Erik Voorhees, a long time crypto industry innovator, is once again under investigation by the U.S. Securities and Exchange Commission (SEC), according to The Wall Street Journal. As a former board member of crypto loans startup Salt Lending Holdings Inc., the company and Vorhees were subpoenaed by the SEC in February over the $50 million Initial Coin Offering (ICO) held last year.
Many ICOs are feeling pressure from the SEC thanks to the agency’s investigations into ICOs that failed to register securities offerings with regulators. Now, Salt Lending’s token (SALT) is under scrutiny. The SEC is additionally looking into how token funds were used and potential misallocation of tokens to employees.
The original 2017 SEC filing by Salt Lending listed Vorhees as part of the company but later removed his name in an amendment.
Voorhees has an existing five-year ban on making cryptocurrency related securities offerings due to a previous SEC charge from 2014. Voorhees previously ran two Bitcoin companies, SatoshiDICE and FeedZeBirds, where he ran unregistered public offerings in 2012 and 2013.
“A provision in the  settlement makes him a so-called “bad actor” unable to rely on an SEC safe harbor for private, unregulated stock sales,” said Keith Higgins in a WSJ interview. Higgins is chairman of the securities and governance practice at Ropes & Gray LLP and a former SEC division director.
Coinciding with the investigation, Salt faces a private lawsuit in the state of Colorado. Filed by a former Salt financial officer, the firm is accused of giving insiders and employees favorable loan conditions. This case potentially corroborates allegations of suspicious token allocation.
Voorhees’ lawyer, Brian Klein, responded in a tweet about the private suit.
“I am proud to represent @ErikVoorhees, a real visionary, who has abided by his SEC settlement terms,” Klein said. “This @WSJ story is an unfair attack on him relying on unsubstantiated allegations, anonymous sources, and he is not even a party to the lawsuit discussed.”
Crypto.IQ’s take is Salt’s situation showcases the fact that compliance with U.S. security laws and regulations is necessary for crypto startups and projects. They’ll either pay up front by doing things right in the first place or pay a lot more when the SEC eventually turns its attention to them.