Man Who Issued Securities For Bitcoins Settles With SEC 56
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."
the empire strikes back... (Score:1, Insightful)
Re:The what strikes where now? (Score:4, Insightful)
The only issue that involves bitcoin specifically is enforcement. If he hadn't been so public, the crime could have gone unnoticed - there are no reporting requirements. If you move more than $10,000 or so in a conventional bank, it'll set off alarms and someone will come to see what is going on.
Re:SEC (Score:4, Insightful)
Ironic (Score:3, Insightful)
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.
Re:The what strikes where now? (Score:4, Insightful)
Is it good?
I don't think there's any problem with governments competing against ratings agencies: I think 2008 showed pretty conclusively that the existing private sector organisations kind of suck at protecting people from risk. But the 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. It also can seriously hinder innovation: look at the glacial speed of progress towards the oh so ambitious goal of "not killing crowdfunding sites". You'd think not doing something would be easier, wouldn't you, but it's taking years and an 800+ page report.
If the SEC lost their enforcement powers and just acted as a place where reputable, respectable fundraisers wanted to go it'd be pretty unobjectionable and there'd be natural flex in the system if they started making bad decisions. They'd give Moody's a run for their money. But it's not like that. They probably stopped some scams by virtue of the threat of their enforcement actions, it's hard to know how many, but they probably also stopped a lot of legitimate and non-scam investments too. The cost/benefit ratio of securities laws is rather hard to know.
Re:The what strikes where now? (Score:4, Insightful)
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. They failed, completely, to understand the "new" derivative investments and thus the problems associated with compounded leveraging, that they of all people should have recognized.
IMHO when a organization, which has one task, fails to manage in their duties in such a complete way as this, the whole thing needs scrapped. Caveat Emptor is heartless, but it is heartless at both ends. However if you break the law, you should go to jail. Too bad our elected officials were in on the scam and thus nobody is going to jail for the theft and fraud that was perpetrated on our country (and the world)