On September 18, the U.S. District Court for the Eastern District of Texas held that the defendant’s bitcoin investment program was a Ponzi scheme, and enjoined the founder and the investment program from violating Section 10(b) of the Securities Exchange Act of 1934 and Sections 5 and 17(a) of the Securities Act of 1933. S.E.C. v. Shavers, No. 4:13-CV-416 (E.D. Tex. Sep. 18, 2014). The court ruled that the founder knowingly and intentionally operated the bitcoin investment program as a sham and Ponzi scheme by repeatedly making misrepresentations, both to investors and potential investors alike, concerning: (i) the use of their bitcoins; (ii) how he planned to generate the promised returns; and (iii) the safety of the investments. The founder used new bitcoins received from investors to make payments on outstanding bitcoin investments, and diverted investors’ bitcoins for his own personal use. The court granted Plaintiff’s uncontested motion for summary judgment or, in the alternative, for default judgment, and, in addition to the injunctions, ordered Defendants jointly and severally liable for disgorgement of approximately $40 million in profits, and ordered each Defendant to pay civil penalties in the amount of $150,000.