EtherDelta Founder Charged by SEC With Operating Unregistered Exchange

North America United States
EtherDelta, a decentralized Ethereum exchange (DEX), has been accused by the SEC of providing a platform that illegally allowed users to trade tokens that the SEC considers to be securities under federal law.

The US Securities and Exchange Commission (SEC) has charged the founder of EtherDelta, Zachary Coburn, with operating an unregistered exchange.

EtherDelta, a decentralized Ethereum exchange (DEX), has been accused by the SEC of providing a platform that illegally allowed users to trade tokens that the SEC considers to be securities under federal law. Hence, making it an unregistered securities exchange.

“EtherDelta had both the user interface and underlying functionality of an online national securities exchange and was required to register with the SEC or qualify for an exemption,” said Stephanie Avakian, co-director of the SEC’s Enforcement Division according to a report by CCN.

“We are witnessing a time of significant innovation in the securities markets with the use and application of distributed ledger technology,” added Steven Peikin, co-director of the SEC’s Enforcement Division.

“But to protect investors, this innovation necessitates the SEC’s thoughtful oversight of digital markets and enforcement of existing laws,” added Peikin.

Zachary Coburn, EtherDelta’s founder, consented to the order and agreed to pay $300,000 in disgorgement, along with $13,000 in prejudgment interest and a $75,000 penalty, though he has not admitted or denied the SEC’s findings.

As a DEX, the crypto trading platform allowed users to trustlessly trade Ethereum-based tokens without registering accounts or entrusting their funds to an exchange-controlled wallet. Trading was managed by a smart contract, though the exchange relied on off-chain infrastructure maintained by its operator.

About the author

Mark Knowles

Mark Knowles

Coinlaw Multi-Jurisdiction Blockchain News
Mark Knowles is the Executive Editor of coinlaw.io
With more than a decade of experience as a journalist and editor, Mark has now turned his focus to the blockchain and cryptocurrency revolution that is currently reshaping the global economy. As Executive Editor at Coinlaw Mark is working to create a website that is a hub for the international crypto community to find the latest legal news, legislative changes and expert opinion from across the industry. Contact him at [email protected] or through mobile on +66 (0) 98 705 2716.

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