal use; and made preferential redemptions to friends and longtime BTCST investors. 

Misappropriation of Investor Funds 

31. During the relevant period, Shavers obtained at least 700,467 BTC in principal 

investments from BTCST investors, or $4,592,806 when converted to U.S. dollars based on the 

daily average price of BTC when the BTCST investors purchased their BTCST investments. 

32. During the relevant period, Shavers returned at least 507,148 BTC to BTCST 

investors as withdrawals or purported interest payments. 

SEC v. Trendon T. Shavers, et al 6 
COMPLAINT 



 

 

 

 

 

  

 

 

 
 

 

 

 

33. During the relevant period, Shavers transferred at least 150,649 BTC to his 

personal account at an online BTC currency exchange which, among other things, he then sold or 

used to day-trade (converting BTC to U.S. dollars and vice versa).  As a result of this activity, 

Shavers suffered a net loss from his day-trading, but realized net proceeds of $164,758 from his 

net sales of 86,202 BTC. 

34. During the relevant period, Shavers transferred $147,102 from his personal 

account at the online BTC currency exchange to accounts he controlled at an online payment 

processor and his personal checking account, which he then used for, among other things, his 

personal expenses, including rent, car-related expenses, utilities, retail purchases, casinos, and 

meals. 

FIRST CLAIM FOR RELIEF
 
Violations of Section 17(a) of the Securities Act 


35. The Commission re-alleges and incorporates paragraphs 1 through 34 by 

reference as if fully set forth herein. 

36. Defendants, directly or indirectly, singly or in concert, in the offer and sale of 

securities, by the use of the means or instruments of transportation or communication in 

interstate commerce, or by use of the mails, have (a) employed devices, schemes, or artifices to 

defraud; (b) made untrue statements of material fact, or omitted to state material facts necessary 

in order to make statements made, in light of the circumstances under which they were made, not 

misleading; and/or (c) engaged in transactions, practices, or courses of business which operate or 

would operate as a fraud or deceit upon the purchasers of securities. 

SEC v. Trendon T. Shavers, et al 7 
COMPLAINT 



 

 

 

 

 

  

 

 
 

 

 

 

 

 

 

37. By reason of the foregoing, Defendants, singly or in concert, directly or indirectly, 

have violated and, unless enjoined, will again violate Section 17(a) of the Securities Act [15 

U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF
 
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder 


38. The Commission re-alleges and incorporates paragraphs 1 through 34 by 

reference as if fully set forth herein. 

39. Defendants directly or indirectly, singly or in concert, in connection with the 

purchase and sale of securities, by use of the means or instrumentalities of interstate commerce, 

or of the mails, or of the facilities of a national securities exchange, have: (a) employed devices, 

schemes, or artifices to defraud; (b) made untrue statements of material fact, or omitted to state 

material facts necessary in order to make statements made, in light of the circumstances under 

which they were made, not misleading; and/or (c) engaged in acts, practices, or courses of 

business which operate or would operate as a fraud or deceit upon other persons. 

40. By reason of the foregoing, Defendants, singly or in concert, directly or indirectly, 

have violated and, unless enjoined, will again violate Section 10(b) of the Exchange Act [15 

U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §240.10b-5]. 

THIRD CLAIM FOR RELIEF
 
Violations of Section 5(a) and 5(c) of the Securities Act 


41. The Commission re-alleges and incorporates paragraphs 1 through 34 by 

reference as if fully set forth herein. 

SEC v. Trendon T. Shavers, et al 8 
COMPLAINT 



 

 

 

 

 

  

 

 

 

 

 

 

 

42. Defendants, directly or indirectly, singly or in concert, have made use of the 

means or instruments of transportation or communication in interstate commerce, or the mails, to 

offer and sell securities when no registration statements was filed or in effect as to such securities 

and when no exemption from registration was applicable. 

43. By reason of the foregoing, Defendants have violated and, unless enjoined, will 

again violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c).]    

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

(a)	 Finding that Defendants each violated the securities laws as alleged 

herein; 

(b)	 Permanently restraining and enjoining Defendants, and their officers, 

agents, servants, employees, attorneys, and all other persons in active 

concert or participation with them, who receive actual notice of the Final 

Judgment, by personal service or otherwise, and each of them, from 

violating Sections 5 and 17(a) of the Securities Act [15 U.S.C. §§ 77e and  

77q(a)], and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and 

Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; 

(c)	 Ordering Defendants to disgorge their ill-gotten gains received as a result 

of their violations of the federal securities laws and to pay pre-judgment 

interest thereon; 

SEC v. Trendon T. Shavers, et al 9 
COMPLAINT 



 

  

 

 

 

  

 

 
  
 

 
 

 

 

 

 

(d) Ordering Defendants to pay civil money penalties pursuant to Section 

20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the 

Exchange Act [15 U.S.C. § 78u(d)(3)]; and 

(e) Granting such other and further relief to the Commission as this Court 

may deem just and proper. 

Dated: July 23, 2013 By: /s/ Jessica B. Magee 
JESSICA B. MAGEE 
Lead Attorney 
Texas Bar No. 24037757 
Matthew J. Gulde 
Illinois Bar No. 6272325 
SECURITIES AND EXCHANGE COMMISSION 
Burnett Plaza, Suite 1900 
801 Cherry Street, Unit 18 
Fort Worth, TX  76102 
(817) 978-6465 
(817) 978-4927 (fax) 
[email protected] 

ATTORNEYS FOR PLAINTIFF 
SECURITIES AND EXCHANGE COMMISSION 

Of Counsel: 

Andrew M. Calamari* ([email protected]) 
Valerie A. Szczepanik* ([email protected]) 
Philip Moustakis* ([email protected]) 
SECURITIES AND EXCHANGE COMMISSION 
NEW YORK REGONAL OFFICE 
3 World Financial Center 
New York, NY 10281-1022 
Ph: (212) 336-0542 

*not admitted in the E.D. Tex. 

SEC v. Trendon T. Shavers, et al 
COMPLAINT 

10 

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