The Securities and Exchange Commission Monday sanctioned a computer programmer for operating two online venues that traded securities using virtual currencies bitcoin or litecoin without registering them as broker-dealers or stock exchanges.
According to the SEC’s order instituting a settled administrative proceeding, the programmer, Ethan Burnside, 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 the ability to use bitcoin or litecoin to buy, sell and trade securities of businesses (primarily virtual currency-related entities) listed on the exchanges’ websites.
However, as the SEC explains, the venues weren’t registered as broker-dealers despite soliciting the public to open accounts and trade securities, nor were they registered as stock exchanges despite enlisting issuers to offer securities for the public to buy and sell.
Litecoin is described as a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world, and is an open source, global payment network that is fully decentralized without any central authorities.
Litecoin has also been described as the second-largest cryptocurrency in terms of market capitalization.
David Berger, founder and CEO of the Digital Currency Council, says that Litecoin’s market cap, at $127 million, is a tiny fraction of Bitcoin’s market cap, which stands at $4.9 billion.