The US Securities and Exchange Commission’s (SEC) move against the decentralized crypto trade EtherDelta is a remarkable action by the SEC since it is its first enforcement activity ever against an exchange it deems to operate illicitly.
Nonetheless, it seems that at this time Zachary Coburn, the founder EtherDelta, has reached a quick agreement with the agency over non compliance. This was according to what the commission said in a public statement on Thursday.
The report said that most of the trading activities in question were made on EtherDelta exchange after the SEC in the “2017 DAO Report” clarified that some digital resources could be considered “securities,” and that any entities offering these services are liable to SEC registration requirement.
Non Compliance By Exchange
“On the off chance that you are exchanging securities – which most ICOs [initial coin offerings] are – they should be exchanged on a registered Alternative Trading System or National Exchange. This will probably be the first of numerous implementation activities and think the accompanying sentence is fascinating,”
Dina Ellis Rochkind of the law office Paul Hastings LLP told Reuters.
“EtherDelta had both the User Interface and underlying functionality of an online national securities exchange and was required to register with the SEC or meet all requirements for an exception,”
Stephanie Avakian, co-chief of the SEC’s Enforcement Division, said in a press release.
Penalties Imposed On EtherDelta
According to SEC, Coburn consented to pay USD 300,000 in disgorgement, USD 13,000 in prejudgment interest, and also a penalty of USD 75,000, “without conceding or denying the discoveries.”
It is apparent that the severity of the SEC action was ameliorated by the cooperative stance of Coburn in the issue.
In a statement to Bloomberg, Coburn’s lawyers said that they were “satisfied with the outcome,” and that Coburn “values having this behind him.”
SEC move follows nationwide crackdown
The enforcement activity by the SEC comes just seven days after it was revealed that the agency had started an across-the-country crackdown on what it considers to be potential misconduct involving cryptocurrencies.
As indicated by three undisclosed sources who spoke with Politico, the SEC’s Office of Compliance Inspections and Examinations has been asking investment advisors, who oversees more than USD 100 million, for data on ICOs and crptocurrencies.
Meanwhile, in September, New York’s attorney general Barbara D. Underwood harangued cryptocurrency exchange, saying that a system to guarantee “the reasonableness, uprightness, and security” of the platforms is needed.
Investors and the Crypto Community Reacts
In reacting to the SEC move, a number of tweet commentaries show that there was widespread approval for the SEC regulatory action. Many commentators expressed happiness that what they deem a “clean up” has commenced and praised the agency for the action.
“Dear SEC, thank you so much for “protecting us” from these unregistered and illegal businesses. We know that you have the investor in mind and not incumbent exchanges or big players wanting to control this space. You guys are awesome”
said Node Investor.
A few commentary felt the SEC was meddling with the Cyberpunk tradition of the crypto space with Sterling Archer who wrote,
“EtherDelta is a ritual that one must go through to actually belong to the crypto community, leave crypto alone sec, you guys are messing with our online cyber punk tradition.”