On paper, Bitcoins sound like a libertarian's dream: A virtual crypto-currency that's veiled in anonymity, free from ties to national governments, and wonderfully bereft of transaction fees? Take that, The Man! But now that Bitcoins have been thrust into the limelight, The Man is starting to take back. Earlier this week, a federal judge in Texas ruled that Bitcoins are indeed a currency, and therefore subject to government regulation.
The judgment didn't occur in a vacuum. Judge Amos Mazzant came to the determination during a case against Bitcoin Savings and Trust, a hedge fund that "raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments were offered and sold," according to the U.S. Security and Exchange Commission. When the SEC filed the case, 700,000 Bitcoins were worth in excess of $60 million.
But all those digital dollars weren't invested in earnest, and the SEC alleges that BS&T operator Trendon Shavers defrauded his investors. Shavers' defense? Bitcoins aren't money, so shove it, SEC.
Judge Mazzant's finding squashed that argument, as Ars Technica first reported. Here's what His Honor had to say:
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