SEC Gets Federal Court's Permission to Pursue Bitcoin-Related Lawsuit (with Lofchie Comment and YouTube Video)

A federal district court ruled that the SEC can continue its case against a firm in the business of selling interests in a Bitcoin enterprise.The Court ruled that the firm's offerings met the definition of "investment contract" and (thus) "securities" under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Lofchie Comment: The Bitcoins case raises interesting questions about regulatory jurisdiction (which the court does not address) - i.e., Bitcoins are a form of currency interest that should be regulated by the CFTC rather than the SEC. It will be interesting to see whether the SEC and the CFTC in particular come to a public scuffle eventually regarding jurisdiction over Bitcoins. (See, e.g., YouTube Video.)

That said, it appears that the SEC is on solid ground as to assuming jurisdiction in this case because the alleged fraud is not the sale of Bitcoins per se, but rather the sale of an equity or debt investment in an enterprise that traded in Bitcoins. (See also: "Bitcoins; SEC Issues Fraud Charge and Alert; Conflict with CFTC to Come?)

See: Case No. 4:13-CV-416 (E.D. Tx. Aug. 6, 2013).