Two online websites MPEx and SatoshiDice received inquiry letter from the US Securities and Exchange Commission (SEC) which is investigating whether the companies violated the US law. Earlier, a SEC representative sent an email request to MPEx operator Mircea Popescu of Romania.
Though there is confirmation on the part of John Nester, a spokesman for the SEC as he says that he couldn’t confirm or deny the existence of any inquiry, Mircea Popescu, the MPEx operator to whom the letter was addressed, confirmed that he got an e-mail pertaining to the formal inquiry.
Mr. Popescu offered a lengthy defense of Bitcoin in his responses to the SEC’s request for the formal inquiry. Andrew Ceresney, the SEC’s enforcement director earlier in January had said that the agency was very focused on whether Bitcoin-denominated stock exchanges were illegal and what could be done if they were illegal; the inquiry seems to be on the same issue.
As the US laws require securities-trading platforms to be licensed, it will have to be checked whether the two companies violated the law. Fact in issue is that as these companies offered those stocks that users can invest in are violating the law or not. Another question is whether those unregistered exchanges or broker dealers operating in violation of the securities laws.
The SEC Asks for Documents Regarding the Contract and Deals from the Two Companies
SatoshiDice listed shares on MPEx in August 2012, now the SEC letter has sought all documents or contracts between the exchange and SatoshiDice’s Erik Voorhees. The regulatory body has asked the company to furnish all the documents concerning the listing or sale of the shares, as well as his account statements.
Mr. Popescu however says that his company has not broken any laws contrary to the belief that the SEC has wherein it says that online gambling website’s Bitcoin-denominated stock sale may break US laws. Interestingly enough Popescu says that the SEC failed to mention which specific rules were violated by the company.
Defending his company Popescu said that the US securities laws don’t apply to MPEx as Bitcoin doesn’t fall under the legal definition of money. The formal inquiry according to him should be rejected prima facie as the SEC is not clear which law his company broke. At the same time, he says that the SEC lacks jurisdiction as the company is based in Romania.
To contact the reporter of this story: Deepak Tiwari at email@example.com