On November 8, the SEC issued a settled order against Zachary Coburn, the creator of the smart contract that powers the EtherDelta decentralized exchange. In the settled order, the Commission found that Coburn’s EtherDelta smart contract, which enabled trading of Ether against any other ERC20 token, and the EtherDelta website through which buyers and sellers of ERC20 tokens met, operated as an unregistered “exchange” in violation of Section 5 of the Exchange Act. Without admitting or denying the findings, Coburn consented to the order and agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty. The Commission’s order notes that Coburn’s cooperation was a consideration in not imposing a greater penalty.
This is the first case involving a so-called “decentralized exchange.”
Continue Reading The EtherDelta order: SEC continues to articulate what constitutes a cryptocurrency “securities exchange,” weighing in on “decentralized” exchanges