Complying with the laws and regulation by the US Securities and Exchange Commission or SEC is important, was learned the hard way by Erik Voorhees. The 29 year old entrepreneur published prospectuses and solicited investors through the Bitcoin Forum website to buy shares in FeedZeBirds and SatoshiDICE; however, he forgot to follow the guidelines issued by the SEC.
According to the federal securities law Erik Voorhees who co-owns the two companies FeedZeBirds and SatoshiDICE should have registered the offerings before the SEC. However, as he did not follow the procedure, he was asked to pay the penalty and agree for a financial settlement.
Andrew Ceresney, head of the SEC enforcement division in his statement to media said that 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. As Erik Voorhees did not follow the required process he was asked to pay nearly $51,000.
According to Andrew Ceresney the amount was towards settling US Securities and Exchange Commission civil charges that Erik Voorhees publicly offered unregistered shares in two internet ventures. Interestingly, when he started the company, the value of Bitcoin was $5 which later on went up to $1200 in October 2013.
Mutually Agreed Upon Financial Settlement
It is not yet known whether Voorhees, also a founder of Coinapult, which lets users transfer Bitcoin via email or messaging service, did not follow the regulatory laws deliberately, however, he did not agree that he did anything wrong. At the same time he agreed to pay whatever was asked by the SEC.
According the settlement Voorhees will give up $15,844 in profit and interest, and pay a $35,000 fine. The amount is being charged from Voorhees as the SEC believes that he helped raise 2,600 Bitcoins in May 2012 through the sale of 30,000 shares in FeedZeBirds, which promises to pay Bitcoins to Twitter users who forward sponsored text messages.
According to the SEC, an agency that enforces the federal securities laws and regulating the securities industry, Voorhees raised 50,600 Bitcoins from August 2012 to February 2013 through the sale of 13 million shares of SatoshiDICE, a gaming website that pays out casino-like winnings in Bitcoin.
SatoshiDICE is the same company that was sold last July for more than $11 million.
To contact the reporter of this story: Deepak Tiwari at email@example.com