According to an order issued by the Securities and Exchange Commission, Ethan Burnside and BTC Trading Corp actively solicited the public to open accounts by advertising the websites for both of his stock exchanges on Bitcointalk.org and other forums dedicated to virtual currency.
The SEC today sanctioned the computer programmer for operating two online exchanges that traded securities using the cryptocurrencies Bitcoin or Litecoin without registering the businesses as broker-dealers or stock exchanges. The sites were purportedly operated out of Belize City, Belize.
Barred for Life
Mr. Burnside was also sanctioned for soliciting unregistered offerings. He agreed to cooperate with the SEC’s investigation and to settle the case by paying more than $68,000 in fines. He’s also barred for life from conducting business in the securities industry.
Andrew M. Calamari, Director of the SEC’s New York Regional Office stated:
Burnside operated two online enterprises that weren’t properly registered to engage in the securities business they were conducting. The registration rules are vitally important investor protection provisions, and no exemption applies simply because an entity is operating on the Internet or using a virtual currency in securities transactions.
The solicitation efforts resulted in approximately 2,655 users opening online accounts with the Litecoin-based exchange and executing approximately 60,496 trades through the website, paying a total of 12,081 litecoins in transaction-based compensation.
While nearly 8,000 users opened online accounts with the Bitcoin-based exchange, conducting over 350, trades through the website, and paying a total of 2,141 BTC in transaction costs and fees. The SEC’s order finds that in this line of business, Burnside and BTC Trading Corp were required to register both online enterprises with the SEC as brokers or dealers, which they neglected to do.
The two exchanges had solicited in total more than 10,000 users who had opened online accounts and executed more than 425,000 traders, the SEC said. The settlement requires Burnside to pay around $58,000 in profits and interest, and a penalty of $10,000.
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