The cryptocurrency market has slipped in recent trading after the SEC came out Thursday to announce that it has charged Zachary Coburn, the founder of decentralized exchange (DEX) EtherDelta, with operating an unregistered exchange.

SEC Charges EtherDelta Founder With Operating an Unregistered Exchange https://t.co/KYRBmn2UHw — SEC_News (@SEC_News) November 8, 2018

According to the announcement, more than 3.6 million orders for ERC-20 tokens have been executed on EtherDelta, including tokens that are securities under the federal securities laws. Based on this language, it looks like the SEC is pinning EtherDelta to ICO’s that they consider security sales, thus charging Coburn with the operation of an illegal secondary market.

“Almost all of the orders placed through EtherDelta’s platform were traded after the Commission issued its 2017 DAO Report, which concluded that certain digital assets, such as DAO tokens, were securities and that platforms that offered trading of these digital asset securities would be subject to the SEC’s requirement that exchanges register or operate pursuant to an exemption,” reads the announcement.

Stephanie Avakian, Co-Director of the SEC’s Enforcement Division, added, “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.”

Coburn notably has paid $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty, all without contesting the charge.

Given that the SEC is coming after an Ethereum-based DEX, it is very likely that other similar crypto exchanges are in violation of the securities law and more charges could come in the near future, should the exchange operators be located within the United States.

Over the last 24 hours, the crypto market has slipped as investors were given a swift reminder of the ongoing regulatory risks facing the new industry. The AltDex 100 Index (ALT100), a benchmark index for large-cap cryptocurrencies and tokens, is currently down roughly 1.3% on the day.

Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.