NEW YORK (REUTERS) - A US federal judge in Texas ordered Bitcoin Savings and Trust and its owner to pay a combined US$40.7 million (S$51.5 million) after the Securities and Exchange Commission (SEC) established that the company, which sold investments using the virtual currency, was a Ponzi scheme.

In a decision dated Thursday, US Magistrate Judge Amos Mazzant said Trendon Shavers "knowingly and intentionally" operated his company "as a sham and a Ponzi scheme," misleading investors about the use of their bitcoin, how he would generate promised returns and the safety of their investments.

Shavers, of McKinney, Texas, did not immediately respond on Friday to a request for comment. His ability to pay the judgment is unclear.

Shavers' lawyer withdrew from the civil case this week, court records show.

The SEC said Shavers used the online moniker "pirateat40" to raise more than 732,000 bitcoin from February 2011 to August 2012, promising investors up to 7 per cent in weekly interest to be paid based on his ability to trade the currency.

But according to the decision, Shavers used new bitcoin to repay earlier investors, diverted some to personal accounts at the now-bankrupt Mt Gox exchange and elsewhere, and spent some investor funds on rent, food, shopping and casino visits.

"The collective loss to BTCST investors who suffered net losses (there were also net winners) was 265,678 bitcoins, or more than US$149 million at current exchange rates," wrote Judge Mazzant, who sits in Sherman, Texas.

He held Shavers and his company liable to give up US$38.6 million of illegal profits plus US$1.8 million in interest.

Each defendant was also fined US$150,000.

The SEC announced the case on July 23, 2013, the same day it warned investors to be on alert for potential scams involving bitcoin and other "cutting-edge" investments.