In a press release on November 8th, the SEC has charged EtherDelta founder, Zachary Coburn, with operating an unregistered exchange. Without admitting or denying the SEC’s findings, he has agreed to pay $300,000 in disgorgement, $13,000 in prejudgment interest, and another $75,000 penalty ($388,000 in total). The SEC chose not to impose a greater penalty to Coburn due to cooperation.

According to the SEC, EtherDelta, a popular “decentralized” exchange, executed about 3.6 million orders for ERC-20 tokens over the last 18 months (included are tokens deemed securities by the SEC). Most of the 3.6 million trades were placed after the SEC issued their 2017 DAO report, stating “that certain digital assets would be subject to the SEC’s requirement that exchanges register or operate pursuant to an exemption.” Basically, EtherDelta offered securities on their exchange and failed to register as an exchange or apply for an exemption.

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

As this investigation progresses, we will continue to provide updates.


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