Zachary Coburn, the founder of EtherDelta — a decentralized trading platform for ether (ETH) and Ethereum-based tokens — has been charged with operating an unregistered national securities exchange.
The exchange is known for being among the first to list new ERC20 tokens, and currently has over 240 tokens available on its platform. Having a rather clunky and unwieldy interface, EtherDelta was popular among more experienced cryptocurrency traders due to the sheer variety of digital assets on offer.
According to a press release from the U.S. Securities and Exchange Commission (SEC) released today, the decentralized exchange (DEX) facilitated the trading of what the SEC considers to be security tokens under federal law.
However, the founder did not register for a license with the SEC, nor was the exchange operating pursuant to an exemption.
The SEC goes on the state EtherDelta conducted more than 3.6 million orders for ERC20 tokens, many of which were considered security tokens.
According to the release, Coburn consented to the order and paid a total of $388,000 in costs, $300,000 of which is in disgorgement — a type of penalty aimed at deterring future violations of securities laws, with an additional $13,000 in prejudgment interest and a penalty of $75,000.
Despite giving his consent to the fines, Coburn did not confirm or deny the findings.
The SEC notes that it recognizes Coburn’s cooperation with the order, and are not pushing to impose any further penalties.
As the investigation into the matter continues, this will story will be developed as more information becomes known.
What do you think about the SEC’s finding? Will this force other decentralized exchanges into compliance, or will it be met with continued defiance? Let us know what you think in the comments below!
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