
SEC Charges Bitcoin Entrepreneur For Share Offering - antonius
http://www.marketwatch.com/story/sec-charges-bitcoin-entrepreneur-for-share-offering-2014-06-03?mod=latestnewssocialflow&link=sfmw
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dustcoin

        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.

~~~
citricsquid
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/1yx2t5/erik_voorhees_on_bloomberg_tv/cfoktr8)

[http://www.reddit.com/r/Bitcoin/comments/1yv6ph/some_words_f...](http://www.reddit.com/r/Bitcoin/comments/1yv6ph/some_words_for_my_friends/)

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

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rayiner
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.

~~~
mabbo
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.

~~~
arjunnarayan
You're too late. We're past Peak Cupcake
([http://marginalrevolution.com/marginalrevolution/2013/04/gou...](http://marginalrevolution.com/marginalrevolution/2013/04/gourmet-
cupcakes-are-crashing.html)), and well into the Cupcake Deflation
([https://twitter.com/JustinWolfers/status/335017341295419394](https://twitter.com/JustinWolfers/status/335017341295419394))
era.

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driverdan
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.

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

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

~~~
gojomo
But a "cryptocoin IPO" is more like a seed round; most such investments are
losses. A few have (and likely will) succeed, and quite likely at a better
rate than lotteries/casinos. Why can't people choose the "entertainment with
small chance of net rewards" in cryptocoin investing?

~~~
cb18
Notice driverdan uses the term, fraud. Which I think means he is implying that
there are instances where the business plan doesn't go much if any beyond
selling shares in their fledgling startup and then calling it a day. That is a
different thing entirely from buying shares in a legitimate business that
subsequently fails.

~~~
gojomo
And of course frauds should be prosecuted. But does all the up-front
compliance and registration burden provide any actual protection against (a)
dedicated fraudsters, and (b) credulous fools?

It looks to me that it just changes the expression slightly, and not for net
social benefit. People gamble or day-trade-on-margin or over-leverage-in-real-
estate or wire-their-money-toNigerian-419-scams, when some longshots
(including occasional frauds) as cryptocoin/venture investments would be no
worse. And, they'd be plausibly better, because the _process_ of aiming for
business success, but still failing through misestimation, misexecution, or
even malfeasance serves as valuable training for future success.

If you lose at your lottery scratcher 10 times in a row, the 11th is still an
awful bet for you and society. But if you lose your investment principal 10
times, even if most of those times were total or borderline fraud, you _will_
make usefully better choices, for yourself and society, in the 11th try.

(Or you'll just stick to other areas where you're more competent, which is
fine, too.)

------
tinkerrr
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...](http://www.businessinsider.com/these-guys-are-creating-a-
new-internet-2014-5) [2]: [http://www.ibtimes.co.uk/cryptocurrency-news-round-
dogecoin-...](http://www.ibtimes.co.uk/cryptocurrency-news-round-dogecoin-
party-maidsafe-raises-over-5m-xapo-credit-card-1446019)

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

~~~
trhway
>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.

~~~
DennisP
Ok not legally a "currency" according to the IRS, but still a product, rather
than a share in a company or a bond.

The SEC doesn't get involved in Farmville plots of land, any more than it gets
involved in physical real estate. It's not involved if I sell you a gold coin
or rare stamp, even if you hope to resell at a profit.

Cryptocurrencies seem more analogous to these things, rather than equities,
debts, profit-sharing agreements, or anything else in the SEC's official
definition of a security:

[http://www.thestreet.com/topic/47042/securities.html](http://www.thestreet.com/topic/47042/securities.html)

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jedunnigan
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/](http://sinistercyb.org/wp/2013/07/satoshi-dice-sale/)

------
tatalegma
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?

~~~
_delirium
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.)

