Erik Voorhees, 29, who published prospectuses and solicited investors through the Bitcoin Forum websites to buy shares in FeedZeBirds and the popular bitcoin casino SatoshiDICE, both of which he co-owned, without first registering the offerings as required under federal securities law, according to the SEC.
A well-known proponent of the electronic currency bitcoin agreed to pay nearly $51,000 to settle U.S. Securities and Exchange Commission civil charges that he publicly offered unregistered shares in two Internet ventures, the regulator said on Tuesday.
The settlement calls for Voorhees to give up $15,844 in profit and interest, and pay a $35,000 fine. He didn't even admit or deny any wrongdoings.
Erik Voorhees is also a founder of Coinapult, which lets users transfer bitcoin via email or messaging service. The virtual currency is transacted independent of central control, and it is not backed by any government or central bank.
"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," said Andrew Ceresney, head of the SEC enforcement division.
Brian Klein, a lawyer for Voorhees, did not immediately respond to request for comment. Klein has also worked for the nonprofit Bitcoin Foundation, which advocates use of the currency. The SEC said Voorhees raise 2,600 bitcoins in May 2013 through the sale of 30,000 shares in FeedZeBirds, which promises to pay bitcoins to Twitter users who forward sponsored text messages.
It also accused Erik of helping raise 50,600 bitcoins from August 2012 to February 2013 through the sale of $13 million shares of SatoshiDICE, a bitcoin casino gaming website that pays out casino-like winnings in bitcoin, SatoshiDICE was sold last July for more than $11 million, Eirk Voorhess said at that time.
According to the SEC, the value of bitcoin has fluctuated since Voorhees' first unregistered offering from about $5 to $1,200 per bitcoin.
The case is In re: Voorhees, SEC Administrative Proceeding No. 3-15902. The SEC's order finds that Voorhees violated SEctions 5(a) and 5(c) of the Securities Act of 1993.
In addition to the monetary sanctions, Voorhees agreed that he will not participate in any issuance of any security in an unregistered transaction in exchange for any virtual currency including bitcoin for a period of five years.