SEC First Charges Against a Crypto Trading Platform as an Unregistered Exchange

[ChainDD report] November9 (ChainDD) The U.S. Securities and Exchange Commission (SEC) announced settlement with Zachary Coburn ,the founder of a digital token trading platform EtherDelta that was charged for its unregistration as a national securities exchange. This is SEC’s first enforcement action against such platform based on its finding.

According to SEC’s announcement, EtherDelta is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in Initial Coin Offerings (ICOs). The platform brought buyers and sellers together for digital asset securities trading. Over 18 months, users executed more than 3.6 million orders of ERC20 tokens, including some tokens classified as securities under the federal securities laws.

"EtherDelta had both the user interface and underlying functionality of an online national securities exchange and was required to register with the SEC or qualify for an exemption," said Stephanie Avakian, Co-Director of the SEC's Enforcement Division.

Under the settlement, Coburn agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty. But he did not admitting or denying SEC’s findings.

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