The US Securities and Exchange Commission has accused the founder of decentralized Ethereum currency exchange EtherDelta (DEX) of operating an unregistered exchanger.
Cryptocurrency marketplace DEX allowed users to trade Ethereum-based tokens without registering an account or depositing funds into a wallet controlled by the exchange. The trading process was carried out by a smart contract, although the exchange itself depended on off-chain infrastructure managed by the operator.
According to the SEC, the EtherDelta platform illegally allowed users to trade tokens that, in accordance with federal law, classified as securities.
“EtherData has both the user interface and core functionality of a national online exchange that is subject to registration with the SEC,” said Stephanie Avakian, co-director of the commission's enforcement division.
“The securities market is currently undergoing significant change and innovation through the use and application of distributed ledger technology,” said Stephen Peikin, Co-Director of the SEC's Division of Enforcement. “However, in order to protect investors and ensure compliance with laws, these innovations require close oversight by the SEC.”
Zachary Coburn, founder of EtherDelta, agreed to pay $300,000 in restitution, $13,000 in legal fees, and a $75,000 fine, although he neither admitted nor denied wrongdoing.
According to ccn.com
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