SEC Charges Bitcoin Entrepreneur For Share Offering (opens in new tab)

(marketwatch.com)

60 pointsantonius11y ago42 comments

42 comments

    Voorhees agreed to settle the SEC’s charges by paying full
    disgorgement of the $15,843.98 in profits plus a $35,000
    penalty for a total of more than $50,000.

Voorhees later sold S.DICE for 126k BTC ($12.4M at the time). Sounds like a good deal.

citricsquid11y ago

He did not own the majority of S.DICE and he lost 550 BTC (>10% of his holdings) when MtGox fell apart, he's certainly well off but he is far from 8 figure rich.

http://www.reddit.com/r/Bitcoin/comments/1yx2t5/erik_voorhee...

http://www.reddit.com/r/Bitcoin/comments/1yv6ph/some_words_f...

gnaritas11y ago

Maybe, but it certainly appears he's 7 figure rich which still ain't bad.

rayiner11y ago

It's interesting, but not surprising. If you offer to sell securities to the U.S. public, and meet certain other requirements, you need to register with the SEC. It doesn't matter if you take payment for the stock in dollars or Bitcoin or cupcakes.

mabbo11y ago

That's it. I'm selling securities via cupcakes.

Cupcakes represent a stable, decentralized currency with a proof-of-work (you had to bake a cupcake to get one!). No government can stop my cupcake transactions.

This is the future.

arjunnarayan11y ago

You're too late. We're past Peak Cupcake (http://marginalrevolution.com/marginalrevolution/2013/04/gou...), and well into the Cupcake Deflation (https://twitter.com/JustinWolfers/status/335017341295419394) era.

driverdan11y ago

There is a lot of fraud going on in the cryptocoin "IPO" space. It's strange that the SEC went after one of the cases that wasn't fraud. Maybe it was because they knew who he was. Either way they really need to crack down on these unregistered securities. People are being fleeced left and right.

gojomo11y ago

I suspect more people are losing money on state lotteries than cryptocoin IPOs. Shouldn't enforcers go after those, first?

cwkoss11y ago

I disagree with your point. IPO implies a hope for future return, whereas lotteries are gambling for entertainment.

1 more reply

cb1811y ago

Good god, typical coiner logic... An attempt at a fallacy of relative privation('whataboutery') that doesn't even make sense. Do you think state lotteries are being misrepresented for what they are? Putting aside people's innumeracy, do you think state lotteries fraudulently misrepresent the expected return of purchasing a ticket?

I too think lotteries are a little seedy, and it's a little weird how the state uses its vice regulating powers to create something of a vice monopoly to further its own ends, but surely you see how this comparison you're making is lacking in equivalence.

http://en.wikipedia.org/wiki/Fallacy_of_relative_privation

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driverdan11y ago

I'm talking about outright fraud, not gambling. Quite a few cryptocurrencies have had larger premines than the devs claimed or other outright fraud issues that allow the devs to profit and costs everyone else money.

tinkerrr11y ago

Wonder what the implications are for the other companies/altcoins that go the IPO route. There are a number of well-known companies in the space that IPO without registering with the SEC, most recently MaidSafe [1] from the SAFE network that got a lot of publicity but no questions asked about the IPO (except boasting in their press release that they raised $5 million in the first 5 hours [2]) [1]: http://www.businessinsider.com/these-guys-are-creating-a-new... [2]: http://www.ibtimes.co.uk/cryptocurrency-news-round-dogecoin-...

DennisP11y ago

I'm not convinced a presale of a currency falls under the same regulations as equity in a company.

trhway11y ago

>I'm not convinced a presale of a currency falls under the same regulations as equity in a company.

BTC isn't a currency in US. I'm kind of curious where SEC draws the line, if any, when somebody sells some interest in some virtual artifact - say a website or a Farmville plot of land - in exchange for some other virtual artifact - say BTC or ISK.

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TwoFactor11y ago

It definitely falls under money transmission - which could be worse as far as penalties go

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bitJericho11y ago

They are registered in Scotland. Likely any American individual or company that doesn't register is liable to have the same thing happen to them.

tinkerrr11y ago

If they are raising money from American individuals (not Qualified Institutional Buyers) they would need to be registered with the SEC irrespective of where they are headquartered.

They might, at most, qualify as foreign private issuer, so they can file with the SEC in private, but I strongly doubt they did it. http://www.sec.gov/info/smallbus/qasbsec.htm

Edit: For those asking why the American laws apply to this situation, it is because if you're raising money in America, American laws apply just like British laws would apply to Google if Google is doing business in Britain (or raising money there). If the company is registered in Scotland and raises money in Scotland, knock yourself out, the SEC doesn't care.

4 more replies

jedunnigan11y ago

This was bound to happen eventually, especially given the indication of insider trading the day before SD was bought out.[0]

[0]http://sinistercyb.org/wp/2013/07/satoshi-dice-sale/

tatalegma11y ago

Very interesting that the shares he issued were purchased in bitcoin, and still the SEC decided to step in. How is this different than if you issue shares and sell them for an in game currency?

_delirium11y ago

The SEC doesn't really care how the payment is carried out, if that's the only difference. The actual medium of exchange could be dollar bills, gold coins, euros, baseball cards, rare watches, gemstones, bitcoin, used books, etc. (Though some of those are treated differently for capital-gains purposes.)

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42 comments

dustcoin11y ago

    Voorhees agreed to settle the SEC’s charges by paying full
    disgorgement of the $15,843.98 in profits plus a $35,000
    penalty for a total of more than $50,000.

Voorhees later sold S.DICE for 126k BTC ($12.4M at the time). Sounds like a good deal.

citricsquid11y ago

He did not own the majority of S.DICE and he lost 550 BTC (>10% of his holdings) when MtGox fell apart, he's certainly well off but he is far from 8 figure rich.

http://www.reddit.com/r/Bitcoin/comments/1yx2t5/erik_voorhee...

http://www.reddit.com/r/Bitcoin/comments/1yv6ph/some_words_f...

gnaritas11y ago

Maybe, but it certainly appears he's 7 figure rich which still ain't bad.

rayiner11y ago

mabbo11y ago

That's it. I'm selling securities via cupcakes.

Cupcakes represent a stable, decentralized currency with a proof-of-work (you had to bake a cupcake to get one!). No government can stop my cupcake transactions.

This is the future.

arjunnarayan11y ago

driverdan11y ago

gojomo11y ago

I suspect more people are losing money on state lotteries than cryptocoin IPOs. Shouldn't enforcers go after those, first?

cwkoss11y ago

I disagree with your point. IPO implies a hope for future return, whereas lotteries are gambling for entertainment.

1 more reply

cb1811y ago

http://en.wikipedia.org/wiki/Fallacy_of_relative_privation

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driverdan11y ago

tinkerrr11y ago

DennisP11y ago

I'm not convinced a presale of a currency falls under the same regulations as equity in a company.

trhway11y ago

>I'm not convinced a presale of a currency falls under the same regulations as equity in a company.

1 more reply

TwoFactor11y ago

It definitely falls under money transmission - which could be worse as far as penalties go

1 more reply

bitJericho11y ago

They are registered in Scotland. Likely any American individual or company that doesn't register is liable to have the same thing happen to them.

tinkerrr11y ago

If they are raising money from American individuals (not Qualified Institutional Buyers) they would need to be registered with the SEC irrespective of where they are headquartered.

They might, at most, qualify as foreign private issuer, so they can file with the SEC in private, but I strongly doubt they did it. http://www.sec.gov/info/smallbus/qasbsec.htm

4 more replies

jedunnigan11y ago

This was bound to happen eventually, especially given the indication of insider trading the day before SD was bought out.[0]

[0]http://sinistercyb.org/wp/2013/07/satoshi-dice-sale/

tatalegma11y ago

Very interesting that the shares he issued were purchased in bitcoin, and still the SEC decided to step in. How is this different than if you issue shares and sell them for an in game currency?

_delirium11y ago

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