YouStake Clears Major Legal Hurdle as SEC Drops Investigation
Action-selling platform YouStake has resumed operations and appears to be legally in the clear after a court case against the United States Securities and Exchange Commission has been dismissed.
According to a court document obtained by PokerNews, the SEC dropped its investigation of YouStake on Dec. 18. Thereafter, YouStake CEO Frank DeGeorge and legal counsel Mac VerStandig responded by dropping their own countersuit against the SEC.
Selling action has been a part of the poker world for probably as long as the poker world has existed. Players contacted each other and associates and sold pieces of themselves in order to be able to play bigger and potentially more lucrative games.
The advent of the internet made it even easier for individuals seeking to buy and sell action to connect through platforms like TwoPlusTwo. A few years ago, the connection was made even easier when intermediary businesses popped up to facilitate the process.
Players would post packages of tournament action on the platforms. The platforms would serve as a way to connect the players with prospective buyers, who could buy pieces far tinier than would ever be sold on a person-to-person basis — the logistics of collection and payment make it unfeasible to sell to a large number of people in tiny increments. In return, the platforms charged a small fee.
Essentially, it's crowd-funded poker action.
YouStake was among those platforms, being founded in October 2013 by DeGeorge and co-founder Scott Hansbury. YouStake claims to be "the first fully integrated sports crowdfunding platform that allows the masses to contribute to sports players for entry in live events."
The company counts high-profile poker players Anthony Zinno and Jamie Gold as ambassadors, with former WSOP Main Event runner-up Josh Beckley among the notables selling action there.
However, the party came to a screeching halt when the government rode in and proclaimed the Virginia-based company might be in violation of federal law by virtue of selling unregulated securities.
Securities, or tradable financial assets, come under the regulation of the SEC in the U.S. The commission spent over a year investigating YouStake, to which the company and its counsel took exception due to "enormous financial burden" as it was "hampered in its ability to conduct business and raise capital."
Dropping the Case
YouStake filed a countersuit against the SEC, and the government entity looks to have waved the white flag last month as it is "not now contending that the business model of YouStake involves the sale and/or exchange of securities."
"Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against YouStake."
With that, YouStake dropped its countersuit against the SEC, and the action-selling industry appears to be safe from government scrutiny for the time being. Packages are once again being posted on the site, with the SEC magnifying glass safely trained away from the poker world.