August 08, 2013

A U.S. federal judge ruled yesterday that the virtual currency Bitcoin is real money and is subject to regulation by government agencies, according to news sources.

Trendon Shavers, a 30-year-old man recently charged with running a Ponzi scheme using Bitcoin, tried to get his case thrown out by claiming that Bitcoin isn’t real money and therefore is not subject to regulation by the U.S. government.

The court rejected Shavers’ claim yesterday, according to media reports, ruling that Bitocin is real money, and that the Bitcoins invested in Bitcoin Savings and Trust -- Shavers’ hedge fund -- count as securities that are subject to SEC regulation.

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Bitcoin was originally founded on the idea that it could not be regulated, since Bitcoins are handled by computer algorithms, opensource Bitcoin applications and a peer-to-peer network, rather than by a central bank.

Despite that original intention the U.S. and other governments have begun taking regulatory actions around the virtual currency. The Department of Homeland Security recently issued a seizure warrant on a Bitcoin exchange. And last month Thailand became the first country to ban Bitcoins.

The Bitcoin community has made efforts to jump ahead of regulators. A number of Bitcoin participants recently banded together to form a self-regulatory organization called DATA.

ABOUT THE AUTHOR
Jonathan Camhi is a graduate of the City University of New York's Graduate School of Journalism, where he focused on international reporting and interned at the Hindustan Times in Delhi, ...