Launched in April 2012 by Erik Voorhees, SatoshiDICE allows players to bet on the roll of a dice using bitcoin. By 2013, the company had processed over 4.6 million bets worth more than 3.6 million bitcoin – worth over $419 million.
In May 2013, SatoshiDICE closed its website to all US-based IP addresses following advice from its legal team. At the time they attributed the move to legal uncertainty around online gambling in the United States. In July of the same year, Voorhees sold the company to an unknown buyer for 126,315 BTC, worth $11.5 million at the time. At the time, this was the first major acquisition of a company in the blockchain space, and the transaction was notably carried out in bitcoin.
In 2014, Voorhees was fined by the U.S. Securities and Exchange Commission (SEC) for his solicitation of funds for stocks related SatoshiDICE and FeedZeBirds, a “bitcoin Twitter advertising platform.” According to the SEC, 30,000 shares of FeedZeBirds and 13 million shares of SatoshiDICE were sold for bitcoin amounting to a total of $737,659 at the time. These shares were traded on MPEx, a Romanian bitcoin securities exchange. Voorhees was accused of using social media platforms like Facebook between 2012 and 2013 to solicit investors without federal approval. This was the highest-profile case of securities violations for bitcoin ventures at the time.
Voorhees settled with the SEC and agreed to pay $15,843.98 plus a $35,000 penalty in disgorgement. The settlement also prohibited him from making a crypto security offering for five years.
Authored by John Metais. Image via SatoshiDICE.