SEC Sues 'Bitcoin-Related' Web Vendor
WASHINGTON (CN) - The SEC on Tuesday accused the co-owner of two "Bitcoin-related websites" of publicly offering shares in the company without registering them.
The SEC filed an administrative cease-and-desist order against Erik T. Voorhees.
In a statement accompanying the filing, the SEC said that Voorhees "published prospectuses on the Internet and actively solicited investors to buy shares in SatoshiDICE and FeedZeBirds. But he failed to register the offerings with the SEC as required under the federal securities laws. Investors paid for their shares using Bitcoin, a virtual currency that can be used to purchase real-world goods and services and exchanged for fiat currencies on certain online exchanges. The profits ultimately earned by Voorhees through the unregistered offerings totaled more than $15,000."
Voorhees, 29, "is a U.S. citizen who, at the time of the FeedZeBirds and SatoshiDICE offerings, was living in the United States," the SEC said in its order.
According to the cease-and-desist order: "From May 2012, the time of the first offering, to the present, the exchange rate of U.S. dollars ('USD') to bitcoins has fluctuated between a low of approximately $5 per bitcoin and a high of approximately $1,200 per bitcoin.
"In May 2012, FeedZeBirds offered and sold 30,000 shares, and raised 2,600 bitcoins in connection with that unregistered offer and sale. At the time of the FeedZeBirds offering, the USD value of the bitcoins raised was approximately $15,000. From August 2012 through February 2013, in two separate offerings, SatoshiDICE offered and sold 13 million shares, and raised 50,600 bitcoins in connection with those unregistered offers and sales. At the time of the SatoshiDICE offerings, the USD value of the total bitcoins raised was approximately $722,659. In July 2013, SatoshiDICE bought back all outstanding SatoshiDICE shares from investors at a price of 0.0035 bitcoins per share, for a total of 45,500 bitcoins. Due to the significant rise in the exchange rate of bitcoin, the total USD amount paid to investors in the SatoshiDICE buy-back transaction (approximately $3.8 million) exceeded the total USD amount raised."
The SEC seeks disgorgement of $15,000 plus prejudgment interest of $844; a civil penalty of $35,000; and that Voorhees cease and desist from violating the Securities Act.