In an ongoing lawsuit by the Securities and Exchange Commission (SEC) against a Texas man it has accused of defrauding investors in a Ponzi scheme involving the popular "virtual currency" Bitcoin, Federal Magistrate Judge Amos Mazzant of the Eastern District of Texas re-affirmed in August his earlier denial of the defendants' motion to dismiss. In his ruling, Judgef Mazzant held that Bitcoin is "money" and that contracts involving the investment of Bitcoin rather than traditional currency are nonetheless subject to federal securities law. In an ironic twist, the ruling lends credibility to Bitcoin as a currency while simultaneously allowing the government to proceed in a case highlighting Bitcoin's risks and to potentially subject it to closer regulation-certainly an uncomfortable situation for a currency whose entire point is to serve as an alternative to government-sponsored legal tender.
At the request of the Securities and Exchange Commission, on February 17, 2009, United States District Judge David Godbey in Dallas issued the first of many orders which, in effect, seized Stanford Financial Group and placed it in a receivership. Thus began a lengthy civil case concerning the assets of the organization, which included various insurance policies. At the time, all civil suits against Allen Stanford himself, or against his employees, were stopped, as well as certain satellite claims against third parties. It is estimated that the firm had 30,000 clients in 136 countries with about $8.5 billion invested.