Erik Voorhees May Have Violated SEC Settlement from 2014
A $50 million cryptocurrency coin offering is being investigated by the U.S. Securities and Exchange Commission (SEC). According to The Wall Street Journal, this cryptocurrency sale may involve a well-known bitcoin entrepreneur, Erik Voorhees, and if this is found to be the case, he will have broken the law by helping out with the fundraising of the start-up called Salt Lending Holdings Inc. Indeed, this investigation follows a series of similar inquests to cryptocurrency companies
Erik Voorhees is a name a familiar name in the virtual currency industry with Bitcoin assets. He was the chief executive of ShapeShift AG, which is infamous for being an exchange platform that has been used for money laundering millions of dollars by criminals. While ShapeShift AG has been investigated in several criminal cases, the SEC is now probing Salt Lending Holdings Inc, which has been associated with Erik Voorhees. Particularly, records are sought for the $50 million digital token sale that took place last year. The SEC will be investigating if the token sale ought to have been registered as a securities offering, as well as tokens were received and used. In addition, the regulators will look at if the 2014 SEC settlement was violated. This involved prohibiting Voorhees from fundraising.
Personally, Voorhees does not believe in cryptocurrency regulation. He states that exchanges are not subject to federal laws that say that financial companies have to know the identity of their clients, plus they do not have to report any suspicious activity to the government for money laundering. However, the U.S. Treasury Department do say that the exchanges should be playing by the anti-money laundering regulations.
Indeed, Salt Lending Holdings Inc. also has a private lawsuit on its hands in Colorado, which was filed by a former financial officer for the company. He claimed that they gave favourable loan terms exclusively to executives and their families. In addition, the former financial officer claimed that they lost $4 million in cryptocurrency as a result of a hack suffered in February.
An executive from Salt Lending Holdings Inc., Jennifer Nealson, claims that Erik Voorhees played a part in the company in the very beginning, but that he no longer ‘serves in any formal capacity’. She also states that Salt Lending Holdings Inc. made sure that they complied with state and federal laws through their own company policy.
In 2014, Erik Voorhees was investigated by SEC for illegal public stock offerings. He was required to pay fines and disgorgement of around $50,000. In addition, he was barred from raising money in private markets with his companies, as well as fundraising as a director. However, in August 2017 when Salt Lending Holdings Inc. held a private offering, Voorhees was named as a director. This means that the SEC may look to Salt Lending Holdings Inc. to pay civil penalties. This will happen if it is found that Voorhees was a director and as a consequence, would have barred Salt Lending Holdings Inc. from raising money in private markets.
Felix Shipkevich is a principal of Shipkevich PLLC. His practice focuses on providing counsel to FinTech and financial services firms, including financial technology, payments and emerging digital currency space. He has spoken at national panels in the money transmitter space and payments industry. Mr. Shipkevich’s payments practice has brought him into contact with money transmitter registration requirements in all fifty U.S. States.
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