It is the SEC’s ‘first enforcement action based on findings that such a platform operated as an unregistered national securities exchange’.
EtherDelta is one of the largest decentralised exchanges in the cryptocurrency space; it runs on the Ethereum blockchain and uses smart contracts to enable a peer-to-peer trading experience. More than 3.6 million buy and sell orders in ERC20 tokens, including securities, were facilitated by the exchange from 12th July 2016 and 15th December 2017.
In the SEC’s book EtherDelta meets the ‘criteria of an exchange’, as defined by Section 3(a)(1) of the Exchange Act. Cobrun decided not to register the exchange with the Commission and as a result he was aware of EtherDelta’s violations.
He eventually sold the platform to ‘foreign buyers’ in December 2017 and ceased the collection of trading fees thereafter.
Without admitting or denying the SEC’s findings, Coburn agreed to pay $300,000 in disgorgement in addition to $13,000 in prejudgement interest and a $75,000 penalty.
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