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SatochiDice Named in SEC Bitcoin Investigation

25 March 2014 by Devon Chappell

The hits just keep on coming for the virtual currency, Bitcoin, as it is now being reported that the Securities and Exchange Commission (SEC) is carrying out a formal examination into dealings between the online exchange, MPEx, and Bitcoin online casino, SatochiDice.com. Specifically, the issue at hand is based on SatochiDice’s stock sale of Bitcoin via MPEx.

A letter of request regarding the transaction(s) was sent to MPEx by the SEC inquiring about an online exchange for trading that was Bitcoin related. In the letter, a request for access to contracts and other various documents relating to SatoshiDice.com was asked for.

MPEx confirmed to Bloomberg News that it received the inquiry and is confident it did not break any laws relating to the inquest. The SEC letter names SatoshiDice as the basis of its investigation, yet states no specific interests or details, which is typical SEC practice.

An SEC investigator/spokesperson stated that the SEC is very interested with the dealings between the Bitcoin-based online casino and MPEx, going on further to say that Bitcoin-denominated stock exchanges are illegal. In the US, federal law states that securities-based trading platforms need to be licensed. The SEC’s choice to open an inquiry does not mean the company’s staff broke rules per se; it’s simply an official inquiry.

Online gambling industry insiders won’t find this inquiry as a shock, as Bitcoin and everything related to the currency is under the microscope in one way or another. While it is understood that one can invest in companies with Bitcoin currency, the investigation is based on whether unregistered exchanges or broker dealers operated in violation of the securities laws or not.

While MPEx is forthcoming that it did, in fact, receive the letter from the SEC formally requesting information, those at the SEC are less than forward with information regarding this investigation.

What we do know is that SatoshiDice listed shares on MPEx in August of 2012. This fact is confirmed by MPEx. It is also reported that the SEC letter seeks “all documents or contracts” as vague as it sounds. In a nut shell, the SEC wants to look at all documents surrounding the sale in 2012.

MPEx does not currently have SatochiDice listed at this time. This is a simple question of regulation and making an example of any new type of currency’s legality within the system and how it is legally perceived altogether. Beyond the concept of online gambling itself being continually developed and accepted legal, so too is the concept of virtual currency.

Because this is a first where trading in this realm is concerned, we honestly doubt much will come of this investigation directly related to this dealing. Perhaps some blood and sweat will come from it, but it’s more probably to say the SEC is just poking its head in the hotbed. US securities laws in the grand scheme of things do not pertain to MPEx because Bitcoin doesn’t necessarily fall under the legal definition of money.

Virtual currency acceptance is another matter. Satochi’s tie to Bitcoin is easy. The Bitcoin concept was at one point loaded with much hope and potential. The once highly popular digital currency’s concept was born from a 2008 paper written by one or more computer programmers under the name Satoshi Nakamoto.

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