Start-Up Launchpad Blog

SEC Announces Settlement with Operator of Bitcoin Websites - June 4, 2014

Amy R. Piepmeier

Recently the SEC announced a settlement with Erik T. Voorhees, an operator of two Bitcoin-related websites, for publicly offering shares in the two web ventures, FeedZeBirds or SatoshiDICE, without registering the offerings. Under the terms of the settlement, Voorhees agreed to return the $15,844 in profit and interest from the offerings, and pay a $35,000 fine. In addition to the monetary sanctions, Voorhees agreed that he will not participate in any issuance of any security in an unregistered transaction in exchange for any virtual currency including Bitcoin for a period of five years. He did not admit or deny wrongdoing as part of the settlement. Further details of the charges and settlement can be found in the SEC announcement. 

Over the last few years, the recognition and use of Bitcoins, a decentralized, peer-to-peer virtual currency that can be exchanged for traditional currencies such as the U.S. dollar or used to purchase goods or services, has grown. With this rise in fame (or notoriety), Bitcoins has garnered investor attention, as well as the attention of the SEC. Although the SEC has not yet addressed the issue of whether Bitcoins, themselves, are securities, it has clearly stated that interests in entities owning Bitcoins would be securities subject to SEC regulation.