SEC Settles Case Against Bitcoin-Denominated Stock Sale

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SEC Settles Case Against Bitcoin-Denominated Stock Sale

Bitcoin entrepeneur Erik Voorhees will have to pay more than $50,000 to settle a case in which the SEC charged him with failing to register a stock option. The SEC stated that Voorhees published prospectuses and solicited investors to buy shares in SatoshiDice and FeedZeBirds. Voorhees first raised money in May 2012 by offering stock in FeedZeBirds, which promised to pay Twitter users who shared sponsored text messages. He also raised 50,600 bitcoins, which were worth about $722,659 at that time, in two offerings for SatoshiDice, a gambling site, in August 2012 and February 2013.

Voorhees still broke the law even though the stock was denominated in bitcoins, which can be used for purchases and can be exchanged for fiat currency. Issuers who sell securities to the public are required to comply with the registration provisions of the securities laws. That includes those who seek to raise funds using bitcoin. The SEC has emphasized that it will continue its focus on enforcing its rules and regulations as they apply to digital currencies.

Vorhees agreed to pay full disgorgement of about $15,844 in profits in addition to a $35,000 penalty in order to settle the SEC’s charges. While Voorhees neither admitted nor denied the charges, he agreed not to participate in any unregistered issuances for five years. Voorhees stated on Reddit that he “look[s] forward to helping to build the Bitcoin industry and the future of finance.”

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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