The Security and Exchange Commission (SEC) of the US charged the decentralized exchange (DEX), EtherDelta, for operating an exchange without registering it.

As a DEX, EtherDelta allows users to trade Ethereum based tokens anonymously and without the funds being stored by the exchange. But according to the SEC, EtherDelta got the users to exchange tokens which it deems as security, thus breaking the law.

JUST IN: SEC charges EtherDelta founder with operating an unregistered exchange — its the agency's "first enforcement action based on findings that such a platform operated as an unregistered national securities exchange." Story to come — CoinDesk (@coindesk) November 8, 2018

EtherDelta’s founder Zachary Coborn has agreed to pay a fine of $300,000 in disgorgement plus $13K in prejudgment interest and a $75K penalty.

4/Without admitting or denying the SEC's findings, EtherDelta founder Zachary Coburn agreed to pay $300K in disgorgement plus $13K in prejudgment interest and a $75K penalty. — CoinDesk (@coindesk) November 8, 2018

According to a statement received by CCN,

“We are witnessing a time of significant innovation in the securities markets with the use and application of distributed ledger technology,” added 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.”

Blockmanity’s Take

One of the fundamental challenges a DEX has to overcome is a political barrier imposed through anonymous trading. Centralized Exchanges have overcome the political barrier by cooperating with the government, but due to the decentralized nature of DEX it becomes much harder. EtherDelta penalty is the first one of many other fines to come.

Note: The story is developing, subscribe to our notifications to get instant updates.

Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.

Get the latest news on Blockchain only on Blockmanity.com. Subscribe to us on Google news and do follow us on Twitter @Blockmanity

Did you like the news you just read? Please leave a feedback to help us serve you better