SEC Successfully Charges Unlicensed Exchange Platform
The fine is part of the SEC’s plan to crackdown on illegal exchanges. The regulator is believed to be tracking other cases behind the scenes.
SEC Cracks Whip On Ether Delta
The founder of token exchange platform EtherDelta has been charged by the US SEC. The regulator successfully managed to charge Zachary Coburn. The case now becomes the first one facing a crypto exchange by the regulator.
The SEC made the announcement on Thursday. Coburn was accused of operating an exchange that was not accredited under the law for about 18 months. The accused handled over 3.6 million orders at the helm of the exchange. The orders were classified as unregistered securities.
In the settlement, Coburn will pay $300,000 in disgorgement. Additionally, he will pay $13,000 for prejudgment and a fine of $75,000. Terms of the agreement state that he will not face criminal charges before a court. The total penalty amounts to $400,000.
According to SEC, the exchange engaged in the illegal activities moments after the DA report was unveiled last year. The report put crypto initiatives on notice. The exchanges were notified that the SEC views some tokens as security tokens. The case becomes the first one to be successfully settled.
By the time of the settlement, Coburn had cut ties with EtherDelta. During the period of unlawful operation, Coburn was the main driver for the exchange's activities. According to the SEC, Coburn's actions made him eligible for violation of laws that existed earlier. The accused is believed to have come up with the exchange and then deployed EtherDelta smart contracts on the ethereum blockchain.
EtherDelta was designed for investors to trade ERC20 tokens with a similar one. Reports indicate that the SEC has silently contacted projects to purchase back tokens sold in the course of ICOs. The SEC is currently going after projects that were purchased by unregulated investors.
At the moment, we have some exchanges that are taking part in unregulated securities. EtherDelta, however, is the only firm to have its legal troubles aired in public. A look at exchanges like IDEX, they have set up all the KYC requisites which means that they will be safe from the last minute rush to meet legal requirements.
Elsewhere, ShapeShift, a wallet trading protocol has also set up additional ID parameters silently. The SEC appears to be extending its oversight role considering the way the EtherDelta case was handled behind the scenes.