Reuters reported Monday that Ethan Burnside, owner of BTC Trading Corp., was fined more than US$68,000 by the US Securities Exchange Commission as part of an agreement “to resolve claims that he did not register the exchanges.”
“Burnside operated two online enterprises that weren’t properly registered to engage in the securities business they were conducting,” said Andrew M. Calamari, director of the SEC’s New York Regional Office. He said:
“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 SEC’s Claims
According to the SEC’s filing [PDF], Burnside lives in California, but his unregistered business was incorporated in Belize.
“Burnside, an experienced computer programmer, and his company, BTC Trading, launched the two website enterprises during the early stages of the adoption and use of these virtual currencies,” the filing reads. It continues:
“Through the websites, Burnside also offered shares in unregistered transactions in exchange for bitcoins and litecoins in LTC-Global and LTCMining, another virtual currency enterprise founded by Burnside.”
Here are the relevant figures for accounts and transactions, as claimed by the SEC:
- BTC-TC had 7,959 registered accounts, and 366,490 trades had been made.
- LTC-Global had 2,655 registered accounts, and 60,496 trades had been made.
Burnside neither admitted nor denied the charges, Reuters reports. The total fine Burnside has agreed to pay comes out to US$68,387.07. Of that, US$58,387.07 represents Burnside’s profits from the company, and the SEC levied another penalty of US$10,000 on top.
As part of the agreement, Burnside is also not to engage in any securities trading for two years, after which he can reapply to participate in that industry.
“[Burnside’s] lawyer, Steve Unger, said in a statement that they were pleased the SEC had approved the settlement, and that Burnside worked to protect website users and to cooperate with the SEC,” the Reuters piece reads.
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