Another day, another regulatory scandal for everyone’s favorite virtual currency. On Tuesday, the Securities and Exchange Commission announced charges against the operator of bitcoin betting site SatoshiDice and bitcoin marketing site FeedZeBirds.
In a release, the SEC said the operator, Erik Voorhees, sold millions of shares in the two sites without registering the securities as required by law.
Voorhees, who took payment for the unregistered securities in bitcoin, will disgorge around $15,000 in profits and pay a fine of $35,000 under a settlement agreement.
“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,” Andrew J. Ceresney, director of the SEC’s Division of Enforcement, said in a statement. “We will continue to focus on enforcing our rules and regulations as they apply to digital currencies.”
The SEC also stated that Voorhees sought the investments on bitcoin forums and on Facebook, and that he described one of the offerings as the “FeedZeBirds IPO.”
The Voorhees incident is just the latest in a series of enforcement actions by the FBI and SEC against high-profile bitcoin entrepreneurs, including Bob Shrem and Mark Karpeles, who face accusations of money laundering and fraud.
It is perhaps ironic that the SEC’s action against Voorhees may have helped further legitimize bitcoin as a currency since the agency treated the security sales as if they were made with real money:
“Investors paid for their shares using Bitcoin, a virtual currency that can be used to purchase real-world goods and services and exchanged for fiat currencies on certain online exchanges.”