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October 16, 2018

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Etherdelta Charged with Operating Unregistered Exchange

November 8, 2018


Is the crackdown on all Crypto exchanges that we have been dreading with bated breath finally on the horizon? According to a piece just released a few hours ago by Coindesk, Zachary Coburn, the founder of EtherDelta, has been charged by the SEC with operating an unregistered securities exchange. Upon reading the specifics of these charges via Coindesk, several points on the subject seem to become clear.


First amongst these points is the idea that there is a way to tell if a Crypto exchange is offering securities, based on its features. Reportedly, the regulators in charge of the investigation cited the facts that EtherDelta has an order book, an order display website, and an Ethereum smart contract as some of the reasons for their decision. Furthermore, the overarching reason for these charges appeared to be that the SEC felt that EtherDelta was clearly a secondary market for ERC-20 tokens.


If this is actually the case, then we could probably extrapolate the idea that they believe ERC-20 tokens are all securities. On the other hand, if this was true, then the Ethereum network would reasonably already have been given the same designation. Therefore, it appears it would be more reasonable to say that Crypto exchanges are only unregistered securities offerings if they meet all of these criteria at once.


Until the SEC confirms this hypothesis of sorts, it will remain up in the air either way. One way to further clear the situation up might be to cite a quote from the SEC, which states that it was able to prove that some tokens which are securities were being traded on EtherDelta. If we were all clued in on what these tokens were, then it might be crystal clear what exact Crypto networks are already classified as securities.


For now, exercise caution in doing business with Crypto exchanges that are unregulated, until all of this is better illuminated. In terms of EtherDelta, the website already appears to be down.



By: BGN Editorial Staff


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