The Securities and Exchange Commission launched an inquiry into a sale of online casino shares denominated in Bitcoins.
An online casino in the United States is under investigation by the Securities and Exchange Commission (SEC) after Bitcoin-denominated stock sale. SatoshiDice has listed its shares on a Bitcoin exchange back in August 2012, which were later sold for the virtual currency.
The SEC is now investigating if Bitcoin-denominated stock exchanges related to online gambling business are legal under American gambling laws and other rules and regulations. The Securities and Exchange Commission has already contacted MPEx, the online exchange the deal occurred at, asking for contracts and other related documents.
Comments from the involved parties
The MPEx operator, Mircea Popescu, the person SEC’s letter was addressed to, confirmed its receipt. He was quick to state the exchange didn’t break any laws. He also revealed that the letter in question lists SatoshiDice as the main topic of the inquiry, but the rules the deal has allegedly broken aren’t specified.
SEC to investigate Bitcoin-denominated sale of online casino
• Selling stock in Bitcoins may be against American gambling laws
• Bitcoin exchange argues they didn’t break any rules
• Bitcoin and online gambling benefit each other
The Enforcement Director for the Securities and Exchange Commission, Andrew Ceresney, has already stated that the agency was extremely focused on the legality of Bitcoin-denominated stock exchanges. According to the American laws, securities trading must be carried out on licensed platforms only.
But the recent letter also states that the decision to start an inquiry doesn’t mean there’s a conclusion that any rules have been broken.
American gambling news quoted Ceresney saying: “You can invest in those companies with your Bitcoin online. And so the question is, are those unregistered exchanges or broker dealers operating in violation of the securities laws?”
What’s the deal with SatoshiDice
The Securities and Exchange Commission letter is asking for “all documents or contracts” made up between SatoshiDice’s executive Erik Voorhees and the Bitcoin exchange. Any communication referring to listing and shares sale is to be submitted as well as Voorhees’ account statements.
Erik Voorhees has shared an online statement with the public, where he confirmed the sale of the company to a private party, but didn’t specify it. Currently MPEx exchange doesn’t list SatoshiDice shares. Voorhees denied to comment on the matter any further.
Mircea Popescu, the operator of the exchange, opined that the American laws and regulations don’t apply to MPEx, simply because Bitcoin currency doesn’t fall under the commonly understood legal definition of money.
He said: “There’s no discussion of breaking laws. Somebody wants to propose I broke a law, they’re to come up with the law I broke.”
Bitcoin and online gambling
Bitcoin is the most popular digital currency in the world. It dates back to 2008, when a paper has been written by a programmer or a group of programmers referred to as Satoshi Nakamoto. The currency utilizes public ledger to record all transaction carried out under pseudonyms.
Bitcoin transactions are cryptographically signed for increased security. Bitcoin is very similar to traditional currencies, and that’s why many business use it to create securities and trade in them.
Recently, Bitcoin have moved onto the online gambling arena. More and more gambling destinations accept Bitcoin as a payment method for their online clients. The penetration of Bitcoin into gambling is so high, that some estimates value the gambling transactions between 50 and 60 percent of all Bitcoin transaction.
Online gamers prefer Bitcoin not only for its anonymity. Transaction costs are very low compared to any other method used by online gambling sites. And Bitcoin transactions cannot be reversed, which is a huge plus for gambling operators allowing them to escape the chargeback fraud problem.
Online gambling aficionados prefer gambling in Bitcoins for other reasons as well. The winnings are received right on the spot, there are no bank withdrawals, approvals or waiting times. Bitcoin is a payment processor by itself, thus eliminating the need for a middleman.
Gambling operators using Bitcoins take a lower cut of the winnings than any other gambling destination, including the traditional land-based ones. The house edge at Bitcoin gambling sites is around 2 percent, while Las Vegas casinos’ edge is as high as 10%.
Another great reason for Bitcoin and gambling mutual success is a contradiction. All transactions are at the same time anonymous and transparent. Every single transaction is listed in a public ledger, but without providing any names. The transparency ensures the bets are fair. And don’t forget Bitcoin’s mathematical algorithm, which ensures there’s no possibility for the house to cheat players.
The future looks bright for Bitcoin and online gambling industry, despite some recent scandals of dodgy exchanges. The benefits outweigh the risks and problems, so Bitcoin is here to stay on the online gambling market.