Zachary Coburn, the founder of EtherDelta, has just been charged by the US Securities and Exchange Commission (SEC) with operating an unregistered securities exchange. The SEC released the news via a press release yesterday.
According to the report by the SEC, over the course of 18 months, EtherDelta users placed over 3.6 million orders for digital currencies. Among those ordered were coins considered securities by US federal laws.
Under the current law, EtherDelta was supposed to register in the US or apply for an exemption. However, the cryptocurrency exchange failed to do either.
“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.
According to the SEC, Coburn neither denied or admitted to the findings, instead, he consented to pay the state $300,000 in unlawful profits. In addition to the $300,000 fine, the EtherDelta founder will pay $13,000 for prejudgment interest and an additional $75,000 penalty.
EtherDelta isn’t the only crypto exchange the SEC has gone after. In fact, many popular global exchanges have barred US citizens from using their platform due to the country’s strict regulations. Many exchanges don’t want to have to go through the process of registering and the potential for fines.
“We are witnessing a time of significant innovation in the securities markets with the use and application of distributed ledger technology,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division. “But to protect investors, this innovation necessitates the SEC’s thoughtful oversight of digital markets and enforcement of existing laws.”
While many within the crypto community feel the restrictions are too harsh,