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Bitcoin entrepreneur settles SEC charges over stock sales

By Jonathan Stempel

(Reuters) - 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.

Erik Voorhees, 29, published prospectuses and solicited investors through the Bitcoin Forum website to buy shares in FeedZeBirds and SatoshiDICE, both of which he co-owned, without first registering the offerings as required under federal securities law, according to the SEC.

The settlement calls for Voorhees to give up $15,844 in profit and interest, and pay a $35,000 fine. He did not admit or deny wrongdoing.

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 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 requests for comment. Klein has also worked for the nonprofit Bitcoin Foundation, which advocates use of the currency.

The SEC said Voorhees 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.

It also accused Voorhees of helping raise 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 was sold last July for more than $11 million, Voorhees said at the 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.

(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe and Andrew Hay)

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