The owner and founder of decentralized cryptocurrency exchange EtherDelta has been charged by the U.S. Securities and Exchange Commission (SEC). Zachary Coburn has been running and operating an unregistered securities exchange, according to the SEC. These charge have been made public on Thursday.
EtherDelta acts as a secondary market for ERC20-tokens. According to the SEC (some) of these tokens are ‘digital asset securities’. EtherDelta uses several tools that are normal to an exchange, including an order book, an order display website and smart contracts build on the Ethereum network.
In the past 18 months EtherDelta has been used for 3.6 million trades. The SEC fails to point out which specific trades have been conducted on the platform, but it does specifically mention DAO tokens.
“Almost all of the orders placed through EtherDelta’s platform were traded after the Commission issued its 2017 DAO Report, which concluded that certain digital assets, such as DAO tokens, were securities and that platforms that offered trading of these digital asset securities would be subject to the SEC’s requirement that exchanges register or operate pursuant to an exemption.”
According to the SEC, EtherDelta has ‘the user interface and functionality of an online national securities exchange’. Therefore the platform should’ve been registered with the SEC.
The order from the SEC was against Zachary Coburn, not against the EtherDelta platform. This means EtherDelta keeps working as it always does. Zachary Coburn needs to pay a total of $388.000 in fines and penalties. He did not admit or deny the charges, but has already paid.