SEC Charges Bitcoin Savings and Trust (BTCST) as Ponzi Scheme

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http://www.businessinsider.com/sec-charges-texas-man-with-running-bitcoin-ponzi-scheme-2013-7

https://www.sec.gov/litigation/complaints/2013/comp-pr2013-132.pdf

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[wachtwoord]

Dear BTCT, Bitfunder, Mpex, icbit, et. al..... get ready for a visit from the SEC.

BTCT is officially a play environment. MPex isn't in the US. I'm not sure about the others.

[Mabsark]

This may come as a surprise to you but US law is irrelevant outside the US and these exchanges are not US based.

Look at Liberty Reserve for how well that argument worked out for them.

What does that have to with the fact that the SEC has no jurisdiction outside the US? Liberty Reserve was taken down through collaboration, not the SEC forcing US law upon sovereign nations.

[iCEBREAKER]

I don't think "SEC" and "quick compliance" really go hand in hand.

Heh, it only took the SEC 20 years, multiple whistle blowers holding their hand and drawing them a picture, and a spectacular collapse/ensuing scandal to notice Bernie Madoff. 

OTOH the SEC will gut nobodies like us in a flash, if we act like free people and engage in mutually beneficial voluntary transactions without regard to their vast opaque, incomplete, and contradictory regulatory apparatus.

[crumbs]

http://www.businessinsider.com/sec-charges-texas-man-with-running-bitcoin-ponzi-scheme-2013-7

https://www.sec.gov/litigation/complaints/2013/comp-pr2013-132.pdf

Thanks.

[mrtchipr]

Does anyone know if there's a list of bitcoin businesses that are legally compliant to their respective locations?

I would hope at least CampBX, CoinBase, and BitInstance are...

[TaxReturn]

One day the SEC or some other US government apparatus will crack down on an exchange with the official reasoning that people (read: US citizens) were screwed out of their money, when in fact it will be that very crack down that's screwing people over.

I don't think being registered in Belize or some other gray spot on the map will help either, Liberty Reserve was not under US jurisdiction, that didn't stop the world police from doing what they do best: strong-arming others into complying with their vision of justice.

[nycgoat]

The Liberty Reserve investigation stemmed from here: http://www.wired.com/threatlevel/2013/07/open-market/

[Mabsark]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

About time!

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

Are you confusing BTC-TC with BTCST?

[nycgoat]

The SEC acting outside of the US: http://www.forbes.com/sites/jordanmaglich/2013/02/15/breaking-sec-sues-traders-over-heinz-insider-trading-allegations-freezes-swiss-bank-account/

[matuszed]

The SEC acting outside of the US: http://www.forbes.com/sites/jordanmaglich/2013/02/15/breaking-sec-sues-traders-over-heinz-insider-trading-allegations-freezes-swiss-bank-account/

That was a trade on a US exchange....

[Peter Lambert]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

About time!

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

Are you confusing BTC-TC with BTCST?

No, I realize the difference between BTC-TC and BTCST. If you would notice, the person I responded to is Burnside, who runs btct.co. I was therefore asking if he thought there is a possibility that his operation could face similar charges to what was described in the article.

[Technologov]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

[forensick]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

very good idea, espcially for those exchanges run by Americans

[Peter Lambert]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

If I understand correctly, mpex allows users to generate statements showing which shares they own, then if the exchange is shut down the user just has to show their gpg key to the asset issuer to verify they own those shares.

[ffssixtynine]

I've been reading up several documents on the SEC site. Here's the key wording I've found:

http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf

Any investment in securities in
the United states remains subject to the jurisdiction
of the seC regardless of whether the investment is made
in U.s. dollars or a virtual currency. In particular,
individuals selling investments are typically subject
to federal or state licensing requirements

I've read over a lot of other material as well but I think (IANAL):

• If the exchange is in the US, it needs to comply with SEC regulation.
• If an offering is from a US company, it needs to be registered with the SEC or follow the Exception rules.
• There are no rules preventing US citizens from buying assets, shares, or anything similar from foreign exchanges
• BTCT and Bitfunder are on weak legal ground by trying to claim they aren't real investments. The core issue is that they pay dividends, i.e. real money based on buying a virtual asset of some kind. A crytpocurrency is real money as far as this is concerned. If they aren't selling securities of some kind, they're gambling. It's one or the other, and gambling is far more restrictive.
• As long as these exchanges are not based in the US, they only need to comply with the rules in the country of registration. These rules are likely to be less stringent than in the US but that doesn't mean they don't exist. A legal opinion is needed for e.g. operating out of Belize.
• As above, selling virtual assets in a company registered another country, such as Belize, may similarly need some form of local registration. A legal opinion is needed.

I could be wrong on any or all of the above. Please can a lawyer turn up

Edit: I'm sure those behind the exchanges have had a legal opinion, but we've seen this all go wrong before. Also, those selling 'investments' need to be aware too. Those based in Belize et al are probably fine. Those based in the US are definitely breaking the law unless already registered with the SEC.

Edit2: Ukyo says on IRC that Bitfunder is registered in a 3rd world country that has no securities division.

[btceic]

check out this douche: https://bitcointalk.org/index.php?topic=261350.0;topicseen

[kslaughter]

I've been reading up several documents on the SEC site. Here's the key wording I've found:

http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf

Any investment in securities in
the United states remains subject to the jurisdiction
of the seC regardless of whether the investment is made
in U.s. dollars or a virtual currency. In particular,
individuals selling investments are typically subject
to federal or state licensing requirements

I've read over a lot of other material as well but I think (IANAL):

• If the exchange is in the US, it needs to comply with SEC regulation.
• If an offering is from a US company, it needs to be registered with the SEC or follow the Exception rules.
• There are no rules preventing US citizens from buying assets, shares, or anything similar from foreign exchanges
• BTCT and Bitfunder are on weak legal ground by trying to claim they aren't real investments. The core issue is that they pay dividends, i.e. real money based on buying a virtual asset of some kind. A crytpocurrency is real money as far as this is concerned. If they aren't selling securities of some kind, they're gambling. It's one or the other, and gambling is far more restrictive.
• As long as these exchanges are not based in the US, they only need to comply with the rules in the country of registration. These rules are likely to be less stringent than in the US but that doesn't mean they don't exist. A legal opinion is needed for e.g. operating out of Belize.
• As above, selling virtual assets in a company registered another country, such as Belize, may similarly need some form of local registration. A legal opinion is needed.

I could be wrong on any or all of the above. Please can a lawyer turn up

Edit: I'm sure those behind the exchanges have had a legal opinion, but we've seen this all go wrong before. Also, those selling 'investments' need to be aware too. Those based in Belize et al are probably fine. Those based in the US are definitely breaking the law unless already registered with the SEC.

Edit2: Ukyo says on IRC that Bitfunder is registered in a 3rd world country that has no securities division.

This all looks good for AMC as the stock exchanges are in another country and AMC is not a US company, it is a Belize company.

[ffssixtynine]

This all looks good for AMC as the stock exchanges are in another country and AMC is not a US company, it is a Belize company.

Not a legal opinion though. I'm working on that.

If I ran any of these investment schemes I'd require legal advice from a securities specialist lawyer immediately - though personally I'd have got all this beforehand - and I'd be posting the result in public to reassure investors.

If any companies are actually registered in the US and are not SEC registered (you can be pretty sure they're not), get your shares out immediately people. They're trading illegally and not in a way that will be ignored for long.

[2112]

A bit of advice for non-U.S. entities that have offered and dealt with the U.S. citizens:

Whatever you do make sure that you return to the investor at least the original nominal value of the investment. Or that you can return the original nominal value to all the investors.

As far as I know, in the history of S.E.C. there wasn't a case pursued or prosecuted that didn't involve at least a nominal loss of value (denominated in whatever units).

Please check out the recent case of SatoshiDice and its recent "sale to the undisclosed investors". It is a kind of "ultimate defense". Faced with limited resources S.E.C. (and others) will not spend the energy to pursue a case where there isn't a clear loss or wrongdoing to be shown.

If you are capable of returning the funds received from the U.S.-based investors you have nothing to worry besides a stern cease-and-desist letter from S.E.C. or your local government agency that cooperates with the S.E.C.

IANAL, but I ate many lunches with them.