The United States Securities and Exchange Commission has fined Ethan Burnside for operating the Bitcoin Trading Company (BTC-TC) and Litecoin Global (LTC-Global) virtual currency securities exchanges. Per the SEC's order Ethan Burnside will pay:
- $55,000 as a disgorgement of his profits from operating the enterprises
- $3,387.07 in prejudgement interest on the balance to be disgorged
- $10,000 in a civil penalty
- Possibly further interest if payment is not delivered to the Securities and Exchange Commission on the schedule ordered
These payments are to be made by Burnside to the Security and Exchange Commission who will then transfer the balances to the United States Treasury. The low amount of the civil penalty is explicitly noted by the Commission to be the result of Burnside's cooperation throughout the entire process, including his winding down of operations in September 2013 on uncontested orders from the Securities and Exchange Commission.
This filing by the Commission refutes a number of theories that had been popular including the one where Ethan Burnside managed to become rich, and the one where a regulatory agency might be interested in the likely actual criminal behavior that went into perpetuating the Labcoin scam. This is also in stark contrast to the Security and Exchange Commission's settlement with Erik Voorhees where he was fined roughly the same total sum, but balanced less in profits and more heavily in penalties over his role in the FeedZeBirds security listing. Sure Erik Voorhees also participated in offering shares in Satoshi Dice as a security before a sale took the venture private, but in that case he was working with better tools and venues.
The document from the Security and Exchange Commision is available here as a pdf or below in full plain text:
UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 9685 / December 8, 2014
SECURITIES EXCHANGE ACT OF 1934
Release No. 73783 / December 8, 2014
INVESTMENT COMPANY ACT OF 1940
Release No. 31366 / December 8, 2014
File No. 3-16307
In the Matter of
BTC TRADING, CORP.
AND ETHAN BURNSIDE,
ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS PURSUANT TO
SECTION 8A OF THE SECURITIES ACT
OF 1933, SECTIONS 15(b) AND 21C OF
THE SECURITIES EXCHANGE ACT OF
1934, AND SECTION 9(b) OF THE
INVESTMENT COMPANY ACT OF 1940,
MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER
The Securities and Exchange Commission (“Commission”) deems it appropriate and in
the public interest that public administrative and cease-and-desist proceedings be, and hereby
are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections
15(b), and 21C of the Securities and Exchange Act of 1934 (“Exchange Act”), and Section 9(b)
of the Investment Company Act of 1940 (“Investment Company Act”), against BTC Trading,
Corp. (“BTC Trading”) and Ethan Burnside (“Burnside”) (collectively “Respondents”).
In anticipation of the institution of these proceedings, Respondents have submitted an
Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for
the purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the
findings herein, except as to the Commission’s jurisdiction over them and the subject matter of
these proceedings, which are admitted, and except as provided herein in Section V, Respondents
consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings
Pursuant to Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Exchange
Act of 1934, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and
Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.
On the basis of this Order and Respondents’ Offer, the Commission finds that:
This matter involves two enterprises — LTC-Global Virtual Stock Exchange (“LTCGlobal”) and BTC Virtual Stock Exchange (“BTCT Co.”) — that Burnside and BTC Trading
operated as unregistered, online, virtual currency-denominated securities exchanges and brokerdealers during the period from August 2012 through October 2013.1 Each enterprise launched
and operated its own website (www.litecoinglobal.com and www.btct.co) and required interested
persons to complete an online registration to open an account and access services. Registered
accountholders (“users”) could buy, sell and trade securities of businesses listed on the websites
using the virtual currencies Bitcoin and Litecoin, and the businesses were themselves primarily
virtual currency-related enterprises. Burnside, an experienced computer programmer, and his
company, BTC Trading, launched the two website enterprises during the early stages of the
adoption and use of these virtual currencies. Through the websites, Burnside also offered shares
in unregistered transactions in exchange for bitcoins and litecoins in LTC-Global and LTCMining, another virtual currency enterprise founded by Burnside.
Burnside, age 37, resides in El Segundo, California. Burnside has a background
in computer science and has extensive experience as a computer programmer and computer
systems engineer. Currently, he is employed as a systems engineer and manager in Los Angeles,
California, by a multiplayer online social gaming company. Burnside has never been registered
with the Commission in any capacity.
BTC Trading, Corp. is a Belize corporation and the alter ego of Burnside that he
founded in November 2012. BTC Trading’s sole business was the operation of LTC-Global and
BTCT Co. BTC Trading is 100% owned and operated by Burnside and has never been
registered with the Commission in any capacity.
For purposes of this Order, a “virtual currency” is a digital representation of value that can be
digitally traded and functions as a medium of exchange; a unit of account; and/or a store of
value, but does not have legal tender status (i.e., when tendered to a creditor, is a valid and legal
offer of payment) in any jurisdiction. It is not issued or guaranteed by any jurisdiction, and
fulfills the above functions only by agreement within the community of users of the virtual
currency. Virtual currency is distinct from fiat currency, which is the coin and paper money of a
country that is designated as its legal tender; circulates; and is customarily used and accepted as a
medium of exchange in the issuing country. It also is distinct from e-money, which is a digital
representation of fiat currency used to electronically transfer value denominated in fiat currency,
i.e., e-money electronically transfers value that has legal tender status.
LTC-Global Virtual Stock Exchange was founded and developed by Burnside and
BTC Trading as an online, litecoin-denominated “securities exchange.” Burnside launched
LTC-Global’s website (www.litecoinglobal.com) in August 2012, and offered and sold shares of
LTC-Global as one of the listings on its website. LTC-Global is not an incorporated entity and
has never been registered with the Commission in any capacity. In October 2013, LTC-Global
BTC Virtual Stock Exchange was founded and developed by Burnside and BTC
Trading as an online, bitcoin-denominated “securities exchange.” In December 2012, Burnside
launched BTCT Co’s website (www.btct.co). BCTC Co. is not an incorporated entity and has
never been registered with the Commission in any capacity. In October 2013, BTCT Co. ceased
LTC-Mining is a litecoin mining business owned and operated by Burnside.2 In
July and September 2012, Burnside offered and sold litecoin- and bitcoin-denominated “LTC
Mining bonds,” which entitled “bondholders” to share in any profits LTC Mining earned from
mining litecoins. LTC Mining is not an incorporated entity and has never been registered with
the Commission in any capacity. In late 2013, LTC-Mining ceased operating.
Respondents Operated as Unregistered Exchanges and Unregistered Broker-Dealers
In August 2012, Burnside and BTC Trading launched LTC-Global
(www.litecoinglobal.com) as an online, litecoin-denominated securities exchange. Through the
website, in exchange for litecoins, registered users bought, sold, and traded securities in initial
and secondary securities offerings of businesses (or “issuers’) listed on the website.
In December 2012, Burnside and BTC Trading launched BTCT Co.’s website
(www.btct.co) as an online, bitcoin-denominated securities exchange. BTCT Co. operated
almost identically to LTC-Global, but accepted bitcoins, instead of litecoins, as payment.
According to its website, BTCT Co. allowed users to “experiment with virtual
currency investing by purchasing stock in virtual currency” and/or “start a virtual currency
company and issue stock to raise funds” for that company. Although anyone was permitted to
register with either website, the websites were marketed to and popular with virtual currency
enthusiasts. Issuers listed on the websites primarily were virtual currency-related businesses,
such as virtual currency mining operations.
A virtual currency “miner” is an individual or entity that participates in a decentralized virtual
currency network by running special software to solve complex algorithms in a distributed proofof-work or other distributed proof system used to validate transactions in the virtual currency
system. Certain virtual currencies (e.g., Bitcoin and Litecoin), self-generate units of the currency
by rewarding miners with newly created coins.
Burnside launched the two websites when the exchange rates to U.S. dollars
(“USD”) of Litecoin and Bitcoin were low. From August 2012 to the present, the exchange rate
to USD of Litecoin has fluctuated between a low of $0.02 per litecoin on August 27, 2012 and a
high of $40.73 per litecoin on November 28, 2013. From December 2012 to the present,
the exchange rate to USD of Bitcoin has fluctuated between a low of $12.56 per bitcoin on
December 2, 2012 and a high of $1,209.94 per bitcoin on November 30, 2013.
Account Opening, Deposits, and Custody of Customer Funds
Any individual or group was permitted to open an account and access the
websites’ services after completing an online registration form. The only information required
for registration was a valid email address, which allowed users of each website to maintain a
certain level of anonymity. Registration was free. Once registered, users could view their
account history and balance online.
Both websites maintained custody of users’ litecoins and bitcoins. Registered
users deposited litecoins and bitcoins with each site by accessing certain computer software that
allowed them to digitally transfer funds. Each website maintained custody of its users’ funds,
which were co-mingled in the website’s virtual currency wallet.3 Users could request to
withdraw their funds at any time. Neither website, however, offered users the ability to convert
virtual currency into USD or any other fiat currency.
Through posts on an internet website dedicated to Bitcoin known as the Bitcoin
Forum (bitcointalk.org) and other websites dedicated to virtual currency, Burnside solicited users
to open accounts and access the websites’ services. During the relevant operating periods,
approximately 2,655 users opened online accounts with LTC-Global and approximately 7,959
users opened online accounts with BTCT Co.
Listing of Initial and Secondary Securities Offerings and Issuance of Shares
In order to list the offer and sale of securities on either website, an issuer
submitted an online application that included an “investment contract” prepared by the issuer.
An investment contact typically included a description of the issuer’s operation and the
investment being offered. LTC-Global and BTCT Co. charged each issuer a flat listing fee of
250 litecoins and 5 bitcoins respectively. There was also a “terms of service” for the websites
that, among other provisions, required that the issuer’s business or operation was “legal in the
LTC-Global shareholders had to approve a new listing application through an
online voting process operated by Burnside. Once a listing application was approved, registered
users of either website could create issuances of stock and list initial and secondary offerings of
securities. The shares of stock were uncertified; the issuance and subsequent ownership of
shares by shareholders was reflected in the online account statements that the website maintained
A virtual currency wallet is a means (software application or other mechanism/medium) for
holding, storing and transferring virtual currency.
for all registered users. The website provided each issuer with a list of its shareholders and their
holdings every 12 hours so that the issuer could continue to operate its listing if either website
ever shut down.
Issuers could also advertise their listing by posting a prospectus and business plan
online. Issuers could directly post notifications on the websites and, if they did so, all
shareholders in that particular issuer automatically received a copy of the notification by email.
Although issuers were responsible for posting and updating their content online, Burnside
maintained limited moderator-type rights over the websites.
Burnside regularly posted information on the Bitcoin Forum and other websites
dedicated to virtual currency advertising LTC-Global and BTCT Co.’s listing services. Through
these posts, Burnside solicited issuers to utilize the websites’ listing services. As a result, during
the relevant operating periods, approximately 52 issuers entered into contracts to list their shares
with LTC-Global and paid a total of 11,450 litecoins in listing fees and approximately 69 issuers
entered into contracts to list their shares with BTCT Co. and paid a total of 210 bitcoins in listing
fees. None of the issuers registered a class of securities with the Commission under the
Exchange Act, and none of the issuers registered an offering of securities with the Commission
under the Securities Act.
Trading, Trade Execution, and Trade Reporting
In addition to providing a platform to invest in securities offerings, registered
users could initiate and place different types of trades, including options trades, through each
website. In exchange for these services, Burnside and BTC Trading received transaction-based
compensation based directly on the size or type of securities transaction.
In order to initiate and place a trade, registered users entered “bids” and “asks”
through an online order book maintained on each website, and each website used a nondiscretionary system to match and execute trades according to price and time priority. Neither
website received any external orders for securities or routed orders to any other online virtual
currency exchange. Both websites reported and publicly displayed all trades, quotes and
dividends paid. The websites also reported trading volume for each listed security.
Through posts on the Bitcoin Forum and other websites dedicated to virtual
currency, Burnside and BTC Trading solicited users to place trades in listed securities in
exchange for transaction-based compensation. As a result, during the relevant operating periods,
LTC-Global users executed approximately 60,496 trades through LTC-Global’s website, paying
a total of 12,081 litecoins in transaction-based compensation and BTCT Co. users executed
approximately 366,490 trades through BTCT Co.’s website, paying a total of 2,141 bitcoins in
Burnside Winds Down LTC-Global and BTCT Co.
Beginning in September 2013, shortly after the Commission staff contacted
Burnside, he began an orderly wind down of the operations of both websites. This included
disabling the registration and trading functions of the websites while maintaining the users’
ability to request the withdrawal of their funds. Burnside provided the websites’ users with
advance notice of the wind down and established procedures intended to prevent user losses.
During the wind down period, users withdrew funds totaling approximately 200,000 litecoins
and 20,000 bitcoins, which were held in virtual currency wallets maintained by each website. By
October 31, 2013, both websites had ceased operating.
The Offering of Shares in Unregistered Transactions
In separate unregistered transactions, Burnside offered to sell and buy shares of
two virtual currency enterprises that he owned and operated.
Offer and Sale of LTC-Global Securities
From August 2012 through August 2013, Burnside offered and sold 1,322
dividend-paying shares of LTC-Global, with a maximum of 951 shares outstanding at any given
time. The price of the shares ranged between 25 and 399 litecoins per share, and four shares sold
for 2 bitcoins per share. The shares were offered on LTC-Global’s website as one of its stock
Burnside made general solicitations to sell shares of LTC-Global over the
Internet, which included posts on the Bitcoin Forum and other Bitcoin-related websites.
Burnside raised 109,387 litecoins and 8 bitcoins from the sale of LTC-Global
shares. At the time Burnside sold the shares, the total USD value of the litecoins and bitcoins he
raised was approximately $92,954.
Pursuant to the investment contract with LTC-Global shareholders, Burnside
distributed to LTC-Global shareholders 100% of the profits earned from the operation of both
websites as dividends. Burnside, who owned approximately 90.5% of the shares of LTC-Global,
received dividends totaling 67,751 litecoins. The total USD value of the dividends received by
Burnside at the time the dividends were paid was approximately $102,653.
Beginning in August 2012, in another unregistered transaction, Burnside began
buying back outstanding shares of LTC-Global from investors who wished to sell them, some of
which he resold to other investors. In September 2013, in connection with Burnside’s decision
to shut down the operations of both websites, Burnside agreed to buy back all outstanding shares
of LTC-Global from investors. During the period from August 2012 through November 2013,
Burnside purchased a total of 1,278 shares for a total of 54,798 litecoins (an average of
approximately 43 litecoins per share) and 44 shares for a total of 11 bitcoins (0.25 bitcoins per
share). Due to the significant rise in the exchange rate of litecoin, the total USD amount paid to
investors in the buy-back transactions (approximately $142,457) exceeded the total USD amount
raised (approximately $92,954).
Offer and Sale of LTC-Mining Securities
In two unregistered transactions in July and September 2012, Burnside offered for
sale “LTC-Mining bonds,” which entitled “bondholders” to an interest in the profits LTC Mining
earned from mining litecoins. Although Burnside called the investment a bond, it was in essence
preferred stock that paid dividends.
In the first of these unregistered transactions, Burnside offered and sold 789 LTCMining shares for 0.43 bitcoins per share. The shares were first listed on the Global Bitcoin
Stock Exchange (“GLBSE”), which purported to run a bitcoin-denominated stock exchange4 and
later on BTCT Co.’s website. 5
Burnside solicited investors in the first offering by regularly posting information
on the Bitcoin Forum in a thread titled “The First Perpetual LTC-Mining Bond.” Burnside
provided certain disclosures as part of this offering, posting extensive information about himself,
how the mining operation worked, his involvement in the operation, and the terms of the
The first LTC-Mining offering raised 339 bitcoins. Burnside used the proceeds of
the offering to buy computers and specialized graphic cards to support his mining operation. At
the time of the offering, 339 bitcoins were worth approximately $2,644.
In a second unregistered transaction in September 2012, Burnside offered and
sold an additional 500 shares of “LTC-Mining bonds” for an average of 129.74 litecoins per
share. Burnside offered the bonds on LTC-Global, his newly launched litecoin-denominated
stock exchange and in contrast to the first unregistered LTC-Mining bond offering, sought
payment in litecoins rather than bitcoins.
Burnside solicited investors in the second LTC-Mining bond offering through
posts he made on the Bitcoin Forum. On September 27, 2012, Burnside posted that the litecoin
and bitcoin-denominated LTC-Mining bonds were identical and that the only difference between
the two offerings was that “you get paid [dividends] in LTC instead of BTC.”
The second LTC-Mining bond offering raised 64,870 litecoins, which was worth
approximately $2,834 at the time of the offering.
In June 2013, in a third unregistered transaction and almost a year after the first
LTC-Mining bond offering, Burnside offered to buy back the “bonds” from all existing
bondholders due to the unprofitability of the investment and the rise in value of bitcoins and
litecoins. In connection with the buy-back transactions, Burnside paid LTC-Mining shareholders
a total of 33,100 litecoins and 236 bitcoins. Due to the significant rise in the exchange rate of
bitcoins and litecoins, the total USD amount paid to investors in the buy-back transactions
(approximately $59,504) exceeded the total USD amount raised (approximately $5,490). Also,
In October 2012, GLBSE ceased operations.
Burnside launched BTCT Co. shortly after the GLBSE ceased operating and offered GLBSE
issuers the ability to transfer their stock listings and holdings from the GLBSE to BTCT Co. at
no charge. Burnside transferred his listing of LTC-Mining from GLBSE to BTCT Co. and
created user accounts for all LTC-Mining shareholders.
shareholders who purchased shares in the IPO received approximately a 10% return on their
Section 5(a) of the Securities Act provides that, unless a registration statement is
in effect as to a security, it is unlawful for any person, directly or indirectly, to engage in the
unregistered offer or sale of securities in interstate commerce. Section 5(c) of the Securities Act
provides a similar prohibition against offers to sell, or offers to buy, unless a registration
statement has been filed. Thus, both Sections 5(a) and 5(c) of the Securities Act prohibit the
unregistered offer or sale of securities in interstate commerce, unless the offerings are exempt.
See 15 USC §77e.
As described above, Burnside offered to buy and sell shares of LTC-Global and
LTC-Mining over the Internet and was required to register the offerings with the Commission or
qualify for an exemption. No registration statement was filed for the LTC-Global or LTCMining offerings, and no exemption from registration was applicable to these transactions. As a
result, Burnside willfully violated Sections 5(a) and 5(c) of the Securities Act.
Section 5 of the Exchange Act makes it unlawful for any broker, dealer, or
exchange, directly or indirectly, to effect any transaction in a security, or to report any such
transaction, in interstate commerce, unless the exchange is registered as a national securities
exchange under Section 6 of the Exchange Act, or is exempted from such registration. See 15
USC §78e. Section 3(a)(1) of the Exchange Act defines an “exchange” as “any organization,
association, or group of persons, whether incorporated or unincorporated, which constitutes,
maintains, or provides a market place or facilities for bringing together purchasers and sellers of
securities or for otherwise performing with respect to securities the functions commonly
performed by a stock exchange as that term is generally understood … .” 15 USC §78c(a)(1).
Exchange Act Rule 3b-16 further defines an exchange to mean an organization, association, or
group of persons that: (1) brings together the orders for securities of multiple buyers and sellers;
and (2) uses established, non-discretionary methods (whether by providing a trading facility or
by setting rules) under which such orders interact with each other, and the buyers and sellers
entering such orders agree to the terms of the trade. 17 CFR 240.3b-16(a). The Commission has
also stated that “an exchange or contract market would be required to register under Section 5 of
the Exchange Act if it provides direct electronic access to persons located in the U.S.” Exchange
Act Rel. No. 34-60194 (June 30, 2009), 74 FR 32200, 32204 (July 7, 2009) (order granting
As described above, Burnside and BTC Trading operated LTC-Global and BTCT
Co. as “virtual stock exchanges.” Section 5 of the Exchange Act required them to register both
enterprises with the Commission or obtain a formal exemption from registration. Both LTCGlobal and BTCT Co. operations provided issuers the ability to create and list initial and
secondary securities offerings through their websites in exchange for a flat listing fee. During
the relevant time period, approximately 52 issuers entered into contracts to list their shares with
LTC-Global and they paid a total of 11,450 litecoins in listing fees. Approximately 69 issuers
entered into contracts with BTCT Co. and paid a total of 210 bitcoins in listing fees. Registered
users could also invest and trade in any listed security through each website, which used a non8
discretionary system to match and execute trades. By failing to register LTC-Global and BTCT
Co. as national securities exchanges, or to obtain an exemption from such registration, Burnside
and BTC Trading willfully violated Section 5 of the Exchange Act.
Subject to limited exceptions and exceptions not applicable to Burnside and BTC
Trading, Section 15(a)(1) of the Exchange Act makes it unlawful for any broker or dealer “to
make use of the mails or any means or instrumentality of interstate commerce to effect any
transactions in, or to induce or attempt to induce the purchase or sale, of any security … unless
such broker or dealer is registered” in accordance with Section 15(b) of the Exchange Act. 15
USC §78o. Section 3(a)(4) of the Exchange Act defines a “broker” as a person, including a
company, engaged in the business of effecting transactions in securities for the account of others.
A person is engaged in the business of effecting securities transactions if he or she regularly
“participates in securities transactions at key points in the chain of distribution.” See
Massachusetts Fin. Servs., Inc. v. Sec. Investor Prot. Corp., 411 F. Supp. 411, 415 (D. Mass.
1976), aff’d, 545 F.2d 754 (1st Cir. 1976). Such participation includes, among other activities,
assisting an issuer to structure prospective securities transactions, helping an issuer to identify
potential purchasers of securities, and soliciting securities transactions. See Strengthening the
Commission’s Requirements Regarding Auditor Independence, Exch. Act Rel. No. 34-47265
(Jan. 28, 2003), 68 FR 6006, 6014-15 n.82 (Feb. 5, 2003) (adopting release).
As described above, LTC-Global’s and BTCT Co.’s business, directed by
Burnside, was to effect transactions in securities for the accounts of others. BTC Trading,
directed by Burnside, actively solicited the public to open accounts by advertising the websites
on the Bitcoin Forum and other websites dedicated to virtual currency. As a result of these
solicitation efforts, during the relevant operating periods, approximately 2,655 users opened
online accounts with LTC-Global and executed approximately 60,496 trades through the
website, paying a total of 12,081 litecoins in transaction-based compensation. Approximately
7,959 users opened online accounts with BTCT Co. and executed approximately 366,490 trades
through the website, paying a total of 2,141 bitcoins in transaction-based compensation. As a
result of this conduct, Burnside and BTC Trading were required to register with the Commission
as a broker or dealer. By failing to register as a broker or dealer and as a result of their conduct
described in this Order, Burnside and BTC Trading willfully violated Section 15(a) of the
Respondents’ Remedial Efforts
In determining to accept the Offer, the Commission considered remedial acts promptly
undertaken by Respondents and cooperation afforded the Commission staff. Beginning in
September 2013, in immediate response to the Commission staff’s investigation, Burnside began
an orderly wind down of both websites. Since September 2013, users have withdrawn funds
totaling approximately 200,000 litecoins and 20,000 bitcoins, and in October 2013, both websites
ceased operating. Throughout the investigation, Burnside fully cooperated with the Commission
staff, providing early and substantial assistance. He made himself available to Commission staff
upon request, translated data into accessible formats while producing the raw data to permit
independent verification, and he retained financial audit experts to assist in the generation and
formatting of reports in order to enable the staff to quickly ascertain the scope and operation of
his enterprises. Burnside’s efforts facilitated the staff’s investigation involving an emerging
In view of the foregoing, the Commission deems it appropriate and in the public
interest to impose the sanctions agreed to in Respondents’ Offer.
Accordingly, pursuant to Section 8A of the Securities Act, Sections 15(b), and 21C of the
Exchange Act, and Section 9(b) of the Investment Company Act, it is hereby ordered that:
Respondent Burnside cease and desist from committing or causing any violations
and any future violations of Sections 5(a) and 5(c) of the Securities Act.
Respondents Burnside and BTC Trading cease and desist from committing or
causing any violations and any future violations of Sections 5 and 15(a) of the Exchange Act.
Respondent Burnside be, and hereby is:
barred from association with any broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, transfer agent, or nationally recognized statistical rating
prohibited from serving or acting as an employee, officer, director, member of an advisory
board, investment adviser or depositor of, or principal underwriter for, a registered
investment company or affiliated person of such investment adviser, depositor, or principal
barred from participating in any offering of a penny stock, including: acting as a
promoter, finder, consultant, agent or other person who engages in activities with a
broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or
inducing or attempting to induce the purchase or sale of any penny stock;
with the right to apply for reentry after two (2) years to the appropriate self-regulatory
organization, or if there is none, to the Commission.
Any reapplication for association by the Respondent will be subject to the
applicable laws and regulations governing the reentry process, and reentry may be conditioned
upon a number of factors, including, but not limited to, the satisfaction of any or all of the
following: (a) any disgorgement ordered against the Respondent, whether or not the
Commission has fully or partially waived payment of such disgorgement; (b) any arbitration
award related to the conduct that served as the basis for the Commission order; (c) any selfregulatory organization arbitration award to a customer, whether or not related to the conduct
that served as the basis for the Commission order; and (d) any restitution order by a selfregulatory organization, whether or not related to the conduct that served as the basis for the
Respondent Burnside shall pay disgorgement, which represents profits gained as a
result of the conduct described herein, of $55,000 and prejudgment interest of $3,387.07, for a
total of $58,387.07, to the Securities and Exchange Commission for transfer to the United States
Treasury. Payments shall be made in the following installments.
(1) $10,000 within ten days of the entry of this Order;
(2) $24,193.54 within 180 days of entry of the Order; and
(3) $24,193.54 plus prejudgment interest on the payments described in Section IV.E(2)
and IV.E.(3) pursuant to SEC Rule of Practice 600, within 360 days of entry of the Order.
Prior to making the payment described in Section IV.E(3), Respondent Burnside shall
contact the Commission staff to ensure the inclusion of prejudgment interest. If any payment is
not made by the date the payment is required by this Section IV.E, the entire outstanding balance
of disgorgement, prejudgment interest, plus any additional interest accrued pursuant to SEC Rule
600, shall be due and payable immediately, without further application.
Respondent Burnside shall, within 10 days of this Order, pay civil money
penalties of $10,000 to the Securities and Exchange Commission for transfer to the United States
Treasury. If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C.
Payments under this Order must be made in one of the following ways:
1. Respondent may transmit payment electronically to the Commission,
which will provide detailed ACH transfer/Fedwire instructions upon
2. Respondent may make direct payment from a bank account via Pay.gov
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or
3. Respondent may pay by certified check, bank cashier’s check, or United
States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
Payments by check or money order must be accompanied by a cover letter identifying Ethan
Burnside and BTC Trading, Corp. as Respondents in these proceedings, and the file number of
these proceedings; a copy of the cover letter and check or money order must be sent to Valerie
A. Szczepanik, Assistant Regional Director, Division of Enforcement, Securities and Exchange
Commission, New York Regional Office, Brookfield Place, 200 Vesey Street, Suite 400, New
York, NY 10281-1022, or such other person or address as the Commission staff may provide.
Respondents acknowledge that the Commission is not imposing a civil penalty in
excess of $10,000 based upon their cooperation in a Commission investigation. If at any time
following the entry of the Order, the Division of Enforcement (“Division”) obtains information
indicating that Respondents knowingly provided materially false or misleading information or
materials to the Commission or in a related proceeding, the Division may, at its sole discretion
and with prior notice to the Respondents, petition the Commission to reopen this matter and seek
an order directing that the Respondents pay an additional civil penalty. Respondents may contest
by way of defense in any resulting administrative proceeding whether it knowingly provided
materially false or misleading information, but may not: (1) contest the findings in the Order; or
(2) assert any defense to liability or remedy, including, but not limited to, any statute of
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section
523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by
Burnside, and further, any debt for disgorgement, prejudgment interest, civil penalty or other
amounts due by Burnside under this Order or any other judgment, order, consent order, decree or
settlement agreement entered in connection with this proceeding, is a debt for the violation by
Burnside of the federal securities laws or any regulation or order issued under such laws, as set
forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).
By the Commission.
Brent J. Fields