Erik Voorhees Faces $50k Fine Over Unauthorized Securities Sale

The US Securities and Exchange Commission (SEC) has formally charged and settled with serial bitcoin entrepreneur Erik Voorhees for the public offering of securities without registering with the federal government.

The settlement bans Voorhees from making a bitcoin security offering for the next five years, according to an official SEC release. He must also relinquish profits totalling $15,843.98, as well as pay a penalty of $35,000.

The case stems from Voorhees’ solicitation of shares in two of his bitcoin-related ventures, SatoshiDICE and FeedZeBirds, which according to the SEC took place between 2012 and 2013. The SEC began investigating SatoshiDICE earlier this year.

SEC Division of Enforcement director Andrew Ceresney reiterated that entrepreneurs need to remember that the agency’s regulations still apply to bitcoin-related ventures, saying:

Ceresney added that the SEC will “continue to focus” on targeting companies that illegally offer securities for bitcoin investments.

According to the SEC, Voorhees was found to have violated sections of the Securities Act of 1933. He was accused of using online forums and social media platforms like Facebook to solicit investors between 2012 and 2013.

Voorhees raised more than 50,000 bitcoins from investors, although he later conducted a buy-back transaction in July 2013 which returned 45,500 bitcoins to investors.

It was during this period, the SEC reported, that Voorhees actively engaged in unlawful securities activity without federal approval.

The SEC findings noted:

Notably, Voorhees agreed to cease and desist without conceding or denying the SEC’s findings. He later released a statement on reddit, saying that he plans on continuing his work in bitcoin:

The SEC charges against Voorhees represent one of the most high-profile cases against a bitcoin entrepreneur for securities violations to date.

Previously, the SEC had hinted that it was only investigating bitcoin and companies in the ecosystem in a bid to warn investors about the dangers of investing in digital currencies.

In May, the federal agency released an investor alert, citing the high risk of investment fraud and the prevalence of bitcoin-related scams that target unsuspecting consumers, saying:

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