SEC Settles Charges with Operator of Unregistered Cryptocurrency Exchange - Articles

All Content

Posted by: Matthew Lyon on Nov 15, 2018

In the first case of its kind, the SEC has settled charges with Zachary Coburn, the operator of the cryptocurrency exchange EtherDelta, both the New York Times and CoinDesk report. In the settlement order, the SEC takes note of the fact that most of the trades on EtherDelta occurred after the SEC issued The DAO Report in July 2017. That report clarified that many of the crypto-tokens being offered in initial coin offerings (ICOs) met the test for a “security” under SEC v. W.J. Howey Co. and that issuers and or exchanges trading in such tokens needed to either follow the registration requirements of the federal securities laws or qualify for an exemption. While noting Coburn’s cooperation in “facilitating the staff’s investigation involving an emerging technology,” the settlement order still required him to pay disgorgement and interest of $313,000 and a civil fine of $75,000 for operating an unregistered securities exchange.