SEC Charges Bitcoin Savings and Trust (BTCST) as Ponzi Scheme - page 10.

ffssixtynine

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Securities act of 1933

http://www.sec.gov/about/laws/sa33.pdf

Quote

(1) The term ‘‘security’’ means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly
known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any
of the foregoing.

Edit: I don't see how BTCT's claim holds any water whatsoever, but it's not in the US. Those with stock on there, however...

ffssixtynine

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Quote from: stslimited on July 23, 2013, 07:04:31 PM

the SEC does not even consider what currency is used, read the Securities act of 1933. It doesn't need to consider or not consider the merit of bitcoin, it considers the offer and sale of securities. This has nothing to do with acceptance or recognition of bitcoin by the federal government.

There are, ahem, some people who claim they aren't dealing in securities. Or real money.

Quote

I've already brought this up with some of the US companies listed on the exchanges, its the US COMPANIES AND PERSONS issuing securities IN THE UNITED STATES that have a problem. Some literally have their address listed on the forums and the about pages of the exchanges. They can get their assets frozen any day. THOSE are the ones that need to register with the SEC or file for an exemption. Sitting idle is bad. The only saving grace is that the numbers are too small and hopefully the SEC will turn a blind out.

Questions since you've researched this.

The SEC's rules are there to protect US investors. If a company is registered outside of the US and the securities are traded on foreign exchanges, what can they do?

What would happen if the people behind the foreign company were in the US? What would make the SEC come looking?

What would they do if that company was actively soliciting investments from the public in the US?

Quote

For the investors, the only thing you need to worry about is your shares going to zero once the SEC freezes and seizes all the assets one day.

Only thing! I wouldn't touch a US registered investment now.

stslimited

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Myself and my company "State Trading Society" do a lot of research on securities laws, and you guys are running around like headless chickens

the SEC does not even consider what currency is used, read the Securities act of 1933. It doesn't need to consider or not consider the merit of bitcoin, it considers the offer and sale of securities. This has nothing to do with acceptance or recognition of bitcoin by the federal government.

I've already brought this up with some of the US companies listed on the exchanges, its the US COMPANIES AND PERSONS issuing securities IN THE UNITED STATES that have a problem. Some literally have their address listed on the forums and the about pages of the exchanges. They can get their assets frozen any day. THOSE are the ones that need to register with the SEC or file for an exemption. Sitting idle is bad. The only saving grace is that the numbers are too small and hopefully the SEC will turn a blind out.

For the investors, the only thing you need to worry about is your shares going to zero once the SEC freezes and seizes all the assets one day.

TraderTimm

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So I guess Erik Voorhees "IPO" and subsequent dump-o-matic plan put him in the eyes of the SEC eh?

Hope he doesn't have any plans for being in the USA anytime soon.

ffssixtynine

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Quote from: 2112 on July 23, 2013, 06:21:16 PM

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.

So if there is a solid plan, not a ponzi plan, that's a good start.

However, all investments carry risks...?

Perhaps the safest option is to register with the SEC before doing an IPO, even if you are a foreign entity. If nothing else, you'll look much more professional and trustworthy.

I presume you can't really do much after the event.

2112

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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.

ffssixtynine

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Quote from: kslaughter on July 23, 2013, 05:05:03 PM

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.

kslaughter

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btceic

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♫ A wave came crashing like a fist to the jaw ♫

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

ffssixtynine

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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

Quote

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 Wink

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.

Peter Lambert

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It's all fun and games until somebody loses an eye

Quote from: Technologov on July 23, 2013, 02:06:48 PM

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.

forensick

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Quote from: Technologov on July 23, 2013, 02:06:48 PM

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

Technologov

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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

Peter Lambert

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Activity: 756

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It's all fun and games until somebody loses an eye

Quote from: Mabsark on July 23, 2013, 01:30:13 PM

Quote from: Peter Lambert on July 23, 2013, 12:09:07 PM

Quote from: burnside on July 23, 2013, 11:51:05 AM

Quote from: matuszed on July 23, 2013, 11:44:52 AM

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.

matuszed

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Quote from: nycgoat on July 23, 2013, 01:37:43 PM

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....

nycgoat

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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/

Mabsark

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Quote from: Peter Lambert on July 23, 2013, 12:09:07 PM

Quote from: burnside on July 23, 2013, 11:51:05 AM

Quote from: matuszed on July 23, 2013, 11:44:52 AM

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

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

TaxReturn

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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.

mrtchipr

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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...

Topic: SEC Charges Bitcoin Savings and Trust (BTCST) as Ponzi Scheme - page 10. (Read 24447 times)