On Tuesday, the Securities and Exchange Commission (SEC) charged Erik Voorhees, co-owner of two Bitcoin-related websites for offering shares in them without registration with the Commission.
One of the sites is SatoshiDice, a website that allows for gambling based off of the Bitcoin protocol. The other is FeedZeBirds, which pays Twitter users bitcoins for forwarding sponsored content.
Voorhees was fined a total of over $50,000, comprised of a disgorgement of $15,843.98 for his profits plus a $35,000 penalty. Voorhees neither confirmed nor denied the allegations and settled upon these charges with the SEC.
The Bitcoin community has come out firing against the SEC and to a large extent, rallying behind Voorhees. Debate also broke out as to how much we can compare this case with HSBC, who was fined $1.9 billion for poor money laundering controls in 2012.
Voorhees himself took to reddit to post what was obviously a restrained reaction:
As you may have seen, it was announced today that I have entered into a settlement agreement with the SEC. With this matter resolved, I look forward to helping to build the Bitcoin industry and the future of finance.
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For further comment, please contact my attorney:
Brian Klein Baker Marquart LLP Email: email@example.com
One takes note that there are a myriad of Bitcoin-related “securities” listed on sites like Havelock Investments and MPEx. The SEC has not taken action, although some speculate that they’re not yet done.
Mircea Popescu, who operates the MPEx exchange where SatoshiDice shares were once listed, was contacted by by Daphna A. Waxman in March regarding the investigation. In the SEC’s announcement, she is listed as one of the investigators. Popescu forcefully and mockingly refused to cooperate. He ridiculed hers and the SEC’s credentials for the inquiry and posted their correspondence online.
Tuesday’s charges mark the second incidence of the SEC coming down on Bitcoin. Last year, the SEC charged Trendon T. Shavers for running a Ponzi scheme. He reportedly ran BTCST, which offered bitcoin-denominated investments over the web claiming to return 7% a week.