Hundreds of Bitcoin companies that have released unregistered securities on Counterparty, Cryptostocks will be sent inquiry letters by the SEC. The SEC is asking these Bitcoin companies to voluntarily hand over any documentation that they have regarding their unregistered securities offering. Many Bitcoin companies have been anticipating such action from the SEC and have the necessary information already prepared. On the other hand, other companies may choose to argue that their Counterparty tokens are not securities in any way shape, or form.
The SEC first tackled a Bitcoin company’s unregistered securities crowdfunding sale when fining Erik Voorhees for his “illegal” Satoshi Dice IPO. The money that Voorhees raised and the number of fees that he was able to avoid by using new technologies and platforms did not outweigh the amount that he was fined. Now, the SEC is taking aim again, undoubtedly viewing every Bitcoin company as a potential fee-provider.
Editor’s Note: The article was amended to remove a previous presentation of Erik Voorhees’ SEC fine that was, in his words, “false.”
According to CoinFire, part of the redacted letter asks the served Bitcoin companies to “stay quiet and treat it as confidential.” CoinFire claims to have received six of these SEC letters and that they all come from differing arms of the SEC and different regional offices. An example is provided here. The SEC asks each company for a detailed description of the company’s records (all of them):
“Document” shall include, but is not limited to, any written, printed, or typed matter including, but not limited to all drafts and copies bearing notations or marks not found in the original, letters and correspondence, interoffice communications, slips, tickets, records, worksheets, financial records, accounting documents, bookkeeping documents, memoranda, reports, manuals, telephone logs, telegrams, facsimiles, messages of any type, telephone messages, voice mails, tape recordings, notices, instructions, minutes, summaries, notes of meetings, file folder markings, and any other organizational indicia, purchase orders, information recorded by photographic process, including microfilm and microfiche, computer printouts, spreadsheets, and other electronically stored information, including but not limited to writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations that are stored in any medium from which information can be retrieved, obtained, manipulated, or translated.
The community’s speculators have inferred that former Cryptocurrency exchange mcxNOW is shuttering its doors and “shredding” their paper wallets due to SEC action (So you shouldn’t expect them to come back). Beyond Counterparty and Cryptostocks, the SEC is also inquiring about any company that offered unregistered securities, even just on Bitcointalk. The SEC is reportedly employing researchers that track down the people and/or companies behind domains and Bitcointalk accounts associated with certain IPOs. The SEC is working closely with IRS accountants, the aforementioned researchers, and possibly FinCEN, who just clarified their virtual currency guidance in a way that might make prosecution much easier for the SEC.
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Last modified: March 4, 2021 4:40 PM