A Texas judge ruled Tuesday that lawsuits filed against Trendon Shavers, founder and operator of the investment service Bitcoin Savings and Trust, could proceed despite his claim that the Bitcoin investments he offered are not securities subject to U.S. regulation.
According to Judge Amos L. Mazzant of the Eastern District of Texas, Bitcoin investments “meet the definition of investment contract,” and therefore are in fact securities.
In other words, Bitcoin has finally hit the big time.
Shavers is being accused of running a Ponzi scheme targeted at Bitcoin traders, and as Kirsten Salyer at Bloomberg notes the judge’s ruling will likely calm investors that have felt uneasy by the use of such a new, and potentially unstable, form of currency.
“Legal safeguards can help make Bitcoin more attractive to a larger group of users,” Sayler wrote Wednesday. “It's tech-chic that Bitcoin investments are new and trendy and different. It's comforting that they are also apparently protected under federal securities laws.”
Jordan Maglich at Forbes thinks the implications stretch beyond just Bitcoin pointing out that other non-traditional investments have become a rising problem for federal regulators. The Bitcoin ruling can then be used to set a precedent for future non-traditional cases.
As The Deseret News reported earlier this summer, Bitcoin has been gaining in popularity, partly due to the endorsement of the tech titans Cameron and Tyler Winklevoss, who took both praise and criticism for their support of the electronic currency.
“I’ve been saying for some time now that Bitcoin’s obviously and clearly in an investment bubble,” Forbes’ Tim Worstall wrote in early July, adding his concern that “these virtual markets have absolutely no regulation at all.”
With the new court ruling in Texas identifying Bitcoin as a bonafide form of currency subject to the legal regulations of other money, Worstall’s concern may now be outdated. As of Tuesday morning, the Winkevoss' support appears to be less an act of self-indulgent risk than a natural reaction to what may potentially become the money of choice in the 21st century.
Copyright 2015, Deseret News Publishing Company