A man accused of being the Bernie Madoff of bitcoin, the electronic currency, can be pursued by the Securities and Exchange Commission after a federal judge ruled that bitcoin is real money.

Trendon Shavers is accused of defrauding investors by taking 700,467 bitcoins, worth$4,592,806, and promising a weekly return of 7 percent, according to a federal complaint filed by the SEC.

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Shavers, who founded Bitcoin Savings and Trust, had argued that bitcoin linked to his website was not securities because "bitcoin is not money, and is not part of anything regulated by the United States," according to federal documents.

Judge Amos Mazzant of U.S. District Court in the Eastern Division of Texas, disagreed in a ruling on Tuesday, writing, "It is clear that bitcoin can be used as money."

"The only limitation of bitcoin is that it is limited to those places that accept it as currency," Mazzant wrote. "However, it can also be exchanged for conventional currencies."

Mazzant said the bitcoin in Shaver's alleged scheme falls under the SEC's jurisdiction because it qualifies as an investment contract.

The SEC said the investments were both contracts and notes, and so were securities that can be regulated, according to regulatory documents.

Shavers could not immediately be reached for comment by ABC News.

Bitcoin, a decentralized, purely electronic alternative currency created in 2009, has become popular because it is open-source, and not controlled by any nation or government.