Southeast Asian Bitcoin Site Charged With Securities Fraud

A Southeast Asia-based bitcoin website was charged with securities fraud after 72 others like it were seized and shut down this month by Manhattans district attorney.

Bitcoinhyip.org and other companies registered to YouYou Finance were seized Jan. 16 after an investigation that began in July, District Attorney Cyrus Vance Jr. said told an association of money-laundering specialists. An undercover agent e-mailed the site and was told he could not lose money in the investment, according to the complaint filed Monday in state court in Manhattan.

All you had to do, they said, was send them one bitcoin, and theyd send youthreebitcoins in return, within 48 hours, according to a copy of Vances speech. When our undercover investigator transferred a bitcoin to the operators bit-address, they kept it, and he never heard from them again.

The price of bitcoin has fallen almost 77 percent from its peak of $1,137 in November 2013 to about $267.

A federal case in Texas involving a $4.5 million Ponzi scheme was described by U.S. prosecutors in November as the first of its kind tied to bitcoins. Trendon Shavers, founder of Bitcoin Savings & Trust, raised at least 764,000 bitcoins by promising investors a return of as much as 3,641 percent, prosecutors have said. Instead, he used bitcoins from new investors to cover payments owed to earlier clients and paid for his own Las Vegas gambling and spa treatments, they said.

Vance has been an instrumental part of law enforcement investigations into money laundering at large banks including BNP Paribas SA (BNP) and Standard Chartered Plc. (STAN)

A year ago, Vance also testified at hearings convened in New York to discuss the regulation of bitcoins and other virtual currencies after the indictment of former Bitcoin Foundation Inc. Vice Chairman Charlie Shrem for money-laundering linked to Silk Road, a bitcoin-driven website allegedly used for buying drugs and other illicit goods. Shrem pleaded guilty and was sentenced in December to two years in prison.

Digital currencies have been linked to money laundering in the case of Liberty Reserve SA, described by the U.S. as a black-market bank that masked more than $6 billion in criminal proceeds. A manager pleaded guilty in August to conspiracy and operating an illegal money-remitting business, and seven people were charged by Manhattan U.S. Attorney Preet Bharara in May 2013.

On Monday, San Francisco-based startup Coinbase Inc. started the first licensed U.S. bitcoin exchange. Backed by the New York Stock Exchange, Coinbase Exchange can be used in the 24 states that support USD Wallets, according to a press statement.

The BITCOINHYIP.ORG website currently has no information on it, and has been replaced by http://www.seizedbymanhattanda.org.

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Southeast Asian Bitcoin Site Charged With Securities Fraud