SEC Sanctions Operator of Bitcoin-Related Stock Exchange for Registration Violations (with Lofchie Comment)

The SEC sanctioned a computer programmer for operating two online venues that traded securities using the virtual currencies Bitcoin and Litecoin without registering the venues as broker-dealers or stock exchanges, and for conducting unregistered offerings.

According to the Order, the programmer and his company, BTC Trading Corp., operated two online enterprises – BTC Virtual Stock Exchange and LTC-Global Virtual Stock Exchange – from August 2012 to October 2013. These exchanges provided account holders with the ability to use Bitcoin or Litecoin to buy, sell and trade securities of businesses listed on the exchanges' websites.

The SEC found that the venues were not registered as broker-dealers despite soliciting the public to open accounts and trade securities, and were not registered as stock exchanges despite enlisting issuers to offer securities for the public to buy and sell. Additionally, the SEC determined that the programmer and BTC Trading Corp. failed to register the LTC-Global exchange or the BTC exchange as exchanges, despite providing issuers with a platform to create and list initial and secondary offerings of securities in exchange for a listing fee.

Lofchie Comment: Note that the disciplinary action has nothing to do with the status of bitcoins as "securities." Bitcoins were just the currency in which users traded securities.

See: SEC Order.