Bitcoin Entrepreneur Settles SEC Charges with a $50,000 Fine

Jun 04, 2014
Eric Voorhees

Eric Voorhees $50,000 Settlement

Bitcoin entrepreneur Eric Voorhees has agreed to pay $50,000 to settle the charges formally imposed by the US Securities and Exchange Commission (SEC) with regard to his illegal and unauthorized share offerings.

The announcement made Tuesday revealed that Voorhees has been banned from offering Bitcoin securities for the next five years and was fined a penalty of $35,000, together with the $15,843.98 profit he is required to pay.

Voorhees, who created Bitcoin casino gambling sites SatoshiDICE and FeedZeBirds, became the SEC’s latest focus after he began selling shares of his two ventures in 2012 and 2013, but without registering the initial public offerings with the SEC.

According to the securities laws, all public share offerings must follow the requirements set by the SEC, especially the registration part.

In fact, Andrew Ceresney, SEC Division of Enforcement director, cleared that the laws also apply to ventures related to virtual currencies like Bitcoin. This, therefore, demands future share offerings made by operators of online Bitcoin casinos to undergo the same procedure in order to avoid the case similar to that of Voorhees.

“All issuers selling securities to the public must comply with the registration provisions of the securities laws, including issuers who seek to raise funds using bitcoin,” said Ceresney.

Voorhees, who failed to fulfill this prerequisite, clearly violated sections of the Securities Act of 1933 when he solicited investors through online forums and social media platforms, according to the SEC.

“The first unregistered offering was explicitly referred to as the ‘FeedZeBirds IPO’,” explained in the SEC ruling. “Despite these general solicitations, no registration statement was filed for the FeedZeBirds or SatoshiDICE offerings, and no exemption from registration was applicable to these transactions.”

Meanwhile, Voorhees, who sold SatoshiDICE for $12.4 million in July 2013, took to Reddit his sentiments about the settlement agreement, calling it a resolved matter that must serve as the point to move on from in order to continue his dream of “helping to build the Bitcoin industry and the future of finance.”

With more ventures in the online Bitcoin casino industry beginning to offer shares to the public, this unfortunate incident should serve as a reminder for both issuers and investors.