Federal District Court Holds Bitcoin Is Money, SEC Can Pursue Bitcoin-Based Securities Charges


On August 6, the U.S. District Court for the Eastern District of Texas held that the court has subject matter jurisdiction over the SEC’s claims that a Texas man and his company defrauded investors in a Ponzi scheme involving Bitcoin. SEC v. Shavers, No. 13-416, 2013 WL 4028182 (E.D. Tex. Aug. 6, 2013). The SEC filed suit last month alleging that the man misled investors with false assurances about the investment opportunity in Bitcoin-denominated investments he offered and sold through the Internet, while actually using Bitcoin payments received from new investors to make purported interest payments and to cover investor withdrawals. In addressing subject matter jurisdiction, the court held that the institution’s investments meet the definition of investment contract, and are securities because, among other things, Bitcoin is within the definition of “money” for purposes of the rules governing investment contracts – Bitcoin can purchase goods or services, and can be exchanged for conventional government-backed currencies. Therefore, the court held that investors who provided Bitcoin investments provided “money,” and the court has jurisdiction to hear the case under the Securities Act of 1933 and the Exchange Act of 1934.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BuckleySandler LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.