How can the SEC regulate this? BTC is not a real currency but electronic messages being sent back and forth and logged in an electronic ledger. Not a legal tender currency or security registered or traded in a US-based exchange.
So apparently this is an SEC "Investor Alert," but do the legal minds here know if SEC can indict and prosecute this guy? This is important for people who are also running Bitcoin casinos, sports books and prediction markets.
The SEC can go after ponzi schemes because those are effectively investment scams. Any ponzi scheme effectively issues IOU's (e.g. shares in a fund, debt instruments or just verbal promises of future payment). These are the securities involved and thus fall under the SEC's domain. The SEC regulates securities and exchanges. Not just registered public securities and public exchanges, ALL of them. And they say what is a security or an exchange, not you.
Gambling operations such as casinos and sports books are regulated by local, state and federal law enforcement. At the federal level, I think it's the FBI.
On another point, you write, "BTC is not a real currency but electronic messages being sent back and forth and logged in an electronic ledger". Most money is exactly that: entries in electronic ledgers and most money transfers are just electronic messages. You don't really think that banks reconcile transfers with big piles of $100 notes, do you?
Who cares about "real currency"?! It's irrelevant here.
Say you own a bunch of coal. Some guy tells you that if you "invest" your coal with him he'll return 7% of it per-week risk free. He returns a bit and then he vanishes with all your coal.
The fact that coal is not a currency is irrelevant. Its something valuable to you and you got scammed out of it by a phony investment.
So apparently this is an SEC "Investor Alert," but do the legal minds here know if SEC can indict and prosecute this guy?
Here's what they did:
The SEC’s complaint charges Shavers and BTCST with offering and selling investments in violation of the anti-fraud and registration provisions of the securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC is seeking a court order to freeze the assets of Shavers and BTCST in addition to other relief, including permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
The law is not a computer program that you can fool by giving it unexpected inputs.
Bitcoin is obviously a currency. Law that applies to currency applies to Bitcoin. Trying that "it's just electronic messages" thing in front of a judge will get you laughed out of court.
Comments
How can the SEC regulate this? BTC is not a real currency but electronic messages being sent back and forth and logged in an electronic ledger. Not a legal tender currency or security registered or traded in a US-based exchange.
So apparently this is an SEC "Investor Alert," but do the legal minds here know if SEC can indict and prosecute this guy? This is important for people who are also running Bitcoin casinos, sports books and prediction markets.
The SEC can go after ponzi schemes because those are effectively investment scams. Any ponzi scheme effectively issues IOU's (e.g. shares in a fund, debt instruments or just verbal promises of future payment). These are the securities involved and thus fall under the SEC's domain. The SEC regulates securities and exchanges. Not just registered public securities and public exchanges, ALL of them. And they say what is a security or an exchange, not you.
Gambling operations such as casinos and sports books are regulated by local, state and federal law enforcement. At the federal level, I think it's the FBI.
On another point, you write, "BTC is not a real currency but electronic messages being sent back and forth and logged in an electronic ledger". Most money is exactly that: entries in electronic ledgers and most money transfers are just electronic messages. You don't really think that banks reconcile transfers with big piles of $100 notes, do you?
Who cares about "real currency"?! It's irrelevant here.
Say you own a bunch of coal. Some guy tells you that if you "invest" your coal with him he'll return 7% of it per-week risk free. He returns a bit and then he vanishes with all your coal.
The fact that coal is not a currency is irrelevant. Its something valuable to you and you got scammed out of it by a phony investment.
For your information, the US govt is very much treating Bitcoin like a "real" currency.
In addition to the SEC prosecution, the US Treasury bureau FinCEN tacitly approved of Bitcoin ("virtual currencies") in http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001....
Here's what they did:
The SEC’s complaint charges Shavers and BTCST with offering and selling investments in violation of the anti-fraud and registration provisions of the securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC is seeking a court order to freeze the assets of Shavers and BTCST in addition to other relief, including permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
Casino chips are not a 'real' currency either, but pieces of plastic which can be bought and sold for money.
The law is not a computer program that you can fool by giving it unexpected inputs.
Bitcoin is obviously a currency. Law that applies to currency applies to Bitcoin. Trying that "it's just electronic messages" thing in front of a judge will get you laughed out of court.