A U.S. federal judge in Texas has ruled that Bitcoin is a viable currency and that investments made are subject to Federal Securities Laws.
The ruling came in the case of an alleged Bitcoin Ponzi scheme operator who is facing legal charges for defrauding investors of 263,104 BTC, some $25 million when converted to dollars. Trendon Shavers, operator of the Bitcoin Savings and Trust (BTCST), promised investors interest rates of 1% per day, according to CoinDesk.
The Securities Exchange Commission (SEC) stepped in and filed suit against Shavers. The defendant attempted to argue that investments made with Bitcoin do not fall under the classification of securities since the digital currency is not currently regulated in the U.S.
U.S. Magistrate Judge Amos L. Mazzant saw things differently, finding that “Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.” The ruling allows the SEC to proceed with the case against Shavers.
The judge’s decision is likely to be appealed considering that Bitcoin is not regulated by the U.S. banking industry, nor by any current government regulations. The case may eventually have a tremendous impact on the way Bitcoin is perceived as a form of legal tender.
Federal authorities in the U.S. are attempting to control Bitcoin and the opportunities that exist for money laundering. Should they manage to succeed, the digital currency may lose favor as a peer-to-peer payment alternative.