Sandhill Exchange has reported that it has been fined by the Securities and Exchange Commission.

The Menlo Park startup has stated it was fined $20,000 USD for various violations and that the company is settling with the commission.

The company founded by serial entrepreneur Gerrit Hall yesterday afternoon published a series of blog posts that have since been removed from the site.

In one of the blog posts, the company explained why it had been fined by the SEC. The blog post explained how the company used exchange owned bots to increase volume on the exchange. The company stated that the they were found in violation of “acting as unregistered broker-dealers, selling security-based swaps, offering swaps on an unregistered securities exchange”.

The blog post that has since been removed explaining the situation also came with another blog post from the company talking about how it used Google Analytics and other tools to identify user engagement with the platform. The second blog post from the company titled “How to Analyze User Engagement: Sand Hill Exchange Case Study” has since been removed from the Sand Hill Exchange website contained a breakdown of a “study in user engagement”.

The blog post explains how the company was able to use Google Analytics to identify the Securities and Exchange Commission was using the site at a much higher rate than any other user or organization and proceeds to display some information regarding the interests and surfing habits of the Commission employees.

Sand Hill identified the IP addresses, and the organization owning the IP address and was able to learn further information from Google regarding the surfing habits.

The information that it proceeded to publish after announcing the fine from the Commission has infuriated several members who were tasked with the Sand Hill Exchange investigation. Coin Fire learned of the blog post and anger it generated for several Commission employees after reaching out to sources at the Commission for further comment, documents related to the investigation and confirmation of the fine.

One unnamed official at the Securities and Exchange Commission stated off the record to Coin Fire,

Apparently Mr. Hall and his team think that we were harsh but truly we could have pursued them for more issues and still reserve the right to do so soon. Publishing this sort of nonsense as a smack in the face of our investigators isn’t something I would be doing as I settled with the commission. Nothing will ask for more attention from investigators than that sort of action. It seems Mr. Hall doesn’t understand what a good attorney is and how to keep his mouth shut instead of asking for more.

That sentiment was further echoed by another Commission employee stating on a personal phone call,

He just opened up an entire new can of worms for himself, his investors, and everyone else involved. Ruffling feathers at this time is not advisable. Doxxing the Commission is not something I would have done.

It appears that several discussions have taken place inside the Commission regarding the now removed blog post and that many inside the agency felt that the exchange unfairly “doxxed” the Commission as a sort of “vengeance” for the action.

Doxxing is the act of finding personally identifiable information and then broadcasting it on the Internet and while nothing identifying was shared regarding the commission employees a great deal of aggregate data regarding the Commission was shared publicly at a time when the startup likely should be keeping its head low.

The blog post ended with remarks that Sand Hill Exchange believes it has “been successful” in targeting the Securities and Exchange Commission demographic stating,

In total, these users have spent 64 hours, 6 minutes, 26 seconds (and counting!) engaging with our site between March 10 and May 14. Over 96 hours if you include time on the blog and the founder’s personal website. This is more time than our team spent building the damn web page. We have clearly achieved product-market fit with this demographic. Successful marketing and scalable product adoption means understanding our most engaged users, and figuring out how to reach more of them. I think we know how to do just that.

Coin Fire will continue to monitor the situation. The full blog post from Google Cache is shared below.