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Man Who Issued Securities For Bitcoins Settles With SEC
MrBingoBoingo writes with news that the U.S. Securities and Exchange Commission has settled federal civil charges with Erik Voorhees, a man who sold shares of two businesses in exchange for Bitcoins without registering them. Voorhees must make restitution for the $15,000 in profit he made, plus interest, and a $35,000 fine. Here's the SEC's filing (PDF). "The agreement reflects an expanded effort by U.S. regulators to cast a wider net over the burgeoning bitcoin economy. It comes as investor enthusiasm grows for direct offerings of shares by new bitcoin-focused ventures over bitcoin's global computer network. Maidsafe, a system for sharing computer memory, raised $7 million last month in such a deal."
...we all know that issuers of fiat money and securities are not going to take bitcoin et al lying down. Ditto the tax man.
Don't try to run from his brother.
The dude broke the law. A very real, very good (shockingly) law.
Doesn't matter if he offered securities for bitcoin, bushels of corn, or steamy massages. The currency isn't the problem with what he did.
That's a routine sale of unregistered securities case. If he'd sold them for dollars or yen, the SEC would have done the same thing. Bitcoin is irrelevant here.
This is merely the protection racket (SEC) asserting its power to provide "protection" to would-be investors.
Too bad they don't take responsibility when they fail at providing the protection services they assert are necessary.
I take it you are perfect. Do you blame the police when someone gets murdered?
The tech bubble ca 2000 and the mortgage fiasco were perfectly forseeable. Didn't notice SEC do much of anything meaningful before or after.
This news made me shivers :
Bitcoins story
Don't use Bitcoins, $ is the best currency.
Maidsafe, a system for sharing computer memory, raised $7 million last month in such a deal.
I have this horrible feeling that I don't even want to know what that is...too afraid to even google it
And they did such a good job stopping Bernie Madoff's fraud....
Vorhees is a man who is an extremist libertarian to the point of nearly being an anarchist. He spent most of the last few years hating on regulators and government in general, and moved to Panama to escape US regulation. He is one of the foremost in the "Bitcoin can't be regulated" school of thought. So the fact that he's now sending a big pile of dollars to the US Govt is .... ironic.
Still, the real question here is the merits of the case. A Twitter spamming service and a gambling site are hardly businesses making great contributions to society but he doesn't seem to have actively hurt anyone by issuing these securities. The filing suggests all he had to do, to be legal, was file a registration statement with the SEC. I wonder how much effort is involved in doing that. Is it one of those cases where it's extremely hard to be legally compliant for a relatively small $337,000 raise or could he have easily gone through the registration process?
I bet the sticking point would have been the exchanges. MPEx is shady as hell.
fibeta
Glad to see the FCC is focusing their efforts of the important stuff. I'd hate it if they were bothering with unimportant issues.
Good. Took one look at the "bitcoin securities" market and laughed my arse off at the idea anyone would seriously "invest".
"Give me your bitcoins and I'll issue you some CRYPTOSHARES in my business! They're like regular shares, only they don't actually give you any equity, don't commit me to paying you dividends, don't entitle you to a share of the massive windfall I make if I sell out, and I can buy them back at any time and cancel them for whatever price I think fit!"
Yeah.
I'll get right on that.
Is there a huge difference between a kickstarter and selling shares via bitcoin?
In Kickstarter you normally get "property" for your "donation".
VS
Selling shares for bitcoin, might make you bitcoin (property according to the IRS).
I would tell the SEC to kiss off. Only a court order can require a person to pay a fine. And the SEC has no real authority to do so, and he has no obligation to register any bitcoin transactions. The SEC does not own it, nor control it.
And I don't see the SEC finning banks or big corporations that do unregistered trades, and if they do, it ammounts to a tiny amount, compared to the amount of money made. In this case he is suposed to pay a lot more than he made?
No. Don't put up with that, or you will be a slave your entire life.
SEC isn't just an organisation that gives a stamp of approval to well run investment schemes. They actively stamp out any that don't register with them and report to them. That makes the entire economy very vulnerable to poor decision making by a mere handful of people.
No, what it does is help keep crooks from putting forth "investments" that really are just frauds. It's the same reason we require drugs to get FDA approval before being sold to the public.
It also can seriously hinder innovation
You REALLY don't want fast paced financial "innovation". That was a huge part of how we got into the big recession in 2008-9. A lot of "financial innovation" is really fraud with a clever name.
If the SEC lost their enforcement powers
The SEC has their enforcement power for some extremely good reasons. There needs to be a cop on the beat.
Police don't necessarily prevent murder, but they are there to clean up the mess.
Go live somewhere were there aren't any police (like Somalia) and let me know how that works out for you. I'm sure you'll live a long an prosperous life.
I would go a step further, in that the SEC was completely complacent in the whole Banking Investment fraud that led up to the collapse of the economy.
If you want to blame anyone, blame Congress. The SEC is badly underfunded and that is entirely the fault of Congress. I won't get into the politics of why but you can probably guess the various political motives involved. The SEC simply doesn't have the funding or the manpower to oversee what they've been charged with managing adequately.