The US Securities and Exchange Commission (SEC) has officially appointed Zachary Coburn, founder of the EtherDelta cryptocurrency exchange, to manage an unregistered stock exchange. The move by the regulatory agency to charge Coburn is in the midst of a greater tendency to increase regulation of the cryptocurrency industry.
In a press release today, the SEC announced that the charges against Coburn are the result of EtherDelta's ERC20 token offerings, many of which were issued through the first coin offerings (ICOs) and qualify as securities.
"EtherDelta is an online platform for trading on the secondary token market ERC20, a type of blockchain-based token commonly issued in initial token offerings (ICOs) .The order found that Coburn ran EtherDelta as a stock exchange national not registered ", explained the statement.
The press release also notes that this is the first law enforcement action of the regulatory agency against a platform that operates as an unregistered national stock exchange.
EtherDelta is a popular DEF (Decentralized Exchange) that uses smart contracts based on Ethereum to execute purchase and sale orders. According to the commission, the exchange had violated various securities laws due to its offer of specific assets that had been defined as securities in the DAO report of the 2017 SEC.
Stephanie Avakian, the co-director of the SEC Enforcement Division, spoke about the accusations against the founder of EtherDelta, saying:
"EtherDelta had both the user interface and the basic functionality of an online national stock exchange and was required to register with the SEC or qualify for an exemption."
Steven Peikin, also a co-director of the SEC Enforcement Division, also noted that the accusations against EtherDelta come from the ever-increasing attempt to protect investors in the field of distributed ledger technology (DLP) and cryptocurrencies.
"We are witnessing a moment of significant innovation in the securities markets with the use and application of distributed ledger technology, but to protect investors, this innovation requires careful oversight of digital markets and application of existing laws by the SEC, "he said.
Since being accused, Coburn has consented to the order and has agreed to pay $ 300,000 in disgorgement, plus $ 75,000 in penalties and $ 13,000 in injury interest. It is important to note that Coburn did not admit or deny any of the SEC conclusions.
SEC moves quickly to regulate the cryptocurrency sector
The SEC allegations against the EtherDelta platform arrive less than a week after the publication of their annual report explaining in detail how they would move to regulate the cryptocurrency sector.
In the report, they noted that they would focus their efforts on regulating ICO tokens that are offered to investors as unrecorded securities and have recently discontinued multiple platforms, including TokenLot, which are offering these products to investors without receiving the right licenses.
Regarding methods to reduce fraud in the sector, the commission explained that they would focus on raising public awareness about the dangers of nascent industries and that they would prosecute the violators to the fullest extent permitted by law.
The charges against Coburn probably indicate that more cases against unlicensed cryptocurrency exchanges, especially those that offer tokens from ICO, will come in the near future as the SEC moves to regulate the cryptocurrency sector.
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