Bitcoin Ponzi scheme operator pleaded guilty to securities fraud.

On Monday, Trendon Shavers, 33, McKinney, Texas native accused of operating a Ponzi scheme that involved bitcoins pleaded guilty in Manhattan court in what is considered the first U.S. criminal securities fraud case related to the virtual currency.

The man told U.S. Magistrate Judge Sarah Netburn that he made false statements to investors. “I know what I did was wrong, and I’m very sorry,” he said.

In 2011, Shavers started his own company dubbed Bitcoin Savings & Trust. He used its firm to collect bitcoins from potential investors over the web, promising to pay pay investors 1 percent interest on their investment every 3 days, or 7 percent per week. Instead, the man carried out a Bitcoin Ponzi scheme.

This scheme is a fake investment operation in which the operator pays returns to its prior investors with new capital from new investors. So, Shaver used the investors’ money to pay back older ones. The rest of bitcoins he spent on a used BMW M5, expensive meals and casino outings.

Plus, according to the prosecutors, Shavers had invested some of the bitcoins with Mt. Gox, the now-defunct Tokoyo-based bitcoin exchange.

Assistant U.S. Attorney Michael Ferrara told the judge that Shavers invested only some of the bitcoins he possessed. Instead, the accused was “receiving money from investor B to pay investor A. In other words, he had the telltale signs of a Ponzi scheme,” reads Associated Press.

U.S. Attorney Preet Bharara reportedly said in a statement that Shavers’ scheme “yielded high returns for himself rather than his investors,” reports International Business Times. “Instead of reaping gains, his investors were largely swindled out of their money in a cyber-age Ponzi scheme,” Bharara added.

Shavers owned 7 percent of all bitcoins in public circulation as he carried out his scheme from September 2011 to September 2012. The bitcoins amounted to $807,380 according to the average price of bitcoins during the ruse.

Trendon Shavers was arrested in November, two months after a Texas judge ordered him to pay more than $40 million in disgorgement and interest and a civil penalty of $150,000 in a separate civil lawsuit by U.S. Securities and Exchange Commission. He was released on bail the same month, states International Business Times.

Shavers reached a plea deal in which he agreed to avoid appealing any sentence at or below 41 months in jail, Reuters reported. A plea agreement recommends he spend roughly three years in prison. His sentencing is scheduled for February 3 before U.S. District Judge Lewis Kaplan.

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