The US Securities and Exchange Commission (SEC) has filed charges against the founder of the platform for cryptocurrency trading EtherDelta Zachary Coburn in the operational management of the unregistered exchange for the sale of securities.
The regulator’s statement says that the decentralized EtherDelta exchange served as a secondary market for trading ERC-20 standard tokens, which the SEC regards as “digital securities”.
EtherDelta provided a marketplace for bringing together buyers and sellers for digital asset securities through the combined use of an order book, a website that displayed orders, and a “smart contract” run on the Ethereum blockchain. EtherDelta's smart contract was coded to validate the order messages, confirm the terms and conditions of orders, execute paired orders, and direct the distributed ledger to be updated to reflect a trade.
SEC Press Release
The regulator stresses that almost all transactions on EtherDelta were carried out after the SEC report of 2017, in which it recognized TheDAO tokens as securities, and the exchange was not registered with the SEC and did not apply for elimination in the context of federal laws about securities.
We are witnessing a time of significant innovation in the securities markets with the use and application of distributed ledger technology. But to protect investors, this innovation necessitates the SEC's thoughtful oversight of digital markets and enforcement of existing laws.
Co-Director, SEC's Enforcement Division
As noted, Coburn did not admit, but did not reject his guilt. Nevertheless, he agreed to return the illegally obtained profit in the amount of $ 300,000 to the state, as well as to pay $ 13,000 in interest for the period before the court decision and $ 75,000 fine. The Office also noted that Coburn collaborated with the investigation, which resulted in a reduction in the amount of the fine.
This case is also notable for the fact that it was the first of its kind, which concerns the exchange, on which there were never transactions in fiat currencies. Also, the SEC essentially makes it clear that it equates almost all Ethereum tokens to securities.